A strategic alliance is when a company enters into a loose partnership with another business to help them both make extra profits.
Here are some strategies on how to make strategic alliances work for you:
Defining the market
This is critical when it comes to any form of marketing. Who are the people most likely to buy a product or service? Thinking about an average customer in terms of age, sex, income, where they live and what their interests are gives partnering companies a much better idea of what they need and how to best meet those needs.
Alliances work where there is a group of people a company wants to target and there are non-competitive businesses already engaging with those customers. Working with these companies can give your business access to new markets without conflicting with the other company’s offering.
Partner companies should also be positioned at the same end of the price and quality spectrum.
What’s on offer?
Partnering companies each have to bring something of value to the table for the partnership to be mutually beneficial and satisfying. Commission is a good basic option or, if the referral will result in regular repeat business, the allied company could get more or even all of the profit from the first sale. This gives them incentive to refer clients.
Find a suitable system
There are many types of strategic partnerships that can be used and companies need to identify what works best for them. One option is the referral system mentioned above. Or, companies could form a collective. This works well for people in a services industry where, for example, a graphic designer partners with a copywriter and a web developer to take on website projects together. Another option is giving customers loyalty gifts sponsored or discounted by a partner company. That way, the sponsor company gets new potential customers to tap into.