Would you do this offline deal?

MichaelHiles · 03-19-2009, 03:18 PM

I've got a company that sells a big ticket manufactured product.

They have a decent corporate site, not stellar by any stretch.

They have a regional offline distributor network.

The CEO/Founder is offering me exclusive rights to the internet, regardless of region, for lead generation. He's offering me 10% on any closed sale for any lead I generate through any means I utilize via any aspect of IM, list opt-in, etc...

He will be passing the leads to his regional resellers to close, so it's a value-add for him to offer lead generation to his network - understanding that the agreement is that I have exclusive rights to internet lead generation (which I don't think will fly with his resellers, but a contract is a contract is a contract... just expensive and a PIA for me to enforce)

We're talking about a very, very targeted, vertical niche product in the $15K to $75K range per unit. The conversion rate for any such a product would be pretty high because it's so narrow, anyone searching on it is a rifle scope shot targeted prospect.

He's providing me with an inducement to offer for opt-in, marketing collateral, etc...

I have to put up the lead capture pages, do SEO and promote - sending him the leads as they come in.

Considering that a bit of effort on the front end would pay off over and over, would you take this deal on spec considering the back end commissions being so lucrative on the deals?

Debbie Songster · 03-19-2009, 04:37 PM

Lets see if I've got this right

He wants you to put up the pages, advertise, optimize, collect the leads and hand them over to him for his sales force to close and then pay you 10% of the closed sales from those leads?

This sounds great except here is the potential fly in the ointment

You are relying on his sales staff to close the sale. Since he is handing the leads off to the regional sales people, there is potential for a lot of different people to be handling your leads - hard to monitor.
What happens if the sale isn't closed right away? Is there a time provision written in the agreement?
How are you going to police this?

If he wants to include his regional resellers in the mix then I would want to work with them directly - not pass the leads to him and have him pass them along to them.
I'd say the success of this type of arrangement is dependent on the relationship you create between you and the person(s) closing the sale.
Thats a hard one to manage.

Does he have any competitors for this product?

I would be tempted to sell him the leads with the possibility of offering them to the competitor as well. That way the risk of sale vs no sale (and no commission for you) is out of the equation.

Ahhh the joys and pitfalls of the internet - it opens up a huge market.
In industries that historically relied on a regional sales staff selling their product, selling on the internet presents new challenges.
I'm faced with this same type situation with one of my ventures. My site ranks #1, you can't even find the manufacturers website and the regional showrooms that handle this product are not happy with me because they are supposedly bound by region and I'm available world wide.

Good luck with this - come back and let us know what you decide to do.

InternetMarketingCenter · 03-19-2009, 04:40 PM

Very little risk to him, tons of effort for you -- that's a tough tradeoff, but if you are confident in the strategies you want to put to work and you see the market out there, then it's definitely your risk to take.

Michael Oksa · 03-19-2009, 04:45 PM

Hi Michael,

Just to hedge your bets, why not take 50% of your normal fee, then ask for 7.5% of online generated sales?

Oh yeah, and what Debbie said.

All the best,
Michael

JonathanBoettcher · 03-19-2009, 04:52 PM

yeah - I'd tend to agree with Michael - if you don't know the guy too well, why not take part up front and the rest in commissions? That way you're not screwed if something goes sour later on...

MichaelHiles · 03-19-2009, 05:01 PM

All good thoughts. I agree with everything - ESPECIALLY not being able to close the sale.

My dad was a hitter sales exec, and he was constantly preaching, "Don't ever let anyone else close your deal for you."

That's my biggest concern. I can generate a ton of leads but never get a verifiable close for lots of reasons.

Of course, I have them over a barrel as well, because I can simply stop producing new sales funnels, maintain what is out there, and essentially strangle their entinre internet marketing avenues because I have a locked exclusive in writing.

Sword cuts both directions huh?

I'm going to have to put more thought into this.

It IS a big ticket item that will continue to grow in very high demand in a buyer niche that will generally always have the money to pay for it.

Robert_Rand · 03-19-2009, 07:31 PM

It sounds like you probably know the answer to this question better than anyone else - just follow your gut.

And are you sure 10% is the most he'll give you? There have to be creative ways to pull in more money from the arrangement if you think hard enough - especially w/ high dollar transactions.

