How Performance Partnerships Can Scale Your Business
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The document discusses how performance partnerships can scale businesses. It notes three major structural changes in business today: sales going digital, direct to consumer shifts, and paying for performance. An example is given of a company that grew from $25k to $30 million in two years using a performance partnership model. The document advocates for incentivizing the right behaviors in business and scaling the right things like outcome-based partnerships. It presents the affiliate marketing model and how a performance partnership approach can transform headaches into multi-million dollar channels.
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How Performance Partnerships Can Scale Your Business
- 1. @accelerationpar #ScaleUp HOW PERFORMANCE PARTNERSHIPS CAN SCALE YOUR BUSINESS ROBERT GLAZER Founder & Managing Director Acceleration Partners SCALE UP SUMMIT | October 18th, 2017
- 2. @accelerationpar #ScaleUp 3 MAJOR STRUCTURAL CHANGES IN BUSINESS TODAY 2 SALES GOING DIGITAL DIRECT TO CONSUMER SHIFT TO PERFORMANCE Brands Customers Middle Man
- 3. @accelerationpar #ScaleUp 3 • Profitable, No Outside Funding • Digital, Direct to Consumer • Paying for Performance 30M+ 25K 2015 2017 FROM $25K TO $30M IN TWO YEARS
- 5. @accelerationpar #ScaleUp 5 “Doing the right thing is more important than doing the thing right.” PETER DRUCKER
- 6. @accelerationpar #ScaleUp BEHAVIOR ALWAYS FOLLOW INCENTIVES 6 Inappropriate rollovers out of lower-cost retirement plans into higher- cost vehicles. Cost $17 billion. Steering clients’ savings into funds with higher fees and lower returns even before fees. Inappropriate rollovers out of lower-cost retirement plans into higher- cost vehicles. Traders at numerous banks had colluded with each other to submit fraudulent daily Libor rate submissions LIBOR MARKET CRISIS In 2006, $600 billion of subprime loans were originated SUB PRIME MORTGAGE CRISIS HEALTHCARE CRISIS Failure to report safety data, bribing doctors, and promoting medicines for uses for which they were not licensed. $3 billion settlement of the largest health-care fraud case in the U.S. CRACK DOWN ON INVESTMENT ADVISORS
- 7. @accelerationpar #ScaleUp 7 Where in your business are you paying for something and you have no idea what you’re getting in return?
- 10. @accelerationpar #ScaleUp NOT ABLE TO SCALE RIGHT THINGS 10
- 11. @accelerationpar #ScaleUp AFFILIATE (PERFORMANCE) MARKETING MODEL 11 PROGRAM MANAGER AFFILIATE NETWORKS (Tracking & Payment Platform) AFFILIATES (Publishers) CUSTOMER MERCHANTS (Advertisers)
- 12. @accelerationpar #ScaleUp 12 shows the opposite as above as a panacea or in a cloud – perhaps someone happy, relived, organized …zen…
- 13. @accelerationpar #ScaleUp 13 Where are some marketing or business partnerships in your business that are just not scaling? OR If you had a way to scale hundreds or thousands of outcome-based partnerships, what new area(s) would you go after?
- 14. @accelerationpar #ScaleUp WHAT DO THESE IDEAS HAVE IN COMMON? 14 TAX FORMSCONTRACTS (BD TIME AND LEGAL) ACCESS TO REPORTING TRACKING OUTCOMES/RESULTS CUSTOM REQUIREMENTS (IE LANDING PAGES)
- 15. @accelerationpar #ScaleUp 15 - sharing image – same as 10
- 16. @accelerationpar #ScaleUp DEEP INTEGRATION WITH BUSINESS WORKFLOW 16 FIRST RIDE Partner PAYOUT BACKGROUND CHECK + =
- 17. @accelerationpar #ScaleUp 17 FROM A HEADACHE TO MULTI-MILLION DOLLAR CHANNEL
- 18. @accelerationpar #ScaleUp 18 A GLOBAL VIRTUAL STORE
- 19. @accelerationpar #ScaleUp 19 • The found partners in their industry who had biggest influence with their target audience • Paid on outcomes, tracked with software • This one tactic accounted for 60% of their sales, started halo effect HOW DID BUTCHER BOX DO IT? 30M+ 25K 2015 2017
- 21. @accelerationpar #ScaleUp THE PERFORMANCE MARKETING PYRAMID 21 BizDev – 15% AFFILIATE MARKETING Super affiliates, App developers (larger scale) Mid-level professional affiliates (content, paid ads) Local & small affiliates (restaurants, SMB, home owners) Referrals – 5%
- 22. @accelerationpar #ScaleUp 1. PAYING ON A COST PER ACQUISITION (CPA) 22
- 23. @accelerationpar #ScaleUp 2. TRANSPARENCY OF PARTNER’S ACTIVITIES 23
- 25. @accelerationpar #ScaleUp 4. REAL TIME TRACKING AND PAYMENT 25 Influencers NATIVE affiliate partnerships referrals Business Development
- 26. @accelerationpar #ScaleUp THE POWER OF MARKETPLACES 26
- 27. @accelerationpar #ScaleUp MARKETPLACES OF MARKETING 27
- 28. @accelerationpar #ScaleUp MARKETING MARKETPLACES - 1.0 28
- 30. @accelerationpar #ScaleUp PERFORMANCE PARTNERSHIPS - THIRD “FAT PIPE” 3 0 PERFORMANCE PARTNERSHIPSTM High Velocity Advanced Campaign Management Single Source Bring data, scale and efficiency to the mid and long tail Business Dev Lite Partnerships Affiliate Marketing Partners
- 31. @accelerationpar #ScaleUp 31 EXAMINE THE INCENTIVES IN YOUR MARKETING & PARTNERSHIPS
- 32. @accelerationpar #ScaleUp 32 Visual: Bill Bellichek & Patriots Do your Job image for slide https://i2.wp.com/www.nowverybad.com/wp -content/uploads/do-your-job_promo.jpg
