Is it time for your business to cultivate strategic business partnerships?
You want to be successful, and you’ve found your market niche. Congratulations, you’re on your way to being the best your company can be.
Now that you’re growing, however, you have to find ways to remain relevant to your customers – while still taking care of business as usual. It’s possible that your company is at a crossroads where you need some outside expertise, tools or resources to avoid becoming stagnant or obsolete.
Or maybe you’d like to expand your influence with a broader audience. You may want to position your company as a thought leader in your network.
If any of this sounds familiar – then, yes, it’s time to look at creating a strategic business partnership that can deliver consistent, predictable and incremental growth for both organizations.
What are strategic business partnerships?
A strategic business partnership is a long-term business relationship focused on creating joint value for two or more organizations. The more value created by the partnership, the more strategic it is.
A strategic business partnership is not a business relationship that looks to exchange or extract value for your business from the other organization.
A small business, for example, might partner with an industry-specific organization or association in order to reach a specific target market. Access to that member base allows the small business to promote its products or services and show its relevance to that audience.
Another example is partnering with an organization or association so your business can share high-value thought leadership content with its audience or network to further establish your authority and expertise in your market niche.
Five benefits of strategic partnerships
When done correctly, strategic business partnerships offer benefits to both organizations involved, as well as the potential to increase growth and efficiencies for both.
Here are five benefits of strategic business partnerships for business leaders.
1. Overcome business fears
All business leaders, at one time or another, encounter fear about changes that can affect their business, whether those changes are market-driven, regulatory or industry-specific. Integrating business solutions through the help of a strategic business partner can help minimize the impact of changes that have the potential to inhibit your business growth.
When the mandates of the Affordable Care Act hit the marketplace in 2013, for example, insurance brokers nationwide were challenged with delivering additional value to their customers to offset rising healthcare costs for employers.
Many brokers, associations and local businesses found that a strategic alliance with a professional employer organization (PEO) allowed them to increase their relevance by providing comprehensive HR and healthcare solutions to their clients and employees. As a result, they were able to gain a better foundation for growth and increased success in a recovering economy.
2. Increase your expertise and your resources
Your business may benefit from developing high-value content through a joint value proposition aimed at your target market. Partnering with large associations, agencies or industry experts is a good way to shorten your go-to-market life cycle and possibly your sales cycle as well.
In a partnership for this purpose, one organization outsources its non-core competencies with the expectation that the other organization will deliver a product, service or peer group expertise that will demonstrate value for both businesses and their clients.
3. Decrease your cost of acquisition
Leveraging another organization’s capabilities or resources can often allow you to achieve the desired goal without taking on the expense and overhead yourself.
In the IT space, for example, resellers or distributors sell a company’s software as a service (SAAS) products through a strategic business partnership, instead of the company’s own sales team doing the work.
The cost to hire, train and onboard sales reps is drastically reduced, allowing the business partner to do the legwork required for the sale, while the IT company focuses on end-customer needs and support.
4. Create predictable revenue streams
A strategic business partnership is designed to be lucrative for both organizations involved. Typically, one organization agrees to sell the products or services of its strategic partner to its client base, in return for a nominal amount of money for each product or service sold.
You might agree to pay the organization you’ve partnered with a fee for each lead your company receives from your partner’s client base, for instance, or a nominal amount for each click-through on your website from that client base.
5. Provide incremental lift to sales and revenue
When two or three strategic partners function at high capacity, you can create multiple revenue streams, and your potential to sell to a larger market increases. You don’t have to limit your company to entering only one strategic business partnership.
The more organizations or associations you can partner with to gain access to a target market, the more likely you are to increase both sales and revenue.
Different needs, different partnerships
Multiple core disciplines routinely work together to ensure that strategic business partnerships function efficiently.
Types of strategic business partnerships include:
Research, development and big data
Research and development (R&D) partnerships are created between businesses capable of developing or improving products or services, and the strategic partners who have a financial interest in these developments. Advantages can include gaining a competitive edge, profit and risk-sharing, shared development and resource costs, decreased time-to-market and access to new markets.
Venture capital funds are seeing increased success in pharmaceutical, health care and technology company startup labs across the country, as they partner with various providers to share liabilities and costs while creating more value in the mutually supported businesses.
Subject matter experts and content developers
Buyer behavior has changed drastically over the past decade, and customers today seek information on companies, products and services before they buy. Finding a trusted partner to be a subject matter expert or content developer can position you to better promote a product or service to your target audience. It also allows you to create more authority in your area of expertise.
When your business provides useful co-created content to a select audience, you begin to solve problems, offer solutions and address needs that your prospects may not have known they had until you pointed it out through your content. Once you establish yourself as an authority, you won’t be chasing leads – prospects will search for you.
Market engagement and co-promoters
Some partnerships look like traditional marketing and can provide you wide exposure within your industry. A co-marketing plan between partners may involve email, direct mail, social media and more – all targeting your market audience and increasing your business exposure.
Say, for example, you own a small bridal shop in a suburban area. You decide to partner with one of the premier websites for all things bridal. Just like that, you’ve widened your visibility from one or two communities to brides-to-be across the nation.
Solution integrators and co-sellers
You may have a proprietary product or service that has someone else’s product built into your solution. For instance, an HR services provider that offers a comprehensive benefits solution to its clients may partner with a healthcare provider to deliver the medical coverage component. Though the overall solution may be unique, the product within it isn’t.
Providing someone else’s product as a piece of your solution provides an opportunity for both companies to increase their revenue stream. Combining solutions is advantageous to both companies.
Peer group communities
The intent of peer group communities is to provide value that clients and prospects can’t find elsewhere. Business owners meet in a non-threatening, non-competitive environment to collaborate and share their business struggles and their solutions for growing their companies.
This provides business owners an outlet to express their own needs and struggles, gather feedback from others, and find answers to business problems and challenges.
A strategy for success
Learn how a PEO can help you reduce your administrative burden and overcome some of your greatest business challenges. Download our free e-book: HR outsourcing: A step-by-step guide to professional employer organizations (PEOs).