Most businesses are keen to find strategies that will allow them to gain more reach and grow their customer base, so what if another business could help with this?
Business partnerships, where you team up with other businesses to reach customers in a way that is mutually beneficial to both parties are a great traction strategy. That term “mutually beneficial” is core to a successful partnership and helps to ensure that both parties are committed to the arrangement.
This type of arrangement commonly falls under the term “Business Development,” which, Gabriel Weinberg defines as follows:
Business development (BD) is the process of creating strategic relationships that benefit both your startup and your partner. It’s like sales with one key distinction: With sales, you’re selling directly to a customer. With business development, you’re partnering to reach customers in a way that benefits both parties.
Seth Godin points out that business development is often misunderstood, yet can be quite valuable:
“Good business development allows businesses to profit by doing something that is tangential to their core mission.” – Seth Godin.
Implementing a plan for business development in your own business can unlock huge growth potential – here’s how it works:
Why create business partnerships?
The bottom line of “why” you might want to build business partnerships is that the right ones can help to deliver significant gains for your company. You get to leverage their brand or audience and they get to leverage yours.
This is best illustrated with a few examples:
- Checkpoint, one of the oldest and best-known cybersecurity providers in the world has entered several technology partnerships. Many of these include big names like Cisco or Amazon Web Services, allowing both partners to leverage off each other’s reputation and reach.
- Colt – The provider of telecom, data centre and network solutions has formed a few strategic partnerships, also demonstrating how good marketing can help to enhance them. Their “website in a box” style makes it easy for partners to replicate product, blog and news content on their own websites, as seen here for Castior. This means their visitors get a professional presentation and fresh content.
- Apple and Nike – These two companies have collaborated on multiple products now, with one of the latest being a new version of the smartwatch. It’s a good way for each brand to gain followers from the other – both tend to have groups of “superfans” who might buy the product because they like one brand so much, thereby exposing them to the other.
A good partnership can help to give you a competitive advantage. Large companies often seek out new deals through business development, although Seth Godin mentions smaller companies often don’t consider them:
“… particularly smaller competitors, are so focused on their core business that it never occurs to them to consider partnerships, licensing, publishing, acquisition and other arrangements that might change everything. Harley Davidson probably makes more money on business development than they make on motorcycles.”
How to create business partnerships
First of all, it’s worth considering what type of partnership you think would be “mutually beneficial.” There are a few different types, as shown in the table below:
[table id=26 /]
Here are a few tips for building your partnerships:
#1. Begin with strategy
What are the goals of your business? How do you envisage a partnership helping you to achieve those goals? For example, if your goal is to build a larger base of core users, you might gravitate toward distribution deals to get the word out to a wider audience. If you have a great idea for a new product but would like to access another company’s technology, either a standard partnership or a joint venture might be what you seek.
“Good Business Development deals align with your company and product strategy and are focused on critical product.” – Startup Runner
#2. Have a process
Seth Godin points out that “I’ll know it when I see it” is not how professionals bring new partners into their business:
“If you’re going to be bringing new partners and new ideas into your organization, you need a process to do it. Professionals don’t, “know it when I see it.” Instead, professionals think about the abilities of their company and strategies necessary to bring ideas in, refine them and launch them.
Great business development people don’t waste time in endless meetings with random vendors or hassle about tiny details up front. Instead, they have an agenda and a project manager’s understanding of what it means to get things done.”
This means developing a process and a clear idea of who you will spend time talking to and what you will be discussing. You don’t want to waste time hashing out minor details or taking meetings without a clear agenda. You also don’t want to waste time engaging with companies that won’t be a good fit.
Having clear criteria for who those companies are is a logical next step…
#3. Identify the right types of partners
What does a good business development partner look like? For any company, one of those criteria has to be that the partner has goals and values that either align with, or are complementary to their own. It wouldn’t make sense for a purveyor of healthy living to go into partnership with a tobacco company.
“You need to understand why a potential partner should want to work with you. What are their incentives? Just as you evaluate potential partnerships in terms of your core metrics, they will be doing the same.” – Traction.
It’s not just about metrics, it’s about reputation and public persona as well. Who are you happy to have your brand associated with? If the company that licensed the opportunity to make Starbucks flavoured ice creams made a poor-quality product, Starbucks wouldn’t have wanted their name associated.
When you establish clear criteria and a threshold for partnerships, you also have a guide for when to say “no” to any offers that come your way. This is again, something that Seth Godin has emphasised.
“…there isn’t a shortage of ideas. There’s a shortage of execution. That means that successful business development teams look for proven partners and organizations with momentum.” – Seth Godin
#4. Get to know people
The “courtship” phase of any business deal always goes better if you make the effort to get to know the real people behind it better. After all, people deal with people – a company is just the entity they put a face to.
You have to do your homework on the people you are dealing with, know their preferences, be respectful and know how to energise a room. That means avoiding things like grouping together a bunch of your preferred potential partners and sending out a BCC’ed email template. These are impersonal and obvious. Picking up the phone or actually physically going to meet people is a much better strategy.
#5. Have a clear value proposition
Why would I want my company associated with yours? This is a question that your value proposition should answer well. You have to be able to give them the “what’s in it for me” in no uncertain terms.
Here are some examples of the value your company might be able to offer:
- Access to a target group of customers
- The ability to leverage your good name
- The potential to leverage your proprietary technology
- A focus on solving a very specific problem
- Access to your people (especially where you might have some top talent)
#6. Maintain an active pipeline
Business development opportunities are often a case of “right place and right time” for the companies involved, so a “no” today might just mean that it’s not the right time for the deal.
Maintaining an active pipeline of possible businesses that you could partner with is a good strategy for being able to move rapidly and try to capture that “right time.” A suggestion for doing this is to create a spreadsheet listing those potential businesses, their contact details and any attributes of each, such as distribution size, revenue or PR prowess.
If you can maintain “warm” contacts within those organisations, that’s even better. It helps to be able to pick up the phone for a quick chat or meet for coffee and not have to start the relationship from square one.
#7. Look for joint marketing opportunities
If you’re testing the waters with a new potential partnership, you could just keep things simple and inexpensive to begin with. One method that answers those criteria is to run a joint webinar – this is a way to prove you can both work together without breaking the bank. It tends to be better to test things out rather than sink a whole lot of time and money upfront.
You might also consider strategies, such as joint email campaigns, “blog swaps,” where you write posts for each other’s blogs, cross promotions of services, or in-app notifications. These are all examples of strategies that don’t cost a lot of time and money and can build into bigger marketing opportunities.
Are you ready to seek partnership opportunities for your business? Here are some next-steps from us:
- View some of the acquisition strategies we have in our database for business development & partnerships.
- Write down three groups of companies that could be useful to yours in terms of partnerships, such as those with complementary products.
- Identify some of the smaller players and reach out to two in each group in order to gauge interest.
Wishing you all the best with your partnership endeavours – should you have any questions, please feel free to contact us.
Get the latest articles
Content from industry experts, delivered straight to your inbox - as soon as they're released.