Introduction
The pressure to scale your business is there from day one, smart customer acquisition is the name of the game and strategic partnerships is a key tactic you should consider. But be warned while the rewards long term can be great, investment is needed to establish and maintain relationships with your partners and for this you need to act like an established business not a start up.
Key takeaways
- Consider partnerships as a way to scale;
- Work out exactly what you need to do to keep your side of the bargain;
- Be prepared to work at the relationship to ensure value is delivered;
- Be prepared to walk if things are not right irrespective of the possible upside.
Assuming you have your identity, value proposition and target market(s) identified as well as a keen awareness of what the competition is doing, you are now free to focus on the business of customer acquisition. As you well know the aim is to do this as quickly and as cost effectively as possible. If you are offering a software or SaaS based product the objective will be for this to be as ‘frictionless’ as possible from when someone hits your website to becoming a paying customer. However having little or no brand awareness can potentially make paid customer acquisition a long and costly business. This is especially the case with B2B or enterprise sales. In this environment you need all the help you can get and partners are a great way to get scale.
Don’t think that partners will simply rock up and do your work for you. You need to do your homework first before even picking up a phone or writing an email. Firstly you need to work out exactly what you are offering a partner. You also need to ensure you know what the partner is after and why and if you can work with them, the word partner is linked to sharing, caring and working together. Ask yourself can I work with these people? In my view there are two categories to consider:
- Technology partnership
- Marketing partnership
Technology partnership
Your product needs to be the missing piece or complementary technology to what your partner would like to offer. For this partnership to work well you have to be mindful of product integration and UI. Both of these take time and cost you in terms of developer/IT resource and will need to be done up front before any revenue can be realised. You have to weigh up if the cost/investment will generate the return before you start, whilst keeping aware of the cashflow implications.
Marketing partnership
Your solution needs to be a complementary service that the partner can offers to its customers. In effect your partner acts as a reseller or indirect channel. For this be prepared to lose branding rights and enter into a revenue share agreement of sorts. You will also have to work closely with its marketing function that might operate very differently to how you do. Again the time, cost and effort needed has to be weighed up before work commences.
Here are a few examples from my own experience that you might find of interest:
Technology partnership case study – Sentiment
A couple of years ago I worked as Marketing Director at Sentiment a social customer service platform provider. It has a great social platform that enables marketing and customer service to engage effectively with customers. At the time it had partnerships with Netcall and PR Newswire as its technology complemented the other solutions that both vendors offered.
Netcall is a well established provider of contact centre solutions, it was seeing the emergence of social i.e. twitter and facebook as a channel for customer engagement and wanted to have a solution it could offer its existing customer base that would complement its current product set.
While Senitment offers a social customer engagement platform enabling businesses to interact with customers on twitter and facebook and monitor social sentiment in real time as well. It’s real value is in being able smoothly integrate the ‘social’ conversations into the customer service cycle.Sentiment was looking for customers with contact centres who were wondering how to integrate social but wanted a trusted solution.
My work involved a lot of behind the scenes effort to ensure integration, running joint webinars, making sure technical training was happening and producing co-branded fact sheets.
The process is not a quick one but when you are talking about a B2B enterprise technology sales, having an established vendor to help you go to market makes a big difference. You are also the cool kid in the class which is nice, but you need to know what the rules of engagement are as well as realising you have to work at the pace of your partner’s (slowly, sometimes).
Marketing partnership I – Tech London Advocates
I have been a member of Tech London Advocates a network that looks to support the startup ecosystem in multiple ways across London. One area I have been involved in is promoting and where possible supporting marketing and advertising tech (madtech) startups in London.
One way in which I have done this is finding a way to give madtech startups the chance to get a presence at trade shows without breaking the budget. To make this happen I approached TFM&A a leading trade show in London to run the startup track at its event. The objective for TLA was branding awareness (achieved) and to provide startups with exposure (achieved) for TFM&A it wanted to offer a start-up stream but did not have expertise in house to do so. Hence the partnership worked.
A word of warning, the TLA team had to do a lot of the running to make this happen with little support from the event organisers (they were organising an event). However it was well worth the effort for the exposure the start-ups gained. Similarly in some marketing partnerships you will find you have to do more of the running, if the outcome is what you are after it might be worth the hit, if not don’t be afraid to pull the plug on it.
Marketing partnership II – Lexoo
Lexoo is a great legal marketplace startup that Forward Partners has invested in and my role is to source strategic partnerships for them that will result in customers. Although early days at present, I am looking for organisations/companies that reach small businesses that will find Lexoo’s service (clear and simple pricing for legal services) attractive. The proposition for the partner is simple, work with Lexoo to offer your customers something you don’t do and they will thank you for it. Each conversation is different and the degree of partnership vary from a common understanding to mention either side in discussions with prospects, to referrals and revenue share. But the partnership work Lexoo is doing complements the other direct marketing activity.
Looking long term:
Partnerships help with scaling and can also be a smart way to generate awareness. Additionally, working with a known brand can get you to the decision maker a lot faster (and cheaper) than doing it on your own. You have to weigh up the time and in some instances money spent and compare that with the revenue the relationships are really generating or have the potential to generate.
Taking the long term view tech companies such as IBM, Intel, Microsoft and more recently Salesforce have built huge partner ecosystems that contribute significantly to their revenue streams but also take a lot of time and money to support effectively. But if your start up can replicate the growth and longevity of these companies the efforts made on strategic partnerships will be worth every minute and penny spent.