“How can I increase revenue for my business?”
It’s a question you’ve likely asked yourself more than once. And there are many ways of driving more sales — search engine optimization (SEO), content marketing, and email marketing just to name a few.
These are all effective strategies to increase your bottom line. But there’s one strategy that you might be overlooking: strategic partnerships.
According to a study from Forester, 77% of businesses say that partnerships were central to their sales and marketing strategy. Over half of the companies surveyed (52%) said they get more than 20% of their revenue from such collaborations.
So, what exactly are strategic partnerships and how can you leverage them to increase revenue growth for your business? That’s what you’re about to find out here.
In this article, we’ll take an in-depth look at what strategic partnerships are, the value they provide, and an overview of common types of partnerships. We’ll also look at how you can make these partnerships work for your business.
What are strategic partnerships?
Strategic partnerships are long-term business relationships between two parties. The general idea behind a strategic partnership is that two companies provide value to each other. They complement one another.
As a small business, you might partner with an industry-specific organization to increase your reach. The relationship in this case is mutually beneficial — you can reach a new audience, and the organization benefits by working with a thought leader.
Now let’s take a look at how strategic partnerships can boost your bottom line.
Benefits of strategic partnerships
You can grow your business in an endless number of ways. But you’ll be able to grow your business to new heights with the right partnerships.
Here are some of the benefits of forming strategic partnerships and why they should be more of a priority if they aren’t already.
Increases brand exposure
Increasing brand awareness is the first step to reaching your audience. But the business landscape is more competitive than ever as consumers have an endless number of brands and products to choose from.
The best thing you can do for your small business is to let people know who you are and the value you provide. Partnering with other organizations or even influencers can expose your brand to more people. Consumers may not purchase right away, but they’ll be aware of your brand.
Check out this article to further help you build your brand online.
Provides access to new customers
This one is obvious, but it’s still worth mentioning. When you form a strategic partnership with another company, you also have the opportunity to reach their customers as well. This is an effective way to grow your business.
For example, let’s say you’re a web design agency and you partner with a content marketing agency. If that agency needs help with design work for their clients, they can send work your way and vice versa.
Lets you reach new markets
In addition to generating brand exposure and reaching new customers, you can also leverage strategic partnerships to enter new markets that you’ve never explored before.
As an example, consider Starbucks and Spotify. These companies are in completely different spaces, yet the two formed a mutually beneficial partnership.
The partnership allows Spotify to tap into a new market (coffee drinkers) and reach more potential subscribers. When coffee lovers visit Starbucks and hear a song they like, Spotify users can tap into those playlists and add them to their own. This allows them to receive reward points that they can redeem for drinks.
If you’re looking to tap into a new market or test the waters, forming a strategic partnership is one of the best ways to do it. Of course, you’ll want to look for ways that your partner can benefit as well.
Decreases customer acquisition costs
No matter how awesome your products or services are, you need to grow your customer base to stay in business. But between advertising and overhead costs, acquiring new customers isn’t exactly cheap.
Forming strategic partnerships helps you reduce your customer acquisition costs. Working with another company can often allow you to grow your own without having to increase your overhead costs.
Let’s look at an example of how this looks. A reseller or distributor might sell another company’s Software as a Service (SaaS) product and earn a commission in the process. The company’s own sales team can quickly close the deal without having to nurture the lead.
Forming strategic partnerships can be incredibly lucrative for all parties involved. It generates brand awareness, provides access to new customers, and can lower your overall customer acquisition costs.
Now let’s take a look at some of the more common types of partnerships.
Common types of partnerships
Collaborations between two companies are a common type of partnership. One that comes to mind is the collaboration between Apple and Nike.
The two companies partnered together to create a Nike version of Apple’s popular smartwatch, which comes with exclusive watch faces and bands.
Here are other types of partnerships that you may consider forming with other companies:
Competency gap partnerships
As a small business, you simply can’t do everything yourself. There are likely aspects of a project where you need outside help.
For example, let’s say you’re developing a mobile app for another company, but you don’t have anyone on your team who can create custom graphics.
You could either hire someone (more overhead costs) or form a partnership with another company to fill the “gap.” Such a partnership benefits both parties as they can also reach out if they need coding work for their app.
Small businesses can’t build their own e-commerce fraud detection solutions, but in 2021 some of them desperately need to have one. Once again, it makes sense to contact an experienced vendor that can offer a solution and fill this competency gap.
Distribution partnerships are another common type of partnership, but with more of an emphasis on the supply chain. Distribution partnerships enable you to get your products to your customers.
Distribution partnerships are vital to many industries. But one of the most obvious is in companies that do business-to-consumer (B2C) commerce. These companies rely on partnerships throughout various parts of the value chain to create value for customers. This includes partnerships within the procurement, production, and distribution phases.
If you sell products, these types of partnerships are key to making sure that your customers receive your products.
Integration partnerships are when you work with another company to build and deliver an integrated product or service.
Examples of integration partnerships can be seen in the technology sector. For example, Intel makes processors for a number of computer manufacturers, including Apple, HP, and Lenovo. These companies use Intel’s processes and integrate them into their computers.
Another example of integration partnerships can also be seen in the SaaS industry. Many SaaS products integrate with other services to gain a competitive advantage.
Frevvo’s business process automation software integrates with several other software including Google Apps Active Directory, SharePoint, and SQL databases.
This kind of integration streamlines the customer experience. Instead of having to switch between different applications, you can simply use one.
A common struggle for growing businesses is managing their cash flow. The fact remains that you need money to run your business. But that can be a challenge in the beginning when you’re still acquiring customers. One option is to seek a financial partnership with a company that can provide funding.
One financial partnership that comes to mind is between SoftBank and WeWork, a company that provides shared workspaces for technology startups. WeWork needed funding to grow its business and purchase real estate. SoftBank provided them with a $18.5 billion dollar loan in exchange for a partial stake in the company.