Revenue share, or rev share, is a business partnership between a marketing agency and a client in which the agency is paid in a way that rewards growth. Revenue shares are often attached directly to sales growth.
In a revenue share, the marketing agency makes an investment in the client’s business, takes risks with that investment, and is rewarded with a share of business generated for the client.
This model allows businesses of all sizes and verticals to get high-level, effective marketing services with the focus of entrepreneurial zest even if they aren’t prepared to spend money on a marketing agency. The revenue share model also closely aligns a marketing agency with the client’s business via directly shared goals. Quantum Lifecycle Marketing has designed process and grown teams that can bring best practices together to intently focus on a client’s revenue growth.
At Quantum, we take pride in our long-term relationships with clients. We’ve worked hand in hand with some of our key clients in a rev share model that have meaningfully accelerated their businesses – 19x revenue growth with one client – in a sustainable way based on Quantum Lifecycle Marketing practices.
How do we do it?
Through honesty, transparency, and hard work. With that commitment to transparency, we’d like to share our learnings in making revenue share models work with our clients. What we bring to the table is the state-of-the-art lifecycle marketing techniques for Shopify, affiliate and ecomm businesses. We focus on enhancing the strengths of our rev share partners’ online business and extending them out through cohesive email and SMSsmessaging that delivers a seamless customer journey that increases the lifetime value (LTV) of everyone that visits our partners’ stores.
Learn more about revenue share marketing below and whether this option is right for your business model.
Benefits of Revenue Share
Let’s take another look at the most common benefits of revenue share before tackling the less common downsides.
No Upfront Costs
Marketing — and especially quality marketing that helps you meet your business goals — comes at a cost. And, to speak plainly, to do it right often costs a lot if you are building everything out. And that cost can seem prohibitive for many businesses. Whether you’re a startup trying to get the word out or an SMB attempting to mind your bottom line while scaling up for growth, you might struggle to find the marketing budget needed to get the job done.
But with revenue sharing models, there are no upfront costs.
This lets you take advantage of premium marketing services that you might not otherwise be able to budget for, potentially increasing your benefits from marketing and growing your revenue so that you can invest more in marketing and other business efforts in the future. It also frees up cash flow, letting you make the most of any wins you get from the marketing.
Agency Absorbs Risks
When you work with a revenue share marketing agency, the agency takes on the risks. They put in the time and effort for marketing your business, only reaping a reward if you do.
That’s a positive benefit on a number of fronts.
First, you don’t have to put your own cash and resources on the line, which helps you keep managing your business day-to-day.
Second, this cash light mode gives our partners access to the very best lifecycle marketing techniques that are the proven way for independent merchants to grow their online store and build lasting relationships that build their customer base.
Also, it enhances the obligation on the agency to do a good job. Because it doesn’t get paid if you don’t make more money due to its marketing efforts, it’s more invested in the entire process.
Aligns The Agency With Client via Directly Shared Goals
When you work with a reputable, strong marketing agency that offers rev share models, it aligns goals across both businesses. Everyone wants to succeed, and a good agency knows that the best way to succeed (and thus increase your revenue and its own cash flow) is to help you work toward business goals.
This enhances communication and partnership for a more seamless, enjoyable experience for all.
Tips for a Successful Revenue Share
Most clients love revenue share models because it allows them to grow their business with little to no out-of-pocket costs. This makes it great for startups and mid-market companies that struggle to compete with industry leaders with deep pockets.
We’ve seen all sides of revenue sharing, including potential obstacles and how to overcome those obstacles. Here are three tips to make sure a rev share works in your favor.
1. Be Clear About Timelines
If you’re not clear about ROI timelines, it can be difficult to know when, exactly, marketing efforts are going to kick in to impact sales.
To make the relationship work, ensure your agreement includes a timeline for ROI expectations. If your sales are seasonal, ask to compare your revenue from the same month the prior year (as opposed to the prior month). Or, use an average of your previous 3-6 months to account for any outliers.
2. Clearly Define Important Attribution Metrics
Marketing is a complex process, which can make it hard to tell where revenue comes from. If your revenue share agreement doesn’t include details about revenue attribution, make sure to ask.
Work together with your marketing agency to define and track attribution metrics. Ensure both entities have access to regular, detailed reporting to avoid surprises and bolster communication.
3. Ensure Your Goals and Values Align
Be wary of short-term rev share agreements and always opt for longer engagements. Short-term agreements might lead to unsavory marketing efforts that are focused solely on short-term growth and can leave your customer base like scorched earth. This can be harmful to sustainable businesses.
Push for longer agreements to ensure both your business and the marketing agency have your best interests in mind and the alignment needed to make the investment in state-of-the-art lifecycle marketing.
Is Revenue Share Right for You?
Revenue share marketing can be a lucrative approach for ecom stores and other online businesses, and there are professional agencies that offer high-quality services via these models (we’d like to think we’re one of them). Whether or not the method is right for you is a personal business decision.
Revenue share is often a great opportunity if:
- You don’t want to foot the bill for ineffective marketing campaigns.
- You want to engage with an agency that values long-term growth.
- You want to partner with an agency that is willing to put their money where their mouth is.
- You want the benefit of state-of-the-art lifecycle marketing programs fully focused on growing your revenue.
To find out more about revenue share marketing, specifically lifecycle marketing for ecommerce stores, contact Quantum Lifecycle Marketing today and request a free audit of your customer journey programs.