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Many businesses acknowledge the importance of joining forces and achieving a common goal. In fact, according to a recent study conducted by the CMO Council, 85 percent of respondents viewed strategic alliances as an essential or important component of business. However, these same respondents were unable to deliver on the premise of a healthy partnership, as nearly half reported high failure rates (a failure rate of 60 percent or more).
What does this show us? That companies are aware of the benefits of strategic partnerships. They know that partnerships help businesses grow revenue, acquire customers, expand market reach, innovate services, and improve customer experiences. However, many of them struggle to get things right.
It’s no secret that sustainable partnerships can lead to success. However, a successful partner program can be difficult to implement. To help with this, below are three keys for building successful strategic alliances.
1. Identify the right partners for the right goals.
Before anything, it’s important to know your organization’s overarching goals—and how they pertain to your prospective partnerships. Like hiring for your own team, searching for the right partners involves some careful vetting. Choose partners that you easily collaborate and develop positive connections with and who can actively introduce you to new customers.
To help with this, ask yourself the following questions:
- What are you trying to gain from this specific partnership?
- Who will it benefit?
- How will you measure success?
- What is the potential for impact?
- Are you compatible with the other company?
- Is this a positive environment for partnering?
- Are there any major risks associated with this prospect?
While searching for partners, try not to immediately write off direct competitors as possible strategic alliances. In fact, there are many companies that have proven they can create successful alliances with competitors. Years ago, Starbucks teamed up with Kraft Foods’ Maxwell House to create a mutual alliance that placed Starbucks coffee in supermarkets. Starbucks profited from Kraft’s extensive network of shelf space, while Kraft benefited from exposure to Starbucks’ massive customer base.
2. Do your research.
Once you’ve established a list of potential alliances, it’s time to gather data and do your research. You should be absolutely confident in a potential partner’s ability to deliver on its promises before you enter any kind of business relationship. It’s also important to know the capabilities of potential partners.
After narrowing down your list, contact your prospects and schedule appointments to discuss the possibilities of working together. Much like an interview, it’s important to ask the right questions. Talk about the benefits of working together, the opportunity for revenue sharing, and the most effective way to earn their business. Discuss your niche market and how you plan to reach customers. Finally, provide enough information to detail your base expectations—and outline exactly what a commitment looks like.
Just because you’re entering a partnership, it doesn’t mean you have to expose your company’s most important information. Instead, decide what—and what not—to share. At this point, you should be able to determine whether or not a partnership will benefit all parties involved.
3. Establish objectives.
While it’s obvious that the first step in establishing partnerships is deciding on shared objectives, only 33 percent of respondents from the aforementioned survey indicated they had a formal strategy for partnerships.
Making sure that everyone is on the same page not only sets the foundation of a mutually positive partnership, but it also provides your organization with a benchmark for measuring success. When establishing successful strategic alliances, it’s important to delineate shared business interests. Discuss objectives, obstacles, and expectations that will determine your relationship.
This often requires a leader to develop the structure, processes, and measurement systems for how each company will develop, manage, and assess partnerships. It’s up to you—or someone else with managerial responsibilities in your organization—to provide oversight of your partner’s capabilities. The absence of an established leadership team results in a lack of strategy and a failure to align outcomes.
As I’ve written about before, the story of Hewlett-Packard and The Walt Disney Company is a classic example of a successful alliance. Not only was it a well-negotiated, well-structured business exchange, the two companies established a clear understanding of what each partner had to contribute, what each should expect from the relationship, and how that would change over time. Because of the complexity of both partners, the alliance was only successful due to careful planning and outlined expectations.
To build successful strategic alliances, first identify the right partners, do the research, and then set shared objectives that are achievable for your partners.