For too long, there’s been a colossal misalignment of incentives in business and in marketing. Performance Partnerships can scale up your business in a way that ensures you’re only paying for outcomes, not inputs.
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
How Performance Partnerships Can Scale Your Business
HOW PERFORMANCE PARTNERSHIPS
CAN SCALE YOUR BUSINESS
Founder & Managing Director
SCALE UP SUMMIT | October 18th, 2017
3 MAJOR STRUCTURAL CHANGES IN BUSINESS TODAY
SALES GOING DIGITAL DIRECT TO CONSUMER SHIFT TO PERFORMANCE
• Profitable, No Outside Funding
• Digital, Direct to Consumer
• Paying for Performance
FROM $25K TO $30M IN TWO YEARS
“Doing the right thing
is more important than
doing the thing right.”
BEHAVIOR ALWAYS FOLLOW INCENTIVES
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-
had colluded with
each other to
daily Libor rate
In 2006, $600
billion of subprime
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
Where in your business
are you paying for
something and you
have no idea what
you’re getting in return?
shows the opposite as above as a panacea or
in a cloud – perhaps someone happy, relived,
Where are some marketing or
business partnerships in your
business that are just not scaling?
If you had a way to scale hundreds
or thousands of outcome-based
partnerships, what new area(s)
would you go after?
WHAT DO THESE IDEAS HAVE IN COMMON?
(BD TIME AND LEGAL)
ACCESS TO REPORTING
(IE LANDING PAGES)
- sharing image – same as 10
DEEP INTEGRATION WITH BUSINESS WORKFLOW
FROM A HEADACHE TO MULTI-MILLION DOLLAR CHANNEL
A GLOBAL VIRTUAL STORE
• 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?
PERFORMANCE PARTNERSHIPS - THIRD “FAT PIPE”
Bring data, scale and efficiency to the mid and long tail
Business Dev Lite Partnerships Affiliate Marketing Partners
EXAMINE THE INCENTIVES IN YOUR MARKETING & PARTNERSHIPS
Visual: Bill Bellichek & Patriots Do your Job
image for slide
@accelerationpar #ScaleUpBoston | New York | San Francisco | Chicago | London
Founder & Managing Director