Before Saying "Yes" to Your Business Partner

In every partnership, the aim is to start on the right foot and keep walking towards the destination that you’ve both paved out. While this sounds simple, it may not always be the case when you’re in it.

In a world where many people pass off sales as a partnership, you must be clear on how you position yourself and approach partners because many partnership personnel in big companies are averse to partnerships that turn out to be sales propositions.

A partnership occurs when two companies come together to create a product or a service that's aligned to both their business goals, and will deliver on those goals over a prolonged period of time.

These partnerships can be broken down to various phases with each phase ranging from three to six months, or in some cases indefinitely. If it’s going well, then you would want to invest more and if not, then it can be killed or you can move to the next phase.

Each phase must have a specific outcome-based Key Performance Indicator (KPI) tagged to it. You need to make a decision on how each phase is going to look like, and they have to be linked to the business objectives that both parties are keen towards investing in.

Partnerships that are not working tend to have unclear objectives that don’t tie back to the business aims. Many companies have created a product only to find out that they got the short end of the stick, and are no longer keen on pushing it through. As a result, the partnership dies out or doesn’t have a chance at succeeding.

So how do you start a partnership on the right foot?

Lay Everything Out

Partnerships that are not well-articulated upfront, don’t do well. You need to be asking detailed and potentially difficult questions from the start: How are you going to do this? How are you going to market this? How are you going to communicate this? How many touch points are you going to use? How many channels are you going to use? How often are you going to use this? What's the user journey?

It’s better to have these detailed conversations first, rather than sign off on something, and then realise that things are not working out because nobody's really going to take responsibility for it. At that point, it would be even harder to have such conversations.

Ideally, both parties get into a partnership that is closely aligned. In the next chapter, I’ll outline some key questions that you should be addressing before you sign off on a partnership.

Come up With Creative Solutions

A fundamental way to strike partnerships is to come up with new and creative solutions to issues that concern the partner.

My approach towards coming up with a new idea is to have a series of conversations with people who are experts at it right now. I pick the right people to talk to. Sure, you can go on Google to research on the viability of your idea, but you don’t know the credibility of it. When you instead reach out to someone you know personally or a friend’s friend who has succeeded in that area, there’s much more credibility.

Sometimes, I reach out to people on LinkedIn. Out of the 10 people that I reach out to, about three to four people respond. Since they’re doing me a favour by meeting me, I usually buy them coffee. It’s a short casual chat where they have nothing to prove, so they're very relaxed and are their authentic selves. They're not in an interview. Based on our conversation, I then choose what to consider, and what not to consider depending on the reasoning.

If you’re working with a company that runs an app, then you can find out the app analytics through App Store rankings, readings, and customer reviews. You can look at a company’s website standing and see how many visits they get and how the market is responding to them.

If it's a traditional company like a utility company, you could look into understanding the industry. What’s the challenge that the industry is facing, and what are the big moves by competitors? You could also look at their counterparts in other countries to have something to emulate or learn from. One great way is to give them something creative to go against a competitor they hate the most. That would bring them a lot of satisfaction.

Try to do things that have not been done in the market but will help both companies achieve their goals. Create a new angle that the market has not seen before, because both the customers and partners will love that. You also make the person leading the project on the partner's side looks great in front of their organisation.

Be Fully Prepared

Nobody sees all of the background work that you put in, they only see the campaign and whether it was a success or failure. It's a very thankless job in the sense that nobody sees the number of conversations you've had, the research you put in and everything that goes into it. Yet the way to succeed and put your best foot forward is to put in the time to do your homework.

It’s surprising how little people prepare before signing off on a partnership. They then wonder why the meetings seem fruitless or why the partnership is not as exciting as they had hoped. You want to start on the right foot. In the next chapter, I’ve laid out a list to help you with just that.

It’s essential that you have a clearly planned out partnership checklist before you sign with the partner. Once you have a clear answer to each of the segments, you can then consider signing with the partner. If you don’t have some of the answers to these segments, then I would encourage you to work on them first before you sign off on a partnership.

Product Details

What is it that you’re creating together? Come up with an ideal product, and once you understand each other's objectives clearly, you can go back to the drawing board and create a service or a product that's going to align with both parties’ objectives.

Your product has to be clear and easily articulated. If you struggle to explain it then your product isn’t defined clearly enough.

At the end of the day, everything ties back to the consumer. So, you need to be thinking of a product that your consumer will enjoy. What problem are you addressing for the consumer? What value are you bringing to them? If you are solving a problem really well, even if it’s for a small segment, it can be very profitable.

When your product clearly meets the needs of your customers, the other company and your company, then you have a product that is worth going into a partnership for.

Partnership Terms

You need to carve out both of your roles clearly and understand the terms that you will both work on.