P.S. That was a great thread title lol

03-19-2009, 04:37 PM	#2
Debbie Songster Songster Shops War Room Member Join Date: Mar 2007 Location: , Arizona , USA. Posts: 969 Blog Entries: 19 Thanks: 93 Thanked 178 Times in 86 Posts Social Networking Contact Info	Re: Would you do this offline deal? Lets see if I've got this right He wants you to put up the pages, advertise, optimize, collect the leads and hand them over to him for his sales force to close and then pay you 10% of the closed sales from those leads? This sounds great except here is the potential fly in the ointment You are relying on his sales staff to close the sale. Since he is handing the leads off to the regional sales people, there is potential for a lot of different people to be handling your leads - hard to monitor. What happens if the sale isn't closed right away? Is there a time provision written in the agreement? How are you going to police this? If he wants to include his regional resellers in the mix then I would want to work with them directly - not pass the leads to him and have him pass them along to them. I'd say the success of this type of arrangement is dependent on the relationship you create between you and the person(s) closing the sale. Thats a hard one to manage. Does he have any competitors for this product? I would be tempted to sell him the leads with the possibility of offering them to the competitor as well. That way the risk of sale vs no sale (and no commission for you) is out of the equation. Ahhh the joys and pitfalls of the internet - it opens up a huge market. In industries that historically relied on a regional sales staff selling their product, selling on the internet presents new challenges. I'm faced with this same type situation with one of my ventures. My site ranks #1, you can't even find the manufacturers website and the regional showrooms that handle this product are not happy with me because they are supposedly bound by region and I'm available world wide. Good luck with this - come back and let us know what you decide to do.
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03-19-2009, 04:40 PM	#3
InternetMarketingCenter Committed to Your Success Join Date: Mar 2009 Posts: 116 Thanks: 11 Thanked 27 Times in 21 Posts Social Networking	Re: Would you do this offline deal? Very little risk to him, tons of effort for you -- that's a tough tradeoff, but if you are confident in the strategies you want to put to work and you see the market out there, then it's definitely your risk to take.
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03-19-2009, 04:45 PM	#4
Michael Oksa The Ethical Marketer War Room Member Join Date: May 2006 Location: Wisconsin, USA Posts: 6,058 Thanks: 1,750 Thanked 3,025 Times in 1,340 Posts Social Networking Contact Info	Re: Would you do this offline deal? Hi Michael, Just to hedge your bets, why not take 50% of your normal fee, then ask for 7.5% of online generated sales? Oh yeah, and what Debbie said. All the best, Michael
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03-19-2009, 04:52 PM	#5
JonathanBoettcher Compulsive Clicker War Room Member Join Date: Oct 2008 Location: Abbotsford, BC Posts: 548 Thanks: 16 Thanked 53 Times in 31 Posts Social Networking	Re: Would you do this offline deal? yeah - I'd tend to agree with Michael - if you don't know the guy too well, why not take part up front and the rest in commissions? That way you're not screwed if something goes sour later on...
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03-19-2009, 05:01 PM	#6
MichaelHiles Battle Scarred Warrior War Room Member Join Date: Feb 2009 Posts: 2,563 Thanks: 665 Thanked 1,780 Times in 744 Posts Social Networking	Re: Would you do this offline deal? All good thoughts. I agree with everything - ESPECIALLY not being able to close the sale. My dad was a hitter sales exec, and he was constantly preaching, "Don't ever let anyone else close your deal for you." That's my biggest concern. I can generate a ton of leads but never get a verifiable close for lots of reasons. Of course, I have them over a barrel as well, because I can simply stop producing new sales funnels, maintain what is out there, and essentially strangle their entinre internet marketing avenues because I have a locked exclusive in writing. Sword cuts both directions huh? I'm going to have to put more thought into this. It IS a big ticket item that will continue to grow in very high demand in a buyer niche that will generally always have the money to pay for it.

03-19-2009, 03:18 PM	#1
MichaelHiles Battle Scarred Warrior War Room Member Join Date: Feb 2009 Posts: 2,563 Thanks: 665 Thanked 1,780 Times in 744 Posts Social Networking	Would you do this offline deal? I've got a company that sells a big ticket manufactured product. They have a decent corporate site, not stellar by any stretch. They have a regional offline distributor network. The CEO/Founder is offering me exclusive rights to the internet, regardless of region, for lead generation. He's offering me 10% on any closed sale for any lead I generate through any means I utilize via any aspect of IM, list opt-in, etc... He will be passing the leads to his regional resellers to close, so it's a value-add for him to offer lead generation to his network - understanding that the agreement is that I have exclusive rights to internet lead generation (which I don't think will fly with his resellers, but a contract is a contract is a contract... just expensive and a PIA for me to enforce) We're talking about a very, very targeted, vertical niche product in the $15K to $75K range per unit. The conversion rate for any such a product would be pretty high because it's so narrow, anyone searching on it is a rifle scope shot targeted prospect. He's providing me with an inducement to offer for opt-in, marketing collateral, etc... I have to put up the lead capture pages, do SEO and promote - sending him the leads as they come in. Considering that a bit of effort on the front end would pay off over and over, would you take this deal on spec considering the back end commissions being so lucrative on the deals?

03-19-2009, 07:31 PM	#7
Robert_Rand HyperActive Warrior War Room Member Join Date: Feb 2009 Posts: 160 Thanks: 27 Thanked 21 Times in 17 Posts	Re: Would you do this offline deal? It sounds like you probably know the answer to this question better than anyone else - just follow your gut. And are you sure 10% is the most he'll give you? There have to be creative ways to pull in more money from the arrangement if you think hard enough - especially w/ high dollar transactions. P.S. That was a great thread title lol