Strategic partnerships are a key differentiating strategy for many companies. Sales through a channel other than a company’s direct sales team provide companies with the opportunity to increase revenue, expand into new markets, and capture new customers. Strategic partnerships can also help a company strengthen its brand and build market share. For all these reasons it is important to invest time and resources early in the relationship to structure a mutually beneficial partnership that will greatly increase the odds of creating a successful long-term relationship.
Strategic partnerships, sometimes referred to as a strategic alliance (legal teams often refrain from using the word “partnership”), should be approached with the same rigor as other sell-to, sell-with, or sell-through channel partners. If businesses take a passive approach to strategic partnerships, they do not realize the same results as other types of channel partnerships. Therefore establish a structure of accountability to ensure there is energy to create momentum toward making the partnership successful.
Vague agreements. A common mistake occurs when vague agreements are made, especially in situations when financial commitments are not clearly established. If specific commitments and accountability are not defined in detail, this leads to false expectations.
No market enablement. Products don’t sell themselves. Be sure to define the marketing programs and marketing support each firm will provide. Another common oversight is training. Both companies need to clearly understand the value proposition and how to sell and service customers. Outline the training requirements for the sales, operations, and customer service teams.
PR announcements lack substance. The first things many companies do is send out a press release. But since the partnership is new, there is little substance to the announcement. Actions like sending out a press release to announce a partnership or putting partner logos on web sites do little to stimulate sales. A better approach is to describe benefits and results that customers have received as a result of the joint partnership. Get some traction then make announcements. Otherwise the announcement is not likely to get the attention of anyone, except your competitors.
Here is an example of how these three mistakes often play out. During a client meeting the company’s business executives couldn’t wait to tell me about a new partnership they had just struck with another company. They explained how it was a killer deal that would allow them to extend their sales reach by more than 1,000 salespeople. The partnership would also add value to the company’s brand so they asked me to send out a PR announcement describing the strategic partnership. When I asked for details, the business leaders sat back in their chairs and began to question each other about the facts of the agreement. As they began to realize there was only a memorandum of understanding in place but nothing else, excitement turned to concern.
If you are serious about creating a significant new revenue stream with a strategic partner, follow the advice I gave to this company. The key points described below will help your company approach strategic alliances and partnerships with more structure, reduce risk, and increase the odds of success.
Strategic Partnerships—Checklist and Success Factors
Kick-Off Meeting with Key Stakeholders
- When establishing a new strategic partnership, hold a strategic planning meeting between the key stakeholders of both firms. In this initial kick-off meeting it is very important to include a cross-functional team of people from product management, marketing, sales, finance, and the executive sponsors. This will get everyone’s goals, ideas, concerns, and expectations on the table.
- Define and clearly write the value proposition.
- Define the timeframe for major events and timelines.
- Agree on the targeted revenue and benefits each organization will receive. Both parties need to have some “skin in the game” to create accountability and measurable results.
Sales and Marketing Enablement
- Determine the marketing support needs for both companies. Create a partner marketing plan that outlines all the programs, costs, roles, and responsibilities. The marketing staff from each company can create a sub team to develop the plan and meet as often as necessary to refine it.
- Determine how each company will support the sales teams when making sales calls to customers. If a product or service is technically complex, a joint sales team consisting of both a sales and technical expert should meet with customers. An added benefit to this approach is that it is a fast, efficient way for people to learn and improve. The team will learn key benefits of the joint solution, hear customer objections and learn how to overcome them. Over time this will help refine the value proposition.
- To establish early momentum, find a “sales evangelist” who is successfully selling the product or service and making significant commissions. Find out what he or she is doing and promote this to the larger sales teams so they can learn how to make more sales from the strategic alliance.
- Evaluate the training needs for various functional teams (marketing, sales, technical, customer service, etc.), paying special attention to training for the sales force.
- Create training programs specific to the roles of people.
- Keep in mind that sales teams need ongoing training, not just a one-time training event.
Metrics and Reporting
- Agree on the measures of success up front. What metrics will be tracked, measured, and reported to both companies to understand if the partnership is successful? How often will reports be created and by whom?
- A simple one page document or brief executive summary can be a valuable communication tool for the cross-functional team. This report can also be sent to executive sponsors on both sides to keep everyone in the communication loop.
- On a quarterly basis, the cross functional team meets to review results and adjust the game plan.
Focus on creating “quick wins.” Don’t take on too much too fast; otherwise, the alliance will just be viewed as another “program of the month” that didn’t work. Start small and build momentum and success stories. Both teams should agree on what the early wins will be so there is focused energy toward realizing the goals.
The most successful strategic partnerships have structure, accountability, and encourage collaboration. Follow these guidelines to create strategic alliances that are set up to succeed and grow steadily over time.