Tim Tavender is a member of James’s community, and besides being a great contributor to the membership, Tim has seen great success with a business model near to James’s heart – the revenue share deal.
In this guesting, Tim speaks with James about his adopting the revenue share model, and the advantages it offers.
Our experts discuss how revenue share deals differ from a retainer deal.
They’ll talk about the challenge of choosing a business partner.
And you’ll hear why an exit clause is an essential part of any revenue share contract.
Table of contents:
1. Unpacking the concept of rev share
2. The challenge of finding good partners
3. A medical procedure that validated the model
4. The revenue share deal in reverse
5. Revenue share versus affiliate marketing
6. The partner relationship
7. Making provision for an exit
8. A mindset for rev share
9. Filters for revenue share deals
10. When you care about your partner’s success
11. The importance of email
12. Will they let you do what’s needed?
13. The matter of implementation
14. Do you know what screw to turn?
15. When you can actually live…
16. If Tim’s piqued your interest…
Unpacking the concept of rev share
From his experience, how would Tim define the revenue share model?
Tim describes rev share as turning client relationships into partnerships, where both parties share in the success, which for him is the essence of a win-win situation.
James adds further insight – he offers to work with clients to grow their business beyond its current state in exchange for a percentage of the increase in revenue. Unlike the retainer model, where the customer pays money and hopes for a return, this arrangement shifts risk from client to supplier, as it is up to the supplier to produce results.
Despite this risk, both James and Tim have had great success with their revenue share deals. James even offers listeners access to his original revenue share training to encourage more people to explore this business model.
The challenge of finding good partners
One of Tim’s early challenges with revenue sharing was selecting the right partners. He admits to choosing partners then who lacked the resources to invest, which should have been a red flag.
James made similar mistakes when he first ventured into performance-based deals.
There’s a learning curve, he says, in revenue sharing, and while he wasted opportunity and energy on previous deals, his current partnerships are like “jewels in the crown.”
James emphasizes that a potential partner has to have a business already in motion. And the most desirable clients are often those who don’t need you, because they are confident in their product and growth potential.
Tim agrees. Referring to James’s line that you “can’t steer a parked car,” some of his past deals, he says, were cars in reverse. These experiences, however, taught him how to identify the right partners, a skill he further honed with James’s training.
A medical procedure that validated the model
Tim shares a story from the previous year, when he underwent significant surgery. Despite the serious nature of the procedure, he decided to launch a product with a partner, an American doctor, on the very day of his surgery. He wanted in this way to prove how, with the rev share model, one could be both time and location-free.
After a 14-hour surgery, Tim woke to find that the product launch had been highly successful. The revenue generated from his share was more than the combined fees of all the surgeons who had worked on him that day.
This was a compelling confirmation for Tim that his future lay with revenue share.
The revenue share deal in reverse
Tim and James touch on the concept of the “reverse revenue share deal,” where instead of providing expertise in exchange for a share in revenue, you control the asset (such as a business or product) and bring in an expert to help grow it, rewarding them with a share in the earnings.
In James’ experience, an ideal split is a third each to the expert, the business, and himself. And this model provides an attractive business opportunity for those wanting to avoid being tied to content creation or service delivery.
The reverse revenue share deal, says James, could be considered a type of quasi-business. And the advantage of this model, Tim points out, lies in its greater control compared to typical affiliate arrangements.
This is particularly effective when seeking to diversify into a new niche, as Tim is currently doing with a partner in the menopause health and fitness niche. While he is not an expert in the field, his strength lies in organizing and implementing the overall strategy.
For such ventures to work, Tim stresses the need for momentum in the prospective business or niche. Again with the analogy of the parked car, Tim emphasizes seeking opportunities that already have some level of success or forward motion.
The initial proposal does not involve asking for any investment from the potential partner, making it a low-risk proposition and essentially another marketing test. If successful, this can then develop into a formal revenue share agreement.
Revenue share versus affiliate marketing
James goes into the difference between affiliate marketing and revenue share deals.
Affiliate marketing involves being a salesperson and earning a commission from promoting someone’s product, effectively linking a buyer with a seller. In contrast, a revenue share deal allows you to get a cut of all the revenue, including that of affiliates, acting as an overrider.
This arrangement can incentivize you to support and promote affiliates, broadening the reach and success of the product, even though the percentage earnings may be lower than traditional affiliate marketing.
Testing a product as an affiliate before entering a revenue share deal is a crucial step for James. This test allows him to assess whether his customers are interested in and willing to buy the product.
Key is that the product should match James’s customers’ needs and preferences. If his clients don’t buy the product, he doesn’t see the value in giving his strategic help or developing new markets.
Performance deals, says James, offer a larger upside than affiliate marketing, although with a potential downside if results can’t be achieved or execution is unsuccessful. The ideal partners for such deals are usually also open to a retainer, as they are confident in their product and have funds to invest.
With a performance deal, there is a greater opportunity to go deeper, and work across multiple businesses without getting entangled in their day-to-day operations. James likens his role in these deals to that of an affiliate, but with strategic advisory responsibilities.
The partner relationship
James values the depth of his relationships with his partners, some of which span nearly a decade. He emphasizes that these relationships function like real partnerships where strategic decisions are made collectively.
To ensure sustainability, James prefers a model where his partners “win” more, letting them have the “bigger end of the stick”.
In a conversation James had with Jay Abraham, Abraham said that opting for revenue share instead of fees would have significantly increased his wealth. This conversation had a profound impact on James, leading him to embrace revenue share deals.
These partnerships, which have been built over the past eight or nine years, now contribute to half of James’s income, a profound leverage.
