Strategic partnership is a term used across nearly every industry, but sometimes the way it’s misused can be cringe-worthy. Every partnership needs to be a win-win for all parties involved, and strategic partnerships need to create something greater than a short-term benefit. This could be a collaboration or a joint venture to launch an innovative new product. But no matter what form it takes, a strategic partnership needs to tap into the strengths of both parties and create a more powerful product to serve the needs of a larger group of users.
Partnerships come in a variety of shapes and sizes. A one-off partnership usually involves two business units (BUs) working together in a single market where one of the companies is more established than the other. A strategic partnership, on the other hand, could involve multiple BUs including marketing, finance, and corporate development. Strategic partnerships also involve far more trust and a more significant mutual investment than simple partnerships require. Taking the time to develop that trust is the foundation of success. You can’t launch a successful project or partnership without it.
Convincing another entity that a partnership is in their best interests can be challenging, and many people mistakenly think it’s about sales tactics. While it’s true that a sales mentality helps, it’s more about having a mindset of closing a long-term deal, rather than a short-term sale.
In many supposed partnerships, one business asks another to pay a certain amount of money in exchange for something else. This type of arrangement isn’t an actual partnership. Partnerships are long-term efforts, not simple financial transactions. The benefits of strategic partnerships are realised over a longer term, generally between two to three years.
Now that we’ve laid out the definitions, what are some common pitfalls in strategic partnerships?
A lot of partnerships don’t get anywhere because the parties’ interests and expectations are not aligned. Unless both businesses wholeheartedly agree on decisions in the early stages, you’re likely going to be starting off on the wrong foot.
Failures in partnerships almost always stem from the misalignment of objectives and misunderstanding. Most successful partnerships take the necessary time needed to build a solid foundation from the beginning. Businesses in prosperous partnerships generally don’t rush into signing contracts only to argue about terms later on. Rather, they have several rounds of discussions to change and revise various terms before adding them to the initial scope. In the end, this approach makes all the difference. Spend the time to develop a rock-solid foundation before formally signing paperwork for any partnership.
When it comes to identifying potential partners, it’s important to take several factors into account. Look for organisations positioned at the right level and which offer a similar product or service as you. It’s also important to evaluate your own company’s competitive strengths, and investigate which businesses might view your user base as a natural fit.
Once you’ve identified that, it’s time to begin your partnership pursuit.
The primary objective of any strategic partnership should be to better serve the end user, and that can only be achieved by understanding their needs. Many modern businesses exclusively focus on high-end users. Reaching that demographic involves first analysing your users’ behaviour and what choices are available to them. Find out what similar products they already buy, and identify areas where they are frustrated or dissatisfied. Then develop ways to close that gap and transform a pain-point into a lucrative opportunity. The importance of appealing to the needs of your target audience is imperative to striking a successful partnership.
Highly successful companies get approached with partnership opportunities all the time, but the bulk of such emails are deleted and a vast majority of voicemails go unreturned. While picking up the phone is always an option, these days, LinkedIn might be a more viable route depending on your industry. If you share a mutual connection with a potential partner, request for a referral. Yet before you do you that, it’s important to conduct thorough research and identify a mutually beneficial objective.
If you think you’ve come across a viable candidate for a partnership, take the time to understand what they are seeking in the current stage of their business. Review their website thoroughly, study their blog, and read every press release you can get your hands on. Also search online for recent news about the company, and don’t hesitate to ask around for information you’re not likely to find online. The quicker you can identify your potential partners’ frustrations and communicate your level of understanding, the more rapidly these partners will warm up to you.
Once you’ve done that, define what you can bring to the table, and brainstorm approaches to communicate that with your partner. To catch their attention, it’s important to focus on how to solve their problems, not your wants. The first approach is usually very difficult. You have about two sentences to express why a partnership is an outstanding idea and why they should make time to meet with you. Make it clear that you understand their need and concisely state the value you could bring to such a partnership. If you can achieve that, the more likely the prospective partner will respond to you.
A lot of people make the mistake of creating a sales pitch in a partnership proposal. This is a rookie move that’s best avoided. When you propose partnering with a company, it should always be about their needs — not your wants. If your partnership pitch is all about something you have to offer, it’s time to go back to the drawing board and come up a different approach. By disguising a sales pitch as a partnership proposal, you’ll inevitably irritate some prospective partners.
If you’re reaching out to someone you’ve never met and don’t have any kind of referral to, a short email is a great way to go, as long as it’s executed properly. Start by mentioning the needs of your target partner, then briefly state how your business can address this need. Whatever you do, don’t start by explaining what type of company you work with and what service you can offer. They can find that out on their own. Start with a specific need that you know matters to the prospective partner and briefly suggest your solution. Try to open a larger conversation instead of going into details. Make it clear that you understand the other company’s needs. Position your business as a complementary business or a solution. Keep it clear and concise.
To view the full content, sign up for a free account and unlock 3 free podcasts, power reads or videos every month.
Senior Director, APAC Go To Market
Trip Advisor | Criteo