- 33. @accelerationpar #ScaleUpBoston | New York | San Francisco | Chicago | London 617.963.0839 marketing@accelerationpartners.com THANK YOU! 33 ROBERT GLAZER Founder & Managing Director Acceleration Partners rglazer@accelerationpartners.com @robert_glazer www.accelerationpartners.com
Editor's Notes
- I am really excited to be here today and talk to you about what I believe is the future of marketing and business development
- Three changes that will effect all of your business in some way, more prevalent in B2C, quickly B2B Sales Going to Digital: According to Forrester. By 2020 executives predict 47% of revenue will be influenced by digital. Brands are going Direct to Consumer: 90% of consumers would rather buy directly from a brand if they could 40% of manufacturers are already selling directly to consumer For example … Warby Parker, Casper, Dollar Shave Club, etc. Displacing very distribution heavy businesses Brands Shifting to Performance: 63% of CMOs in the U.S. don’t feel they can prove the short-term impact of their marketing spend
- Let me show you how this all comes together into a Scale up case study My friend Mike started a direct to consumer subscription natural meat business a few years ago called Butcherbox When I talked to him in 2015, they were doing a few thousand a month 3 months ago I checked in and they were doing over $2.5M a month How they did that is the core of what I am going to talk to you about today And ties directly to the three themes I just showed you
- We have some smart people in this room, so I’d like to take a pool and ask: Would rather pay for inputs or outcomes? In other words, do you want to pay your sales, marketing and business development partners for their effort or their results? Those who would rather pay for inputs – for the effort that is put in to something -- please raise your hand. - Thank you. Now, please raise your hand if you’d rather pay for outcomes?
- As you can see from the hands raised, the vast majority of you would rather pay for outcomes—for results. What I’m going to show you is, while that may be what you want, it’s most likely not what you have been doing… especially in marketing And you’re not alone. From what I’ve seen, MOST companies – whether it’s in their business or marketing partnerships – pay for inputs.
- I want talk a minute about incentives. Charlie Munger, Warren Buffet’s long time #2, is quoted as saying, “Show me the incentive and I will show you the behavior” What do all of these stories have in common? Behaviors follow incentives. This is also very true with your marketing. If many of your marketing agencies were more transparent about the outcomes they were producing and the incentives around how they were spending your money, you would probably have fired many of them already.
- So I’d like to get a little dialog and discussion going here and have you take a few minutes to talk at your tables about it. Where in your business are you paying for something and you have no idea what you’re getting in return? Let’s take about 3-5 minutes of discussion time Then we will come back together and I will ask you to share
- Who would like to share their “paying for inputs, not outcomes” examples. (2-5 min of discussion on the audience-provided example(s)
- When you’re paying for inputs – not outcomes – it can make it harder to scale the right things as Drucker noted You might be turning up volume at the expense of results, which is dangerous when incentives are not aligned
- You might also have some marketing partnerships that work great But its hard to scale when you are reliant on spreadsheets, invoices and manual processes. Its resource intensive You also might have partners who find out months later that a promotion did really well
- How many of you know of or understand the concept of affiliate marketing? Those of you leveraging the affiliate model in your marketing are actually paying for outcomes. But… if you aren’t applying this model to the majority of your business and marketing partnerships – be it business development, influencer marketing, technology partnerships, etc. – then you’re still only paying for inputs. Swap the word affiliate for partner Ecosystem, link based tracking The network handles the one to many on both sides, from the agreement, to tracking, payment etc. Your partners bear significant risk
- What the affiliate marketing model does is that it allows you to grow your marketing and business development partners in a much more efficient, scalable way The model is quickly expanding to other areas of the business and I want to show you a few examples of what this looks like Before we get into those examples, I’ll pose two more questions to discuss at your tables
- Where are some marketing or business partnerships in your business that are just not scaling? Or “If you had a way to scale hundreds of thousands of outcome based partnerships (as I just showed), what new area would you go into? Give some answers
- Here are some of the common issues Contracts (BD time and legal) Tracking outcomes/results Payment to partners Tax forms Access to reporting for invoicing Custom requirements (ie landing pages, codes etc)
- I am going to do this a little backwards Before I show you the model, I am going to show you some examples of it in action What these companies have in common is that they are following a Performance Partnerships model.
