Key Points
“76% of partnership development managers of 454 companies agree the partnership channel is a key to delivering on our company’s revenue goals” by Forrester consulting.
“49% of the corporate leaders are planning to get their businesses involved in some type of business collaboration” by PWC’s annual survey in 2018
“More than 28% of your total revenue can come from partnership channels and Companies with the most mature partnership programs are growing overall company revenue nearly 2x as fast as companies with less mature programs” by Forrester consulting.
Now, since there are a sea of big and small businesses trying to provide better and better services to the customers, the competition between all the businesses is getting bigger each and every day. To survive and thrive in the competitive environment is now what is concerning most companies. So, a lot of companies are trying to look for the best solutions while some fail on the way.
For all businesses, we all agree on one thing which is we all want “GROWTH”. We like to have growth in all aspects of our business, revenue growth, product adoption numbers growth, and number of professional employees growth who can support and expand for all other growth. What major companies do to drive more revenue...? Sales and Marketing, right? Spending a lot of energy, resources, time and money on marketing and sales? In the 21st century, just sales and marketing are not enough to meet with the business growth.
There is a relatively less common 3rd revenue channel waiting you to unlock. Strategic partnerships!
We will cover the following topics in this article.
What is a Business Partnership?
Why do Companies need Partners and what are the Benefits?
Types of Partnerships
Why Partnership is important for Growth?
How do you build a successful partnership?
What is a business partnership?
A partnership could mean your business will have access to new products, reach a new market, block a competitor (through an exclusive contract) or increase customer loyalty. Some prefer to use partnerships to strengthen weak aspects of their business. These partnerships, which can be in different sizes and forms, should be beneficial for both sides if two or more companies are in a partnership condition. As claimed by most companies, the partnerships mostly result in better services as the talents, technology and the purposes are combined together.
This equation in the picture is the backbone of every type of collaboration. Togetherness always brings something more, even sometimes out of nothing!
Why do Companies need partners and what are the benefits?
Partnership can be used as a growth “hack” to increase speed to growth. They are typically used to gain access to resources, brands, markets, tech or lower cost/scale.
1.Partner to Enable to Focus
It would not be wrong to say that companies partner to reduce cost in some ways. By making a partnership, we can reduce cost in almost all progress from manufacturing to services. So, being able to reduce cost while providing a good product together is a win-win situation for both parties.
2.Partner to Reduce Costs
For a company, we might have work that we need to focus on while we want to try new projects with the existing talents and resources. Now, partnership comes in and with the partners, we can do the work we need to focus on together which makes us able to focus well on the projects we’d like to try.
3.Partner for Market Access
Here, we will mention a scenario where a company from the USA or some places wants to get into the Asian market. For that company, it would be hard to go into the market all by itself, doing all the market research and anything necessary. It is tiring since it is like starting a new business from scratch but what if that company finds a partner from that country? The processes will be quick and the company will have access to the market in a very short time. That is why most companies make partnerships to get in the market, a geographic or a vertical market, in a quick way.
4.Partner for Customer Access
Sometimes, we might face problems such as not being able to reach the targeted customers for our products. For those times, having a partner might be a perfect solution as the partner can share us the marketing way or point out the necessary things in the product or just simply introduce us in the market.
5.Partner to Compete Solution
For most of the time, we need partners not only to work together but also to point out the situation as a third-person view or to guide us while we need help to fix some errors in the processes. So, it is clear that having a partner might give us solutions to the bumps on the way to provide the best product.
6.Partner to Innovation/Differentiation
Some companies seem like they are going well by themselves, providing the best services or products to the customers. At the same time, they might be having some troubles, trying to keep up with the new trends and technologies and to innovate new things. Like the other reasons, for this case, partnership might be the best solution for those companies. That is the reason why most companies are making partnerships with new startups to bring the newest innovations ever to the table.
7.Partner to expand sources of revenue
For this case, some might have complemented the portfolio of what we are offering and by bringing those to our portfolio and leveraging the sales team, it is possible for us to create new sources of revenue.
8.Partner to expand resources access
This applies to most industrial companies. Most industrial companies try to build partnerships to have access to natural resources.
Types of Partnerships
Partnership can come in many different forms such as Affiliates, Influencers, Mobile Apps, Strategic B2B, Integration, Loyalty Programs, JVs, Acquisitions and many more. If we summarize all partnership types, we can break them down into the following four categories.
1.Co-Supply Partners
If you are going to buy from that partner and will meet one of the following goals, it is called “Co-Supply Partner”.
Complete Solution
Enable faster time-to market
Facilitate focus on core competencies
Give competitive advantages
Reduce the cost
2. Co-Develop Partners
If you are going to build or develop together with that partner and will meet one of the following goals, it is called “Co-Develop Partner”
Complete Solution
Enable faster time-to market
Facilitate focus on core competencies
Give competitive advantages
Reduce the cost
3.Co-Sales Partners
Do you want to go directly to the market or indirectly to the market? If the answer is indirect and will meet one the following goals, it is called “Co-Sales Partner”
Extend the sales reach
Accelerate sales
Reduce Cost
4.Co-Branding Partners
If you cannot do brand promotion alone and need the partner to meet one of the following goals, it is called “Co-Branding Partner”.
Provide brand leverage
Extend market reach
Afford cost sharing
Why Partnership is Important for Revenue Growth?
The World Trade Organization reports that 75% of world trade flows indirectly through partnership. According to PWC’s annual survey, 49% of the corporate leaders are planning to get their businesses involved in some type of business collaboration in 2018. As well, Forrester Consulting surveyed over 450 partnership leaders and 76% agreed that partnerships were keys to delivering their revenue goals.
If the company is spending enough attention in terms of team, process and technology for scaling the partnership like sales and marketing, they can expect “More than 28% of your total revenue can come from partnership channels and Companies with the most mature partnership programs are growing overall company revenue nearly 2x as fast as companies with less mature programs” according Forrester consulting.
How do you build a successful partnership?
Partnership is like marriage. Nobody wants to become another. Likewise the business too. Being different is so important. Having a common goal, having a common strategy, but at the same time having your own autonomy, cultivating things together. It is very important that there is “Diversity within Uniformity” and “Commonality with Autonomy” between two partners. That's the way the world works. Almost all the successful partnerships are built on:
Trust
Collaboration
Commitment
Communication
Before making a partnership, we should take these into considerations:
Try to identify the gap
Our common goal for the partnership
Reliability of the potential partner
Conclusion
From this article, you have learned the reasons why we need partnership development, the benefits of it and types of partnerships. If your company does not have a proper partnership development plan yet like sales and marketing, it is never too late to start.
And We will introduce you to more details about how you can achieve partnerships and steps on developing successful partnerships with the framework and case studies in the upcoming articles.
Openfor.co is a “Partnership Incubator” and we help businesses find strategic partners and collaborate with them for increasing revenues, reducing operational costs, and supporting global business expansions. If you need any kind of help about partnership development, please feel free to contact us.