Building a company can be a solitary endeavor. However, marketing one does not have to be complicated. Co-marketing entails two complementing brands pooling their audiences and resources to run a campaign that neither could do well on their own.
Large enterprises and small businesses alike can benefit from a strategic partnership since they allow them to share what they already have rather than beginning from scratch to acquire more visibility for their products or services.
What is a Strategic Partnership and What do They Entail?
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A strategic partnership is a long-term business collaboration between two or more firms to generate mutual benefit. The more value the alliance generates, the more strategic it becomes.
A strategic business partnership is not a collaboration where you seek to exchange or take value from the other enterprise. To reach a particular target market, a small firm could join an industry-specific group or association. The small firm can use that member base for marketing its products or services and demonstrating its relevance to that audience.
Another strategic partnership example is collaborating with an organization or association to further publish high-value thought leadership content with its audience or network to enhance your authority and knowledge in your market segment.
Types of Strategic Alliance
Partnership business model agreements are written agreements between partners that spell out the collaboration's terms and conditions. The following are the five most typical types of strategic alliance:
- Strategic Marketing Collaborations
- Strategic Supply Chain Collaboration
- Partnerships for Strategic Integration
- Strategic Technology Collaborations
- Strategic financial alliances
If carried out effectively and transparently, these agreements are the most effective way of pleasing all parties involved, including the client.
Strategic Partnership Advantages
Partnership business model, when done appropriately, benefit both firms and can boost growth and efficiencies for both. For business executives, here are five advantages of the partnership business model.
・Overcome Business Fears
Changes that can damage a company's bottom line, whether market-driven, regulatory, or industry-specific, cause concern in all business leaders at some point. Using a strategic business partner to integrate business solutions might help you reduce the impact of changes that could stifle your company's growth.
When the Affordable Care Act's provisions went into effect in 2013, for example, insurance brokers across the country were faced with providing additional value to their customers to offset rising healthcare expenses for companies.
Strategic collaboration with a professional employer organization (PEO) enables many brokers, associations, and small businesses to expand their relevance by delivering comprehensive HR and healthcare solutions to their clients and staff. As a result, they built a more robust basis for future growth and success in an improving economy.
・Expand Your Knowledge and Resources
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A combined value proposition geared at your target market could help your company generate high-value content. Partnering with significant associations, agencies, or industry specialists can help you reduce your go-to-market time and, potentially, your sales time.
In a strategic partnership for this purpose, one organization outsources its non-core competencies in exchange for the other firm delivering a product, service, or peer group expertise that will provide value to both organizations and their clients.
・Reduce Your Acquisition Costs
Using the expertise or resources of another business can often help you reach your goal without incurring the costs and overhead. Resellers or distributors, for example, offer a company's software as a service (SAAS) products instead of the company's own sales personnel through a strategic partnership.
The expense of hiring, training, and onboarding sales agents is dramatically reduced, allowing the business partner to focus on end-customer needs and support. In contrast, the IT company focuses on sales.
・Make Predictable Revenue Streams
A strategic partnership is intended to benefit both of the parties involved. Typically, one organization offers to sell its strategic partner's products or services to its customer base in exchange for a small fee for each product or service sold.
For example, you might agree to pay a charge to the organization with whom you've associated for each lead your company receives from that client base or a small price for each client that visits your website and makes a purchase.
・Increase Sales and Revenue by a Small Amount
When two or three strategic partners work together at full capacity, you can generate various revenue streams and expand your market reach. You don't have to limit your company's partnership business model to just one.
The more organizations or groups you can work with to gain access to a target market, the higher your chances of increasing sales and revenue.
Key Factors to Consider for a Strategic Partnership
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Your chances of success are increased when you have the correct partner. As part of your due diligence, identify the strategic and cultural commonalities, as well as the financial fitness, systems, and procedures, and research and development track record of your prospective alliance partners.
1. Make a List of Potential Partners
Frequently, financial advisors choose to engage with outside professionals whom their clients have previously hired. Extend your search outside your inner circle and look into other companies that cater to consumers in your niche market. Make a list of the top three local law firms, CPA firms, and insurance agencies in your area. Use Google searches, LinkedIn profiles, city information, and any other tools you have to find a possible strategic partnership.
Choose counterparts with whom you can easily communicate, develop strong ties, and who will aggressively introduce you to new clients rather than waiting for the right opportunity.
2. Research Potential Partners
Gather information and look into potential alliances. In this phase, you'll support your argument that forming a strategic alliance with this company will be mutually advantageous.
3. Make the Initial Contact
In this harsh economy, where everyone feels the pinch, everyone might use some extra help with business development. Make contact with the alliance possibilities you've chosen and set up a meeting to discuss potential collaborations. Tell them you'll exchange information on your mutual niche market, how to sell to them, and how to get their partnership business model the most effective.
4. The Initial Consultation
The goal of this phase is to determine whether you're a good fit for building a strategic partnership.
- Discuss the potential partnership business model, the advantages of collaborating, and the possibility of revenue sharing.
- Share the facts you obtained earlier on your shared niche market, how to promote to them, and how to gain the most effective business. This will help you position yourself as an authority and influencer in the field and make your case for forming an alliance.
- Provide explicit specifics about expectations and what each firm will do to keep your relationship on track.
- Assess your possible alliance and obtain a deeper grasp of it.
- Make a decision together. Schedule your next meeting to finalize your agreement if you decide that working together will benefit all parties involved, including your clients and each firm.
5. Identify Unique Possibilities
Consider every possible chance to collaborate. Concentrate on your primary hobbies and business principles that you both share. Discuss the aims, problems, and expectations of your upcoming partnership. Determine what your alliance's goals should be for the next 12 months.
6. Set Revenue/Profit Objectives
Determine the optimal and minimum income and profit targets for your strategic partnership. The revenue and new assets under management required to make the program successful should be your ideal target. The minimal aim is what must be met for the cooperation to continue.
7. Make a Schedule
Make a list of any events or campaigns you want to run with your strategic alliance during the next 12 months. Determine the aim for each item, the technique you'll employ to achieve it, the date the event will occur, and who will be in charge of its execution.
Include the following recommended practices in your strategy to guarantee that your collaboration effectively generates new client opportunities.
8. Present Your Strategy
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To propose your strategy, set up a meeting with your potential strategic partnership. Examine your options, plan, and the particular steps you'll take to achieve your objective. Discuss your profit and revenue targets, as well as your costs. Look for any flaws in your original plan and make the required changes.
9. Commitment and Implementation
Commit and put your strategy into action when you've reached an agreement with your partner. Determine who will serve as a point person to guarantee that the project is completed on time.
10. Analyze and Follow Up
Refer to your alliance plan regularly to track and celebrate wins and make changes if something isn't working. You can have the most wonderful strategy in the world, but if it isn't implemented and followed up on a regular basis, it will be useless.
Conclusion
With the rise in strategic partnerships, companies should keep in mind that success is strongly reliant on proper strategy, alignment (both within the firm and between partners), and seamless integration into the organization's processes and operations. To build value, however, it is critical to focus on sharing commitment and capabilities.
The foundation for a successful strategic partnership is open communication, which ensures clarity of objectives, trust, and strong connections.
On a tactical level, the most crucial group to include from both firms is middle management because their goals are frequently at odds. It's also crucial to develop unique, mutually agreed-upon benchmarks for measuring the alliance's success.
When it comes to forming a partnership, equity might be used to replace trust. When trust is low, partners are more likely to believe that “it pays to cooperate.” Still, high trust propels collaborations to the level of personal ties, expressing solidarity and shared cultural values.