- For driver recruitment, Uber has affiliate tracking technology deeply embedded into their business workflow, called the Uber Partner Program Partners such a job boards etc. send potential drivers to Uber though tracked links As they move through the business workflow, the partners are compensated Small amount at background check Bigger amount as they complete their first ride months later and hit swipe Partners have real time access to how they are doing Goal is tens of thousands of global partners in this model
- 1000 of photographs wanting to do business, referrer their clients for cards High value orders, often $1,000 BD not interested, each one too small Wanted codes, custom landing pages etc. No scale We build a simple CMS landing page tool, sat it on top of the affiliate program reporting and payment and for the contracting Turned something that was an aggravation into a multimillion dollar channel
- UFC Fighter. Global following, wanted to sell products on her site but not carry inventory Partner program Got her a product feed Build a digital router to send to the affiliate program in that user’s country tied to the local store, she’s the “affiliate” Model for athlete virtual stores
- And finally our friends from ButcherBox, The found the key influencer in their space, which were paleo bloggers and nutrition sites They paid them outcomes and used a platform to manage. Paying for mktg after sales They had to convince a lot of people to try the outcome model and show them it would be better for them. Those in B2B, this is a digital distribution channel taking over a physical one, they don’t touch inventory
- Go into this in detail in my book One of the big changes in affiliate marketing SaaS platforms, License the technology and run it under your own brand Then in makes economic sense to recruit your own partners onto the platform
- The 85% is on a scaleble system and single platform
- How PP differs from traditional affiliate marketing or performance marketing in general CPA component = COD You pay when you get what you want. IN CASE ITS NOT CLEAR, YOU ARE PAYING FOR MARKETING AFTER YOU GET A SALE/LEAD There is a different between paying for results and being able to measure results
- 10 years ago brands were afraid to ask their partners what they were doing Don’t ask don’t tell in the model You are fully aware of everything they are doing, they aren’t trying to hide anything from you
- Affiliate marketing was always very transactional The future of performance partnerships is much more relationship oriented As part of the transparency element, you treat them as a partner. You're don’t compete with them and you play the long game
- Real time tracking and payment and contracting Can be private label and sit in house, don’t have to share your data More companies calling it a “Partner program”
- How to tap into the power of marketing places with Performance Partnerships Both companies leverage online marketplaces to grow quickly without owning the underlying assets Uber doesn’t own cars Airbnb doesn’t own property In the same vein, you won’t need to own all your sales and marketing
- Companies are taking back control Prioritize budget to the one who makes you a lower offer.
- You want a logo, you paid $500, got 50 options and picked the best Helped lower the cost of internal marketing and leverage crowd
- Smart companies are using PP to Open Source key parts of their marketing to experts Scale up their business though an extended marketing team You figure out Instagram and now you have to learn Snapchat and We Chat Thousands of partners around the world, just have to define the clear outcomes and rules of engagement You can now roll all these people into one system
- People spend a lot of money with FB and Google because they make it really efficient to do so, CMO calls it fat pipe Deploy large budgets at scale, irrespective of ROI PP gives you a third fat pipe to bring automation and some of these programmatic elements to marketing and digital partnerships For example, if you have a hot new product launch, you can get that out to thousands of partners at once to start promoting and up their commission rate in seconds.
- When you go back home, examine the incentives that you have in place I think you will find that behavior is indeed following incentives I apologize in advance to any marketing service firms in the room whose business I just ruined
- I come from Boston and, in my opinion, we have one of the best coaches of all time. He focuses on the job to be done. Get all your partners focused on outcomes in a scalable way Pay them for doing the job you need done. Most importantly, if they don’t’ do their job they won’t get paid. Coach Belicieck will be envious
- Want a copy of the book and did not get one, please reach out