It was one of the greatest deals I’d ever seen.
The kind of deal that changes businesses… that changes lives.
I was excited to present it to my client.
They’d asked me to find them distribution deals for their product.
They wanted two things – eyeballs on their content and revenue.
And within weeks of asking me to help I was sitting on a whale of a deal.
I sent an email to the client.
No response.
I followed up.
I laid out the gist of it.
“They offered to give your product to over 600,000 paying customers.
“It would go in their members area. And they’ll work with us to promote your backend products to their list.
“You don’t get paid on the front-end product.
“But their customers would perceive your product is part of their paid subscription. And we could hit them with your other products.”
No response.
I try to set up a call.
Nothing.
I follow up again.
“To be clear, there are only two reasons for having a front-end product:
1. To acquire customers.
2. To subsidize the cost of the advertising to get those customers.
“Ideally when you advertise you breakeven on your ad spend and identify paying customers for free. Then you make your profit on your backend product sales.
“In financial information you can expect to pay about $130 in advertising to acquire a customer. That’s if your operation is really good at both promotion and media buying – right now you’re struggling with both.
“In this deal, your acquisition product would become part of the paid content these 600,000 paying customers receive.
“In other words, it would cost you roughly $78 million in advertising spend to get your product in front of 600,000 buyers of investment information in the same way.
“From the customer’s perspective you become part of the product they bought. “You don’t get paid on that product sale BUT you’re not making money on it as it is because your costs to acquire customers are currently (far) higher than the product price. “In this deal you don’t spend a dime for the customer.
“But you get similar access to sell to them on the backend.
“It’s all the profit opportunity with none of the ad spend and risk. “And none of the years of building it would take to get a scaled-up customer base.”
I waited.
They only had a few thousand customers.
No profits at this point.
And were in fear of running out of operating capital in a matter of months.
I was trying to save their business.
Finally, a response
“We should probably have a call.”
Ya, think?
They turned down the deal.
They didn’t like it.
I went over the potential backend sales figures.
I went over their current inability to acquire customers.
I went over their current inability to buy advertising at any scale.
They felt it was unfair.
They focused on the idea the other company was sharing their content with their customers (they would keep their brand on the content so this was not a white label deal).
It felt unfair to them.
They wanted the counterparty to pay them for their content AND give them backend promotional opportunities.
Why?
“Because they want our content. It’s so much better than theirs.”
(They ignored the fact that customers were buying the so-called “low-quality” content to the tune of hundreds of millions of dollars a year.)
Then came the big one,
“I don’t think their customers are our customers anyway.”
I could feel the anger growing in my chest,
“Their customers bought memberships to get investment information. You have a membership to get investment information.
“Your own director of research just told me the other day he personally spent $4k with them on their services in the last year. “Their customers are your customers,” I explained.
“No,” he said, “Ours is a more sophisticated customer.
“You know what you should do? Find us a golf magazine to be our affiliate.”
I knew then our relationship was over.
A golf magazine?
OMFG.
I could’ve pointed out that only a tiny portion of a golf magazine’s readers would be interested in financial information.
Or that you’d only convert a fraction of that small portion.
Or that magazine subscriptions were on the decline and you list universe would be small and shrinking.
Or that your ability to scale via partnership with golf magazines is… I’m not even going to bother finishing that sentence.
We lived in different worlds.
I should have known.
Up until this point every meeting had been a struggle.
Their tech guy had a larger input on marketing decisions than I did.
Even though he never sold anything online.
Never sold anything related to financial information.
And I’d sold more financial info-products in a month than they’d sold in several years of operating combined.
Direct response marketing – and to be clear any online, data-driven, conversion-based marketing is direct response marketing – takes a certain type of person.
It takes an education.
Not the college kind.
If you’re doing it on your own, from scratch, then it takes the kind of education that hurts.
Spending money for nothing in return.
Spending years chasing marketing ideas that never pay out.
Like spending nearly $1 million on Google Adwords campaigns that drive to your homepage.
No email capture. No sales page.
Just $1 million, an ad rep’s delusional promises, and a gut-wrenching realization you lost your shirt.
That’s an education I’ve seen several people get.
But for some people even that is not enough of an education.
Not enough pain to make them realize maybe they don’t know what they’re doing and should listen and learn from people who do.
In their hearts they hated direct response.
They loved the idea of the profits, the revenue, and the customers they heard it could generate.
But they hated the core of what it was – selling.
Those guys were great people.
But didn’t really want to be in an online marketing business.
They were content-snobs.
They loved content and hated selling it.
The believed the content-is-king mantra meant if you create content YOU like then customers will flock to you.
It’s a pretty fantasy.
But not a marketing plan.
Great direct response marketing only comes from people who love the selling part of the business as much as they love the product part of the business.
I half-heartedly brought them a couple more distribution deals.
One would’ve put them in front of over 6 million financial prospects a month – again for free. And for probably 5-hrs of admin staff work a month.
They rejected that too.
Instead of relying on their sales to fund their operations they did another round of capital raise.
Then I politely moved on.
I’d brought a series of “dream deals” to them. Each a game changer.
Each time they wanted “more”.
More and more and more until the other side of the deal felt insulted.
They killed deals worth tens of millions per year to them.
Money they desperately needed.
Yet, they’d get excited about someone with 30,000 non-buyers sending one email about their offer – that produced hundreds of dollars’ worth of revenue.
Different worlds.
Over the years of running the Financial Marketing Summit I’ve put a lot of deals together for companies in the space.
This is the most frustrating part of it.
Everyone WANTS distribution deals… affiliate relationships… other people to promote their products.
But a deal has to work for both sides.
It’s like affiliates.
I can’t tell you how many times I’ve come across people who want other people to be their affiliates.
They want other companies to sell their product to their list for a cut of sales…
… but refuse to reciprocate for that company on the same deal.
They have a me-sided mind.
None of those companies are very big.
Rarely do they survive the sales volatility that comes with a major market correction.
It’s a scarcity mindset.
The largest publishers I work with are also the most generous with their joint venture and affiliate partners.
I don’t think that’s coincidence.
A single strategic deal can send you more customers and revenue than several years of grinding sales out on your list.
But you have to leave money on the table for the other guy.
It has to work for both parties.
When you approach someone with an opportunity you should start with what YOU can do for them.
Not what you want them to do for you.
And NO, “you’ll make huge commissions because my stuff is so awesome” is NOT what I mean by “what you can do for them”.
Everyone you do business with has their own business.
They want that business to grow too.
The deeper you think about how doing business with you will help THEIR business, the higher close rate you’re going to have.
If you have deals on the table and need to find the other side – feel free to reach out.
I’ll help if I can.
But, please, come bearing in mind the other person needs to win too.
Best,
John
P.S. I’ll be putting some deals like these on the table for attendees of the Financial Marketing Summit in Orlando, Fl March 17-18th, 2020.
Register for the early bird rate today while you still can. There’s no better place to make deals in trader education, financial publishing, and media.