Making provision for an exit
It’s necessary, says James, to deliver sustained value in order to maintain successful recurring subscriptions, whether in revenue share deals, memberships, or services on retainer.
In the case, however, that a partnership doesn’t deliver that long-term value, it’s essential to have a provision in the agreement that allows partners to exit.
James speaks from experience – he includes an exit clause in all his agreements that enables partners to buy out if they want to. A solid, written agreement is important for these conditions.
James’ experience with rev sharing has mostly been positive, with some partners opting to pay to exit, effectively enabling him to sell parts of his portfolio.
A mindset for rev share
One of the key realizations, says James, when switching from a retainer to a performance-based business model, is understanding that time doesn’t equal money. It enables you to leverage your skills in a way that doesn’t require a direct input of time.
He highlights, though, that although it is a promising model, it is also volatile and has to be done correctly. Has Tim a history of risk-taking and commissioned sales, that attracts him to the performance-based model?
Tim shares that he has largely been self-employed for most of his career, with mostly his agency shaping his professional path.
With the revenue-share model, Tim says, anyone with specific knowledge that can be monetized through retainer or consultancy models can adopt a performance-based approach. He proposes including a success fee in the service proposals, which can shift the dynamics of the client-provider relationship.
James acknowledges the potential for hybrid models, combining a retainer and performance-based deal, but notes some clients might resent the retainer part. He prefers purely performance-based deals, confident in his ability to deliver results.
James recalls his career in car sales, where he operated largely on a commission basis. The high-pressure, performance-based environment prepared him for his present business model.
Filters for revenue share deals
James stresses that one of the important filters for a performance-based deal is the potential for growth in a client’s business. Engaging with a client on the brink of a significant growth phase can yield substantial returns. He emphasizes, though, the need for reputation checks on potential partners to avoid future issues.
Tim appreciates James’s course on membership models, which helped him to understand crucial aspects such as exit strategies and identifying an ideal business partner.
Revenue share deals, Jam suggests, can be part of a mix of business models and don’t have to represent the entirety of one’s business. This allows for a customized risk profile.
When you care about your partner’s success
There’s an advantage, says James, in selectively working with partners whose success you genuinely care about.
As an example, Tim shares his experience working with a client on a project, where he identified an issue with their cart abandonment rate. Seeing a potential for growth, he offered to tackle the issue on a revenue share basis, thereby transforming a problem into an opportunity for mutual profit.
The importance of email
This reminds James of the success of his cart abandonment email series, which boosts sales by 30%. He suggests that Tim could likewise benefit from this strategy as part of a revenue share deal.
James also highlights Tim’s expertise in email marketing and how it can be beneficial for businesses not using their email lists effectively.
Tim explains his decision to reposition his business around email marketing was influenced by his client avatar. He realized many potential clients have large email lists that they aren’t fully utilizing.
Both James and Tim agree on the potential of this untapped resource. Numerous businesses have customer lists they aren’t actively engaging with.
Will they let you do what’s needed?
Tim shares a recent addition to his client selection process: gauging a potential partner’s openness to frequent email communication with their list.
Tim had an experience with a client who was hesitant to send more than one email a day during a product launch, despite data showing increased revenue from multiple daily emails. After talking, they compromised on sending emails only to those who had opened emails that week.
Tim’s filter aims to identify partners who will allow him to implement necessary strategies for success. He and James agree – a partner’s willingness to make data-driven decisions and trust in their expertise significantly impacts the outcome of the partnership.
The matter of implementation
A potential partner, says James, must have the ability to implement the strategies suggested in revenue share deals. His filters include assessing if a partner has a small team or resources to hire contractors for execution.
James usually provides strategic advice and access to his audience, platform, and connections, rather than labor. While he may give assistance with site edits or small tasks, the lack of implementation on the client’s side can limit growth.
Tim echoes this and shares how he helps partners capitalize on existing assets. He identifies opportunities, for instance, like turning a client’s written book into a video course, thus providing a new revenue stream and leveraging existing materials.
Do you know what screw to turn?
Tim shares an experience from a previous role where he saw a client receiving sales notifications from PayPal during a meeting. That made him realize: he wanted to directly participate in and benefit from the sales process, rather than just being on retainer.
This desire led Tim to the revenue share model, which allows him to apply his value and expertise in email marketing to significantly impact a business’s growth.
James, too, often reviews and rewrites partners’ emails and presentations to make them more effective – it’s an enjoyable aspect of his work.
This ability to identify and adjust the crucial “screw” or factor in a client’s marketing efforts can lead to increased sales. And these beneficial tweaks can earn significant returns, far exceeding a flat-rate retainer, when done in revenue share partnerships.
When you can actually live…
Tim speaks to how his business model has also transformed his lifestyle. No longer reliant on retainers, he’s able to choose who he works with and how he structures his day, allowing for greater work-life balance.
For instance, he’s able to spend quality time with his son, taking him to school and swimming lessons, all the while receiving passive income through his revenue-sharing partnerships.
James can relate. One of his recent activities as a father with free time was learning to braid his daughter’s hair.
If Tim’s piqued your interest…
Tim recommends anyone interested in revenue sharing deals start by downloading and studying the course offered by James. It will answer a lot of questions and clarify the concept.
Exploring this model, says Tim, can fundamentally change one’s view on business. The approach allows one to participate in trending businesses or industries, like Bitcoin or AI, without having to be an expert in the field.
James appreciates Tim’s insights and his contribution to his membership. If you’d like to collaborate with Tim, look him up at TimTavender.com.
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