What is the direction of the partnership and what KPI do you want to tag to it? How will you determine whether it’s going well? What’s the goal and what’s the timeline? How are you going to measure it and how often are you going to be measuring it?

What’s the evaluation criteria of success? You need to put some contingency in place too. If it's overperforming, are we able to handle it? If it's not doing well, what's going to happen? What are the main roles and responsibilities, who's going to address which area? Is one party leading the development? All the potential roles need to be agreed upon from the start and it's best to work on the strengths of each company.

Perhaps at the start, the partner is going to take on the marketing responsibility while you take on the development responsibility. Subsequently, you could then consider a joint responsibility of marketing.

When you have all of that laid out, upon launch everyone will know exactly what they need to do. There'll be no question or debate around it. You can, of course, improvise but there needs to already be a clear plan for everybody to follow. It also helps partners feel that things are fair.

At the end of the day, there should be a media plan, an operational plan, a financial reconciliation plan, a customer support plan and a technical plan. All these plans need to exist for a strategic partnership to work.

Commercial Terms

For every customer that's acquired, do you pay the partner or does the partner pay you? This ties back to the alignment with objectives. Some partnerships may not involve this in the end, but you need to make sure this is communicated at the start.

Imagine a partnership between company A and a bank, where part of the agreement is that the company offers the bank something special for their customers. Company A then targets to drive 100,000 customers to put their card on file which translates to millions of dollars annually for the bank. The commercial term would then be that the bank pays X amount of dollars for every customer who puts a card on file with company A. This would be the commercial terms of that partnership.

You need to make sure you have very clear and transparent analytics to promote trust and reduce the chances of cheating or hidden information.

A partnership is kind of like a relationship. If you're about to marry someone, you're not going to hide how much money you make from them. You might as well be honest from the start because it’s going to come out eventually and by then it shows a lack of trust.

One way to promote trust is to have a system generated report where the partners are seeing the exact same numbers that you're seeing. The reports are automated, so no one interferes. Give your partner visibility so that you put their mind at ease.

Of course, certain things are going to be sensitive, but if you make sure that you give the partner as much as you can, you can still maintain the trust, and in return see some transparency on their end. You also have to respect if somebody says that what you want from them is sensitive information, or there's a regulatory issue which restricts them. In which case you can discuss and figure out a way to give both parties maximum confidence in each other.

Commercial terms and analytics may be tough conversations, but you’re better off having them before you sign, rather than later. I've learned this through the experience of not doing it and then regretting it. Get it right from the start.

Aligning Internally

Apart from aligning with your partners, make sure you are aligned with your internal team too. You don’t want to be the guy in the organisation who goes out and promises the world, but then your team has to pick up the pieces behind you. Nobody likes that guy. Don’t be that guy.

While you take care of your partner's needs and what the customers want, you need to make sure you are meeting your own internal KPIs. You can’t be so focused on striking the partnership that you lose sight of what needs to be done to carry it out. Especially because your collaboration will also involve other departments, they can notice if they are doing something that doesn’t actually benefit the company. You don’t want to be making their lives more difficult while servicing the partner without bringing value to your own company.

When things go well, you need to give people credit. In the event of failure, you need to take 100% ownership and still give people credit for working on the project. You need to commend what others have done well and make sure your team and other departments don’t feel like they’re at fault because they did support and work hard alongside you. Giving them credit despite things not turning out well, helps you to gain their support in the next partnership.

Know your bottom line

At the start, you may have little or no negotiation power, especially if you want the partner more than they want you. You’re trying to sort of bait them, so you need to know your bottom line and carve something out from that. Maybe you think that this partnership is going to bring you the first 10,000 customers, but upon discussion, you may need to revise that to 1000 new customers. You then need to be able to realign your objectives and know realistically how the partnership will actually be beneficial and if it really makes sense.

Perhaps in phase one, you are not getting the 10,000 customer acquisition, and you’re instead getting brand awareness with 10,000 people and 1000 customer acquisition. Then in phase two, you can look into how to have the additional 9000 customer acquisition. Try to realign objectives where you can and think about how you can accommodate and work around new parameters.

Ultimately, the unit economics have to be positive. Some companies make decisions that do not lead to positive unit economics, which means the company doesn’t actually gain anything from the partnership. Partners and customers love unique experiences so if you come up with a unique experience that leads to positive unit economics, then you can bring a lot of value to your partnerships. Don’t just be creative without bringing value to your company. Know your bottom line and make sure it’s met.

If your brand is strong, you can be picky, and firm, by saying that you don't want to be flexible in some of the terms because you’ve already done X and what you really want now is Y. If the collaboration doesn’t allow for that right now, then you could walk away and revisit it in the future when it makes more sense. If your brand isn’t that strong then you need to realign internally, and decide how flexible you’re willing to be.