As we enter another year, it makes sense to look for different ways that we can move our businesses forward. After all, we always want to achieve more than we did the year before and grow our companies, right? One of the ways that you can go about this is by leveraging strategic partnerships.
Strategic partnerships can result in mutual benefits, which can lead to long-term profits. A strategic partnership happens when two companies join forces, expanding their brand reach. This is a great way of creating brand trust, increasing brand awareness, and adding value to your business.
What is a strategic partnership?
A strategic alliance or partnership is a relationship between two commercial businesses, typically formed by one or more corporate contracts. A strategic partnership typically falls short of any sort of legal agency, legal partnership entity, or corporate affiliate relationship. Here at Vector Payments, we forge relationships with a wide range of organizations, offering payment processing and working in partnership with businesses to help them process payments safely and efficiently, so we know just how critical strategic partnerships are for businesses of all sizes, across all industries.
What are the benefits of strategic partnerships?
There are a number of different benefits that are associated with strategic partnerships. With that being said, let’s take a look at the advantages of this in further detail.
The potential to reach new markets
When you partner up with new businesses, your brand will have the ability to expand its horizons into areas that you have not explored before.
We can take Starbucks and Google as a very high-profile example here. You may not have associated Google with coffee. Nevertheless, after this partnership, coffee and the internet made a lot of sense. Once this relationship was formed, similar opportunities came to the fore for both companies.
Google is so popular with a huge range of people that this sort of publicity is not really needed. Nevertheless, for a startup business, a partnership like this is an amazing opportunity. If your company has the opportunity to explore a new frontier, you could end up using this publicity to benefit both you and the company you are partnering up with.
You will be able to access new clients
A strategic partnership will give you the opportunity to reach new customers, and embedded in this comes the possibility of free advertisement. When you partner up with another company, you are going to have the ability to reach their client base as well. This is a highly effective marketing strategy, which will stretch your reach considerably so that you can multiply your clientele.
The most vital part of growing any business is broadening your reach to the public. The more people that see the products you have for sale in an area that they frequent, the more they are going to find your product elsewhere.
You can bring extra value to your current customers
Another advantage to a strategic partnership is the value it brings to your loyal consumers. Reaching customers throughout a period of growth can help to solidify loyalty.
You want to show your returning clients that you care about them, as this encourages word of mouth, which is one of the most powerful marketing tools. Customers who hear positive comments about your company will end up telling their family and friends about it.
You want customers who are happy and will promote your services. If you establish connections with other enterprises, you boost your chances that you are going to pick up some of these free advertisers.
Businesses, especially smaller ones, find it challenging to afford or recruit the resources and roles required to grow a company.
By creating the correct strategic partnership, you can overcome these challenges by sharing your resources, especially where those resources are of a technical nature, and could expose the companies to innovative and new solutions.
If you collaborate with partners, share resources and ideas, you can also introduce innovation with regard to the fresh ways of improving business processes and overcoming certain internal problems or issues without the need for any extra investment.
Increase brand trust
Another benefit of partnering up with another company is that it helps you to boost brand trust. Brand trust naturally spawns from an effective business partnership.
When people see that you are working well with other businesses, they are going to be more willing to support your business and help you out. It is all about creating a productive, stable, and healthy network.
You are only as good as the people that are helping you out, so it is important to ensure your company is a worthy investment for them.
You want to create a positive relationship with everyone, and partnerships help you in terms of meeting and working with new people who could help to expand your business when you require it the most.
Partnerships work in a lot of different ways to spur attention and growth for your company, which is the most critical element of accepting the right partner.
Boost brand awareness
Aside from the advantages that we have mentioned so far, another vital result of a partnership is the boost it will give to brand awareness.
The most critical thing you can do for your small company is getting the word out there and let people know who you are. When you partner with other influencers or organizations, there is a greater chance for people to be exposed to branding elements, such as your logo, which helps to create organic curiosity.
Brand recognition is a vital first step in ensuring your brand is a household name. This is something you can accomplish by pairing your service with a successful partner that has a sizable customer base. After you have done this, customers will soon be asking you to partner with them.
Enjoy a number of monetary advantages
Last but not least, we cannot deny the number of different financial benefits that are associated with strategic partnerships. A strategic partnership will help you to increase your profits by enabling you to boost brand awareness and reach more potential customers.
You can also lower expenses as well. This is because you will gain access to technology and other types of resources that may be too costly to develop on your own.
How can you ensure a successful strategic partnership?
Now that you know about the different benefits that are associated with strategic partnerships, let’s take a look at how these partnerships can be formed effectively:
Identify the need for the partnership
There is only one place to begin, and this is by figuring out why you and the company in question should work together. After all, partnerships are highly beneficial but they need to be the right partnerships. So, do your businesses have complementary skills, or perhaps you may be adding extra capacity to each other? Understand the pros and cons of each enterprise. You can then determine how the partnership will fit into your business plan. Be clear with yourself about why you are entering into a partnership and what you expect to gain.
