Partnering with another business can be a powerful way to expand your business’ reach, to trigger growth, and to help weather the inevitable ups and downs of running a business—if you form the right partnership, that is. The key to being able to create a fruitful alliance is in understanding what type of business relationship you are actually seeking.
Watch this short video and make sure you’re never caught out again asking for the wrong thing and shutting your partnership discussions down before they get started.
If you don’t know the difference you’re not alone. In our recent Strategic Partnerships Expert Panel webinar (you can view the full recording here) which I was given the privilege to host, when asked if they knew the difference between a marketing partnership, a strategic partnership, and a joint venture, 61% of the audience members were either unsure or didn’t know the difference. Without an understanding of the unique characteristics and advantages of each, how can you seek out the right partnership?
This is a real risk for newer companies, as well as for businesses that are well-established and are courting a possible partner. Trying to forge the wrong relationship or force something before you are ready can be a costly mistake. Big businesses and professionals with a history in the corporate world will be familiar with the nuances of each type of partnership. You don’t want to look like you don’t know what you are talking about by initiating the wrong conversation and you certainly don’t want to waste your and your potential partner’s time. However this is easy to avoid and you’re in the right place!
Understand Your Partnerships
A common mistake that start-ups make is approaching larger businesses in hopes of forming a “joint venture”. In practice, this is like walking up to a potential partner and asking them to marry you before you’ve even gone on a first date. To put things into better perspective, in the webinar we likened the three major types of partnerships to the three stages of a relationship.
- A marketing partnership is like the first date. It’s the two of you deciding to get together for one goal—to have coffee a.k.a. to work on a marketing campaign, combining the messaging of both of your brands. This is also where you find out how well you get along together.
- A strategic partnership, is like the engagement. There’s a lot that can happen here as more resources can be shared and collaborations made. It’s really exciting as you and your strategic partner join forces to work on more than just marketing – this level of partnership has you focussed on more than growing your audience – you’re looking at the other key benefits of brand leverage, expanding resources, and monetising your assets, but you are still two totally separate entities.
- And then, there is the marriage: The joint venture, where you are literally going into business with someone. It’s legally entangling and is a commitment you only should make with a partner you are extremely sure of because getting out of the relationship can be a messy and expensive task. Ian Murray, Executive Director of the Australian Institute of Export, notes that the main reason joint ventures fail is that sometimes both parties do not fully understand the expectations, potential outcomes, and the investment each is prepared to contribute. For a successful joint venture, you’ve got to know your business well enough to know what type of business marriage you have the capability to sustain. This takes much more than just mutual interest.
Successful Marketing Partnerships
So, when is a marketing partnership right for you? This type of alliance can work well for new businesses and any company who wants to shorten their sales cycle and get much quicker wins. The marketing partnership is a practical first step that can be the start of something more, or not, depending on the unique nature of the relationship between the two businesses.
Its strong point is that it is a simple, straightforward arrangement that only involves marketing – and it’s significantly more effective. In fact, in the 2017 High Growth Study by Hinge Research Institute that compared high growth firms with no-growth firms, partnership marketing was found to be THE most impactful marketing technique for high growth firms. So ask yourself if you can afford not to build your partnership marketing skills.
Even though it’s pretty straight forward, the majority of businesses we encounter simply don’t get it right and are in-avertedly building a partner un-friendly reputation which deters the best partners. This was also reinforce in the webinar where 76% of respondents stated their partnerships could have been more successful or failed altogether. Proactively build your reputation for being partner friendly by getting this right and you will be handsomely rewarded.
Usually, it’s not hugely complicated nor does it require a large commitment, making it ideal when you want to test the water and get quick wins. Like a first date, there are no strings attached outside of the campaign.
Look at the seemingly magical branding bond between portable camera company GoPro and Austrian-based global energy drink company Red Bull. These brands have shared values and an almost identical customer base—the young and adventurous! GoPro may be much smaller than Red Bull, but the company still has something of value to offer the energy drink company: reaffirmation of Red Bull’s commitment to the action-packed, no-fear lifestyle. GoPro, of course, gains formidable market attention through Red Bull’s internationally recognised name.
Even though the two businesses are vastly different in terms of size, with a marketing partnership they both benefit equally.
Successful Strategic Partnerships
A strategic partnership allows your business access to a whole range of resources you may not have otherwise been able to use. With this type of partnership, two businesses decide to partner beyond just marketing. This means that many things can happen—shared office space, staff, filming resources, warehouse facilities—the possibilities extend as far as your businesses’ resources. Strategic partnerships are great for gaining access to global markets and when you want to scale your business.
Cloud-based call centre TCN formed this type of partnership with accounts receivable and debt collection recovery service provider Insight Mercantile. As a result, Insight Mercantile has been able to boost profitability by 15% thanks to the use of TCN’s cloud-based contact centre suite, Platform 3.0. TCN, as a result of the partnership, experienced stronger growth in the Australian and New Zealand markets.
Successful Joint Ventures
Finland’s Nokia with Siemens AG of Germany to form Nokia Siemens; Dow Chemical Company plus the US glass manufacturer Corning Inc., to form Dow Corning; British luxury brand Jaguar and the Chinese automakers Chery Automobiles to create the Chery Jaguar Land Rover Automobile Company—large companies enter into joint ventures to remain competitive, meet the challenges of limited resources, or to otherwise become a stronger entity as one than they ever could have become on their own.
Small and mid-sized businesses may consider joint ventures as well, but only after careful consideration, research, and, ideally, previous partnership experience.
Making Your Business Stronger Through the Right Partnerships
Entering into a partnership is a critical decision for businesses of all sizes. Take the first step and get the insights your business needs by watching Partner2GROW’s very informative Strategic Partnerships Expert Panel webinar on understanding the difference between marketing partnerships, strategic partnerships, and joint ventures, and to get key advice and timely information on the many aspects, issues, and developments relating to partnerships., and to get key advice and timely information on the many aspects, issues, and developments relating to partnerships.
Partner2GROW can also help your business gain clarity, knowledge, and expertise in the decision-making process, along with an accessible system for helping businesses of all stages build their partnership capabilities and form ideal relationships. Remember, with the right partnerships, everyone wins!
Click here to get started so we can support your growth through the right partnerships.