Some of the most enduring businesses of our time have relied on a strategic partnership framework to maximise success. While many organisations do a fine job of excelling independently, external partnerships can if done right help businesses tap into audiences and markets that otherwise wouldnt be possible on their own.
This tactic is one that has been used to great effect by high-street clothing company H&M. The retailers annual partnerships with luxury brands including Versace and Jimmy Choo have seen their collections receive consistent overwhelming consumer demand. From Bud Lights recent partnership with Tinder to Tescos partnership with Childrens Food Trust, more and more businesses are combining forces to increase both scale and revenue. Examples of partnership businesses
Gaining foothold in new markets
For many SMEs, leveraging an established brands resources can be a very effective strategy for establishing foothold in a new market. Why is this Because the business gains association with, and endorsement from, a brand that the market already trusts and recognises. This means there is often less perceived risk associated with the company’s new product or service and therefore likely greater uptake from other businesses and/or consumers.
They can also allow businesses to share knowledge, skills and expertise in a mutually beneficial way. A partnership will result in a greater range of resources being available to both businesses, which can help to supplement weaknesses and build on strengths.
Despite the advantages, it is important to realise that partnerships also come with inherent risks and drawbacks and indeed, dont always go according to plan. As such, it’s wise for businesses to be transparent from the outset and to ascertain whether potential partners have a strategic market presence and easily leveraged brand. Critically, making some money should also be on the partnerships agenda; there should be a clear opportunity to increase revenue.
Its a family affair
In effect, a partnership is an extension of an organisation. As such, it is vital for businesses to take the time to learn about each others mission, styles and brand propositions early on in the relationship. Doing this during the discovery period can help to ensure that values are upheld and that both partners continue to appeal to their target markets later down the track.
When the market suspects that somethings amiss between two corporate partners, a considerable amount of damage can be done to one or both brands. The brands may appear to be selling out and audiences can easily become alienated from each partners values.
This was shown last year when Girl Scouts entered into a partnership with American toy manufacturer Mattel to produce a range of Barbie-themed products. The partnership sparked claims from advocacy groups that Mattel was [undermining] the Girl Scouts vital mission to build girls of courage, confidence and character”.
Sign the dotted line
It can be tempting for businesses especially startups to jump at the chance to partner with any company to foster growth. However, it is important for any potential partnership to be underpinned by due diligence, consideration and legal protection.
In particular, both businesses should be clear on the potential benefits and limits of their partnership. Its wise to devise a plan and sign a contract outlining the intended scope of the partnership, including rights and responsibilities. This covers details such as guidelines, payments, risks, rewards and service-level agreements. It helps to reduce any possible ambiguities and ensure that both companies and their consumers are both happy and certain about what the partnership represents.
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Once all of the relevant paperwork is complete, both businesses will be able to start mapping out a strategic vision for what mutual-success will look like both from an internal and external perspective. This means developing marketing and communications strategies that accurately depict the nature of the partnership to both existing customers and prospects. Importantly, all marketing content and collateral should be strategically aligned, consistent and agreed upon by both parties before it is disseminated to internal and external stakeholders.
Businesses dont need to take an overly complicated approach when pinpointing potential partners. A valuable partnership may stem from something as simple as skill or knowledge exchange. Of course, every organisations intended goal and approach will be slightly different however, through focusing on mutual benefits, shared visions and strategic planning, any business should be able to leverage the partnership model for growth and success. Its all about finding the right fit and ticking your boxes.
Juan Lobato is the CEO of BaseKit