Strategic partnerships and alliances are key to maximizing ROI and minimizing overhead costs in specialized market ecosystems.
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Power in numbers
If you are still operating as a closed, independent organization, you are probably spending more and making less than your competition regardless of sector. The growing merger-and-acquisition business model is leaving closed-off companies behind while favoring organizations that engage in joint partnerships with similar client bases, objectives, and sectors. If you are not looking to buy or get bought out anytime soon but do seek to collaborate, a strategic partnership is the perfect business model for you.
“If you are not looking to buy or get bought out anytime soon but do seek to collaborate, a strategic partnership is the perfect business model for you.” Says Andrea Micucio, Managing Director of CSSvSource.
What is a strategic business partnership?
Strategic partnerships are coordinated relationships between two organizations to expedite and expand joint value. The two entities pool their respective resources to work symbiotically and typically cover each other’s less-developed capabilities. These are almost always non-competitive businesses that share risk and reward.
Strategic partnerships work best with long-term joint goals and can evolve and expand once an initial master service agreement (MSA) has been penned. Before unwrapping the keys to a successful strategic business partnership, let’s get an understanding of its benefits.
Benefits of strategic business partnerships
1. Expand your resources and capabilities
The principal reason for engaging in a strategic partnership is to bring in an organization that does something really well that you do not. If you are a cloud database provider lacking a talent acquisition department, a partnership with a talent managed service provider (MSP) alleviates technical hiring capabilities for you while it expands your vendor partner’s technical portfolio producing mutual ROI.
2. Mitigate sales cost
Outsourcing a section of your business that would otherwise take valuable time, resources, and revenue to build out saves your organization an incredible amount of capital. Bringing on a marketing team allows your solar energy company, for example, to focus on research and development (R&D) instead of spreading budget thin to establish a social media presence.
3. Offer your services to a market introduced by your new business partner
If your sports drink company has a need for new graphics and partners with a design studio who also represents an NFL team, you have new access and a warm lead into a potential partnership with that team. Other organizations will notice you listed as a client of the design house you have partnered with giving you exposure and presence into markets you may not have time, energy, or wherewithal to penetrate.
How to facilitate a prosperous strategic partnership
These partnerships take time and energy to develop for mutual maximum returns over a long period of time. Keep in mind that around 80% of your profit will come from 20% of your customers or clients. That 20% slice most often comes from recurring clients and partners whom you produce recurring monthly revenue (RMR) with. Here are some best practices for being a productive strategic business partner.
1. Understand the business
If you are engaging with another company to align business strategies for a long-term symbiotic relationship, you should probably understand their business. Take time to communicate and understand your partner’s core values, growth goals, available resources, and financial forecasts to align your own resources properly. Become knowledgeable about their market temperature and competition to offer a unique service that will make your partner stand out among their competitors.
2. Never force your way in
When pursuing a strategic partnership, it is imperative you do not force your way in. Contact methods like chasing a CEO to develop a relationship, coercion with threats or forceful language, or shoving partnership clauses crudely into company policy are surefire ways to discourage a long-term relationship. For the best results, approach a potential business partner with a value proposition or service offering coupled with a genuine business case for collaboration.
3. Offer dynamic solutions outside your original partnership purpose
This practice will not only enhance your offering to your partner but will evolve your own company internally and open other future partnerships. Stagnation on the other hand will sour relationships when your partner’s competition revolutionizes their department that you are responsible for with your partner. Your growing solutions offerings to partners will by osmosis innovate your own independent offerings. A study by the BPI Network found that 57% of companies use partnerships to acquire new customers and 44% form alliances to foster new ideas and insights.
4. Facilitate joint integration and change
Your company should facilitate change within your partner’s business operations by adjusting and realigning to new goals and values. In contrast, ensure your partner is as malleable to your own company’s internal adjustments and is as receptive to internal development to help you as you are to them.
5. Focus on shared customer experience
At the end of the day, it will be the success of your shared customer base that drives your partnership so make sure they are happy. Customers take experience into consideration just as heavily as they do the actual product or service. Keep valued customers coming back to you and your partner through clear communication, exceptional customer service, and relevant new product offerings.
6. Connect with CSSvSource today to partner with a managed staffing program leader
The vendor management team at CSSvSource provides expert contingent staff onboarding, payroll, organization, and communication to ensure your company and partners have the best available resources on the market. Connect with CSSvSource today and promote continuous partnership growth and development.