Writing Business Plans/New startup product advice -3
Hi, I am Mourad the CEO of a new startup called LocName which is a web and mobile App that converts your point on the map and address details to a short, unique and permanent name that you can remember share easily. www.LocName.com
We have developed a new tool for Websites to use our application to capture their users addresses accurately instead of filling long address forms (pls download presentation for more information http://goo.gl/1OyQvt
For the launch we are planning to do a partnership program with incentives for early birds, with this program they can become an indirect investors in a promising start-up and LocName success will be their success, we have 2 models in mind:
Model 1 - Revenue share
We will offer each website using our tool a revenue share percentage for 2-3 years based on the hits come from their users
i.e. if you have 1000 users and the hits coming on them are 20% from our total hits then they represent 20% from our revenues, the incentive is that we we will pay you 10% from the 20% revenues for 2-3 years.
Model 2 - Free Ad space
We will offer each website using our tool a free Ad space on his users only for 2-3 years, and he will have the total freedom to used it to display his Ads or sell it.
We need your opinion regarding the two suggested models, is it a good idea? which model is better? what are your recommended tweaks for the best model? Any different new model you suggest?
PREFER MODEL 1
BENEFITS OF Revenue Sharing
An incentive is any factor (financial or non-financial) that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way.Since human beings are purposeful creatures, the study of incentive structures is central to the study of all economic activity (both in terms of individual decision-making and in terms of COOPERATION and COMPETITION within a larger institutional structure).
Eventually, incentives' aim is providing value for money and contributing to organizational success.
Incentives can be classified according to the different ways in which they motivate agents to take a particular course of action.
Remunerative incentives (or financial incentives) are said to exist where an agent can expect some form of material reward — especially money — in exchange for acting in a particular way
BENEFITS OF Revenue Sharing
as a Marketing Strategy
Revenue sharing can increase business.
As a small business owner, the marketing strategies you employ in your daily operations can make or break how successful your company is. While there is no right or wrong strategy, certain ones may work better for your company than others. Revenue sharing as a marketing strategy, for example, may suit your small business's needs.
What It Is
Revenue sharing as a marketing strategy refers to an organization paying partners and associates a certain percentage for recommending customers to the company and helping to build business. By sharing revenue in this way, a company can build strategic partnerships with professionals related to, but not directly within, a company. These types of professionals can include lawyers, real estate agents and accountants.
Using revenue sharing as a marketing strategy "can prove more cost-effective and provide more leads than many of your traditional marketing efforts," according to business management magazine "Transitions." This type of marketing strategy is important because it creates a bigger incentive for partners and associates to funnel business into your company since they share a portion of the revenue that is generated by building business.
Ethics and Standards
When choosing partners with whom to revenue share, it's important to pick people who have the same ethics and standards that you have for clients. While growing revenue can be one factor in a company's success, your customers' "best interests may be in jeopardy" if you accept client referrals from partners who don't understand your company's ethics and standards, according to "Transitions." Meet with each partner and associate with whom you want to revenue share and make sure that you are both on the same page about such things as customer
and financial reporting duties.
There are other concerns to keep in mind when forming revenue sharing partnerships as a marketing tool. Some of these include determining how partnerships are arranged and structured and whether there are any compliance and regulatory issues involved with potential partnerships. Also, decide how exclusive you want to be when potential business partners propose revenue sharing with your company. A lack of exclusivity can be "critical to the success of revenue-sharing programs.