How to partner with an Ecom business as a marketer?

[GoodluckChuck]

I've been consulting someone who has a budding Ecom business. He has many avenues to take and I believe they all have potential.

As a marketer, I can see 100 things I would do this month, but the owner is set on bootstrapping and can only afford a little at a time. I can see it dragging on for a long time on which another business will likely show up.

I asked them if a partnership would ever be considered in order to increase the speed and they said yes. Problem is, I've never structured a deal like that. I'm not over eager to rush into anything but I think it's worth exploring.

I hit Google but haven't been able to find anything. TFF search either.

Off the top of my head I'm thinking that I could join up for a % of additional sales I create through the website. This requires solid tracking which I'm setting up now, but it also requires transparency and trust as we are a few states away.

Before I talk more about it, I want to have a fair idea of how to structure it where everyone is happy and feels good about it. I'm sure these deals happen all the time and some of you guys might be able to share some advice or point me in the right direction.

 

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[SteveO]

Figure out the current value and the value you would expect the company to be worth after your contributions. Estimate the profits. Then estimate how much work it will take you. Come up with a percentage that you would need to make it worth your while.

 

[CareCPA]

Off the top of my head I'm thinking that I could join up for a % of additional sales I create through the website.

This would be my sticking point.
"If" I'm an ecommerce brand owner, I would want this better defined. Am I paying you a percentage of sales, and still covering the ad costs out of my pocket? If so, I could be net negative by the time this is over. As a business owner, I care more about profit than revenue.

If you are taking on the risk of ad spend, and I'm paying you a percentage of sales, then I'm much more willing to take this on. I know my margins, and I know what I can pay you per sale and still be profitable.

 

[BizyDad]

Off the top of my head I'm thinking that I could join up for a % of additional sales I create through the website. This requires solid tracking which I'm setting up now, but it also requires transparency and trust as we are a few states away.

I have one deal I structured with a client like this. It's my only e-commerce business that I market for. Sounds like there's a couple key differences.

First, he was my client for a year before we structured the deal. He still pays me my same flat monthly fee for my time.

Second, he's local. So I'm in his office twice a month, and we have a lot of rapport and trust. I would not do this kind of deal with someone I didn't completely trust. But that's a personal choice.

As for the deal itself, I agree to take a slightly lower percentage of increased total revenue, so that we never had a situation where he disputed where revenue came from.

At time his main source of revenue was either ads or repeat customers. With a majority being ads.

We had goals of adding other marketing channels, and even if I wasn't the one handling those marketing channels, I'd be the one advising on them.

A deal based on total revenue just made sense for me. And I ultimately got him to agree, by dropping the percentage slightly.

Also we did do it based off revenue, not profit, because business owners can mess with their profit all kinds of ways.

We established a baseline of sales over the course of the previous year. We call it a bonus, and bonuses are paid quarterly,compared to growth over that year.

I've had this deal in place for four years now. It works.

Ask me if I do it all over again and I'll tell you no.

I tried to strike up similar deals three other times. The relationship soured when there was a dispute about the bonus. I'd have made more money if I adjust kept them as flat rate clients.

But even in this situation that is going as good as I can expect, there is the issue of the business owner's financial thermostat.

Everyone has a financial thermostat, and it's set for a certain amount of income that gets them to feeling comfortable.

At the point at which they're comfortable, they stopped trying to grow as hard.

So when I doubled this guy sales, he stopped trying to grow as hard, and I never actually saw the kind of revenue I was dreaming of at first.

I make good money, I'm not complaining.

But what I learned from these experiences is that it takes a lot to grow an e-commerce store. Moving forward, if I am going to put in all that effort for anyone, I'm going to do it for myself, and I'm going to keep all the money.

Please don't let my experiences dissuade you from doing this. I'm just trying to help you be more informed on it. You should go for it if you can.

 

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