How To Improve Strategic Alliances
One under-utilized industrial marketing technique is that of strategic alliances (alliances). In essence alliances are simply a way of growing your company by finding another company that has what you lack, sharing resources, and ultimately sharing profits. For example, your company may be lacking in products, staff, technology, assets, or customers.
So let’s assume you have an amazing product or service but, due to a lack of customers, you can’t grow your company as fast as you would like. All you need to do is form an alliance with a company that currently has lots of customers and you’ll soon be rolling in the cash on your secluded tropical island. What could be simpler, right? Well it’s a little more difficult than that.
In order to form alliances and make them work it’s best to remember the following.
When approaching a potential alliance partner it’s imperative to understand that size does matter. If your company is considerably smaller than theirs then your alliance partner may perceive that working with you is a great risk. You need to allay their fears with strong performance guarantees and demonstrate willingness for graduated access to their customer base.
Another key point is if your product does not have the potential of making a substantial contribution to their bottom line then your product may not be even remotely of interest. The truth of the matter is the last thing any alliance partner needs is another product cluttering up their warehouse. You need to prove to them that you know how to market and sell your products effectively and are happy to actively participate and show them how.
A third critical fact you must keep in mind is that in many instances your alliance partner will not sell nearly the kind of volume that you expect or that they promise. In some cases when forming an alliance there can be a period of exuberance where large promises are, somewhat innocently, made. In fact sometimes your alliance partner may exaggerate their marketing and selling capabilities just to get their hands on your products.
The simplest way to avoid this trap is to ask other suppliers about their experience with your alliance partner. If you are the only supplier in a potential alliance, then be certain to ask for and enforce short performance assessment periods. It may also be wise for you to look at any sales projections with a cold eye.
Gaining access to new customers through alliances is one of my favourite industrial marketing techniques. When managed well alliances can dramatically increase your rate of growth. As the beneficiary you need to be realistic and realize that much of the success will come from their access to customers and, more importantly, your industrial marketing prowess.