Revenue Sharing Referral Agreement
For each consulting firm, this always assumes that the consultant can find a way to spend marketing dollars that can actually attract a single customer at a price of only one year. However, in practice, most companies are so limited in means of payment that they do not even plan to spend as much on marketing and/or realize the incredible long-term profitability of this strategy. The fundamental point is this: while a variable marketing approach such as revenue sharing for transfers can be a necessary evil for a new cash flow-free business, it could ultimately be the most expensive form of marketing for consultants. Even at a price that is paid a whole year in customer revenue, it can really be surprisingly good king to invest more in marketing in advance. For most consultants, the hardest part of growing their business is simply attracting new customers. Because investments in marketing are small, most development strategies involve approaches that have little or no ex ante costs, such as requesting informal recommendations. B or enter into a partnership in formal RIA lawyer referral agreements that share a percentage of the client`s turnover. Yet, considering the marketing practices of leading independent consultants – and even a few more successful robo consultants – it seems that companies that focus most on the scale of their consulting activities are starting to avoid revenue-sharing agreements and, instead, to shift their spending to the scale of largely profitable marketing investments! But at the end of the day, it`s just this principle: while a policy approach such as revenue sharing for transfers can be a „necessary evil” for a new consulting firm, which lacks cash flow to reinvest, it could ultimately be the most expensive form of marketing for consultants with high retention rates. Even at a price that costs a full year of customer revenue (or more) for consulting firms with strong customer loyalty, it really pays a surprisingly good „Return On Investment” to invest more in prior marketing costs! So be sure that if you use income generator agreements with stakeholders to start your business, it`s really because you can`t find any other way to invest your marketing dollars instead! In other words, spending a whole year of customer revenue, just to get the next customer, is actually, in the long run, radically more profitable than a revenue-sharing agreement! In fact, for consulting firms at 95% customer retention rate, it would be more profitable, in the long run, to spend a year of customer revenue just to get the next new customer – a strategy that can produce an incredible 400% return on investment for the marketing dollar… With the caveat that few consultants can afford a marketing approach that could take years to recover the initial investment.