When an independent insurance agent, a tax accountant, a lawyer and a financial advisor got together to promote business to each other’s customers, they instantly and exponentially increased the population of customers within their reach.

Sure, this is a classic example of doing business by referral, but these company owners did it with a formal organization. They created a business affiliation.

While business affiliation networks are fairly common on the Internet, groups of local businesses have started to set-up affiliations, particularly where their businesses complement one another.

With an affiliation, members pay one another for new customers brought to each other’s businesses through referrals and the marketing efforts of the individual companies.

Here are just a few of the basic benefits:

  • Access to a new customer base
  • Expanded advertising reach
  • Shared marketing and advertising costs
  • A robust referral system
  • Greater sales force range

Some affiliations help one another with their costs of doing business as well:

  • Shared office, retail or warehouse space
  • Shared technology services
  • Shared admin and customer support resources
  • Group purchasing power
  • Discounts on services for one another

Find other small businesses that are open to the idea and willing to share their customers in the new network. Then start working through the details.

Some questions to consider when organizing an affiliation:

  • Who else markets to your kinds of customers but doesn’t directly compete with you?
  • Do you each have something each other’s customers would want?
  • Do you want to share your customers with another company?
  • Are you confident that other affiliate members would treat your customers as well as you do?
  • Would you be willing to advertise with another business name on your website, printed marketing materials and advertising?
  • Are you willing to share decision-making about the running of the affiliation with other business owners?

Customers like referrals from companies they do business with and respect. If you have affiliate members that you know well, you’ll be giving your customers a service they’re already looking for.

Affiliate marketing requires a formal agreement. They’re not partnerships, but, unlike a referral network, money is involved. Let the group decide how formal to make the arrangement. Maybe having a lawyer in your group is a really good idea.

Affiliation agreements can be designed to pay fees for any referral or just those that result in a business transaction. When the tax accountant refers a client with a new LLC to her insurance affiliate, she receives a referral fee if her client buys insurance.  But, when the lawyer advertises estate planning along with his will writing services, he receives a referral fee for every client he sends to the financial advisor. Affiliate members decide when to pay one another.

Here are some examples companies that have organized affiliation marketing programs:

  • A coffee shop, a bakery, a wine shop and a second-hand book store
  • A web designer, an SEO company, a printing company and an office supply business
  • An architect, a builder, a plumber, an electrician and a pool company
  • A medical practice, a chiropractor, a yoga studio, a compounding pharmacy and a massage therapist
  • An animal feed store, a veterinarian, a farrier and pet sitting business

No matter what business you’re in, and regardless of where you’re located, an affiliation network can tap a growth potential that most businesses can’t reach on their own.

Borrow each other’s influence with customers. Be each other’s expert. Expand your focus outside your niche. With an affiliation network, you’ve got a wide reach.