Even when you get a referral from a trusted advisor or you know someone personally, it is vital to reach a prospective partner is critical. It is not only the capabilities the other business brings to the table. You also need to feel at ease with the work style of the possible alliance. After you have determined the other company has complementary skills, it is vital that you look at management styles in an objective manner, as well as values and work ethics. You also need to determine where possible clashes could occur.
Here are some of the important questions to ask:
- How aggressive or competitive is the business? How does this compare to you?
- What is the business’ work ethic? At what pace do the work? Is this similar to yours?
- Who is going to be paying whom? If you are not going to be in charge of the payment, how quickly are they going to pay you and other vendors?
- How are decisions made? Who owns the relationship with the client?
You will find a better match if you answer these questions honestly. Some businesses, for example, are known for keeping a tight rein on workers or the long hours they keep. If you find that this is not the sort of work style you have, you could end up having issues.
While it makes sense to get references from those who have worked with the strategic partner you are considering, references can sometimes be scared of legal retribution and so they may not give you the complete picture of a business. We would advise that you do some due diligence in the form of a Google search so you can discover whether there have been any lawsuit fillings or negative reports on the Internet.
Establish joint goals and objectives
Developing key goals and objectives that reflect what both parties expect to gain from the partnership is vital. Make sure that your expectations are realistic of the resources that both you and the other business are willing to put forward, and make any changes as required. Nothing will sour a relationship quicker than the feeling that one party is giving their all while the other one is getting a free ride. A strategic partnership needs to foster an environment whereby both parties gain something, otherwise, this is not a partnership at all.
Define responsibilities and roles
A lot of issues can be avoided if you set expectations from the get-go. Evaluate the strengths of every company, and make sure that responsibilities are defined accordingly, especially in terms of management. A lot of partnerships end up failing because relationships are poorly managed, and this is why it is key to document what is expected and to do so in a clear and concise manner. Make sure you are specific. Determine how many people from each business will be involved in the partnership, and what their specific roles are going to be. Both parties will need to provide resources to the relationship, and they also both need to have someone within the business that is going to champion the cause.
Put together an effective communication process
Clear communication is vital when it comes to establishing a lasting partnership. This is one of the chief elements that is regularly overlooked. Misunderstandings and disappointments can be prevented if you establish an effective process for working with your partner. You need to develop the relationship to a level whereby both parties are able to be honest with one and other when assessing progress and providing recommendations for improvement, both of which should be done on a frequent basis. For instance, you may wish to exchange weekly sales report.
Establish a system for resolving conflicts
Next, you need to make sure that you have a conflict-resolution system in place. After all, disagreements, compromises, and misunderstandings are natural. Figure out how you will voice them when you feel that your partner is not being responsive. If a misalignment arises, look to resolve it as fast as you can. It makes sense to meet in a territory that is neutral so that both partners can speak in an honest and open manner. After this, concentrate on creating solutions instead of looking to blame someone. Although we always want the issue to be resolved, there are cases whereby partnerships strain to the point that they break and cannot be fixed. This is why it makes sense to have your exit process worked out in advance.
Use trust to build your relationship
Strategic alliances are built on mutual interests, dedication, and trust. They demand the interaction and respect of people in both businesses. And, like every fruitful relationship, effort is needed to build a strategic partnership. Both parties need to feel like they are giving something but also getting something in return. It cannot all be in one direction. You cannot take, take, take, and then give nothing back. It needs to work both ways.
Next, you need to assume a position of importance and status within the alliance. Both partners need to be willing to care for it and nurture it. This means that the top individuals in both companies need to be supportive. The aim of any sort of strategic alliance should be to make an impact, and you are not able to do this if you do not have active engagement at the top. This also means putting in extra effort to ensure that the venture works, even if this means you have to have a willingness to go the extra mile, i.e. exceed contractual obligations. Dedicated partners put forward energy and resources, and they face risks to ensure that the venture is a success.
They say that patience is a virtue, and this is something that you need to remember when it comes to strategic partnerships. Strategic alliances take time to create and then also to maintain. When you are just beginning, do not make any judgments about possible partners should they seem reluctant. Make sure you figure out how you can stand out from the competition.
Use an Agreement to formalize the partnership
Last but not least, it is imperative to make sure that there is a written document that formalizes what you have both agreed on. While a gentleman’s agreement (a handshake) may be the old-school way of doing things, it can result in problems because you can end up being on different pages. With an Agreement in place, you have an outline of what is expected and you and your alliance are protected should those expectations not be met. Should a disagreement come about, there is a document you will be able to reference so you can get your relationship back on the right path.
Final words on strategic partnerships and the benefits of them
So there you have it: an insight into some of the different benefits that are associated with strategic partnerships. Of course, experiencing the advantages mentioned above depends on the partnerships you forge. You need to make sure that you align with other businesses with care.
If you would like to discuss the prospect of teaming up with Vector Payments for all of your payment processing requirements, please do not hesitate to get in touch with us today for a free quote. We look forward to hearing from you and helping you in any way we can! If you want to speak to someone from our team directly, the number you require is 888 237 1754.