“How do you find the time to manage all of this social media stuff?” That’s one of the most common questions I’m asked whenever I present. And sometimes, I get the sense that people are hoping that it’s so complicated and time-consuming that they’ll have a great excuse NOT to do it. Not to learn [...]
Strategic Alliances - A great way to generate leads and increase your customer base
In today's competitive business environment, medium to large corporations are actively engaging in strategic alliances to generate leads, increase their customer base and best utilise resources. It is well worth the effort for small business to explore strategic alliances, as the benefits can be substantial.
So what is a strategic alliance?
Strategic alliance basically means sharing your customers with other companies that also want or have your customer and mutually benefit from the experience. In addition to companies benefiting from an alliance the customer must also benefit to make it worthwhile to all parties. After all, our customers are buying solutions to their needs. If the customer cannot identify they have a need or as a supplier, you cannot identify or convince the client that they need your product or service, then in effect you simply do not have a sale.
Who do I form a strategic alliance with?
Using the example of a couple planning to be married, the number of purchases to complete the wedding day can be few or many. Now using the question "who else has my customer (before or after me) and who else wants my customer", the couple to be married may be contacting one or more of the following suppliers: jeweller, reception or function centre, florist, dress designer/maker/retailer, suit hire, shoe shop, wedding car, cake maker, hairdresser, make-up artist, caterers, travel agent for the honeymoon and on it goes.
What do all these companies have in common?
They all share the same customer (target market), they operate in a highly competitive environment, they invest resources (people and money) to attract the customer and probably rely heavily on word of mouth, referral business or advertising for new customers. Some customers may want to simplify this whole process and may be attracted to the ''one stop shop'' wedding shop to appeal to this target market. Some customers may want to select their own suppliers and be guided along the way by friends, family, advertising, and through developing relationships with trusted suppliers (such as those mentioned above) to assist with recommendation and referral to other suppliers (the beauty of market segmentation!).
How does it work?
The crux of strategic alliances is to be guided by or referred to another supplier by a non-competitive company selling products or services to the same customer. Who else has my customer before me and who else wants my customer after me? Imagine if the customer developed a strong relationship with the jeweller and was totally delighted with the experience and wanted to repeat this experience with the next supplier being the dress designer/maker or retailer. It would be beneficial to the customer and the jeweller to have a relationship with a trusted dress designer, plus other suppliers listed above, to recommend their customer to.
What if it was the other way around and the dress designer recommended the jeweller plus those other suppliers including the cake maker, florist, make-up artist, hairdresser... and so on across the entire transaction process - see how the referral process works? All the parties benefit, including the customer.
Other examples to encourage your thoughts include: the IT training company can set up an alliance with accounting companies, health and fitness centres with hairdressers/beauty therapists, massage practitioners with natural remedies/nutritional advisers, jewellers with fashion shops/designers, marketing consultancy companies with business advisers/graphic designers/advertising agencies...
What should I look for when developing a strategic alliance?
For a strategic alliance to be successful and to start the process the companies you explore have to:
Mutually benefit the customer and the companies
Share the customer or target market - share common customer characteristics
Make sense to the customer that you have an alliance and that they will benefit
Share the same or similar company and customer service values as you
Be positioned similarly to your business ie price, product quality... premium, value budget...
Share a common goal for the strategic relationship to work
Be committed to exploring opportunities, implementing agreed strategies and working together to make it work
Be committed to making the other company look good and vice versa
Trust the company you are planning to undertake a strategic alliance with. If you do not trust them, then you cannot trust them with your customer.
When you have identified those companies you wish to form a strategic alliance determine how both parties will benefit and meet to discuss how the alliance would work. If an agreement is reached, formalise the arrangement, commit to the process and implement. Don't forget to test and measure the results of the alliance to determine its effectiveness, areas for improvement, etc.
A point to remember
Fundamentally, if you recommend your customer to a strategic partner based on the fact that that partner will service your client to the best of their ability and they don't, then this will reflect poorly on you. Critically, if your strategically aligned customer has spoiled the relationship with you and your customer, then opportunities to encourage referral and repeat business will be diminished, therefore costing you time and money trying to replace that customer with a new customer.
Exploring the opportunities of strategic alliances is well worth the effort and if effective, may be one of the most effective tools used to generate business leads and new customers.