The concept of strategic partnerships is not new. Businesses have been collaborating for decades; McDonald's and Coca-Cola, Spotify and Uber, and Starbucks and Google are a few instances of these alliances. Even while some of these companies might not seem to be all that comparable, the most prosperous strategic partnerships find creative ways to expand their customer base and potentially even enter undiscovered markets. By collaborating, you can boost brand awareness and guarantee the prosperity of both companies.
What do strategic partnerships function?
This partnership between two or more organizations that combines resources, money, and/or technology in order to flourish together is known as a strategic partnership. Non-competing businesses usually choose to work together to lower risks, such as stepping up marketing initiatives in new territory, which may be a costly endeavor with little guarantee of success.
In this instance, working with a strategic marketing partner is a great way for a business to boost return on investment (ROI) since it allows it to expand its customer base quickly and at a reasonable cost.
Another phrase that may be used to characterize a strategic alliance is co-branding. It gives businesses access to resources, services, and information that they may not otherwise have. Any business may thus grow while spending less money.
There are six types of strategic alliances:
Integration partnerships: These include merging different companies or services to make their customers' life easier. Integration agreements are often formed by providers of sales-as-a-service when they create APIs to interact with other services. For example, one of the best email marketing services could work with several content management system vendors to make it simple for customers to connect, update, or move data between apps.
Tech partnership: Under this type of arrangement, two businesses contract with one another to do technical assistance. This may be as simple as two businesses using the same office building and splitting the cost of an expensive piece of equipment, like a large-format printer.
The Financial partnership: In order to generate value for their company through the evaluation of datasets, businesses typically collaborate with independent accounting or financial firms. In order to assist the business's leaders in making choices, the partnered financial organization often does a market study, audits the company's finances, and produces forecasts and insights.
The Supply partnership: In this kind of arrangement, a manufacturer and a vendor work together to stock a certain product on the company's shelves. For instance, an electronics retailer and an audio manufacturer may collaborate to offer the maker's line of headphones alone. Another illustration would be an office building's cleaning supply inventory, which is solely stocked by one company.
The Supply chain partnerships: These are typical of larger companies and include many companies working together to create a product. To develop a product, for instance, a television company might work with multiple businesses: one might design the screen, another might manufacture the electronic components, and a third might create the plastic or metal housing.
Partnership in marketing: This type of relationship is also quite popular and may be as simple as two companies promoting each other's goods or services to increase their market share. A local general contractor and an interior designer are an example of a best-practice marketing cooperation as they both work in related sectors.
Which types of partnerships are strategic?
Strategic alliances are something that many elite businesses frequently participate in. Even if your company is undoubtedly smaller than the ones listed below, you can still get inspiration from these. Think about how you could implement such policies at your own business.
Pottery Barn and Sherwin-Williams
This strategic partnership brought new clients interested in home remodeling projects, which benefited both parties. On the Pottery Barn website, users may match Sherwin-Williams paint colors to available Pottery Barn furniture items. The website also featured a blog with tips for do-it-yourself painting activities.
Uber and Spotify
Uber and Spotify worked together to provide consumers the choice of what music to listen to on each trip, even though there doesn't seem to be any connection between the two services. Why makes this configuration logical? Although users of Uber may listen to their own playlists, Spotify stands out in a competitive market.
Eddie Bauer and Ford
The automaker teamed up with the apparel manufacturer to provide unique marketing opportunities for each brand. Some Ford vehicles were outfitted with high-end Eddie Bauer amenities including leather seats, and Eddie Bauer luggage and accessories bore the Ford logo. Both companies were able to increase brand recognition in this way.
The aforementioned partnerships were all formal arrangements governed by contracts. For the protection of your business, a legal agreement has to be in place. That will be especially useful in the event that you ever need to cancel a relationship, which, depending on how closely connected the two companies are, may be challenging.
What benefits do strategic partnerships offer?
Strategic partnerships are fundamentally symbiotic relationships, as suggested by the definitions given above. Collaborating may benefit all parties involved, as it can save expenses and pool resources. We'll go into more depth about a few of the less obvious advantages below.
Attracting new clients
One of the most important aspects of business development is reaching out. Developing a strategic partnership that gives you access to new customers could also mean free advertising. When you partner with another business, you may get access to their clientele. By extending your reach, this is a tremendously effective marketing strategy that doubles your clientele.
Possibility of expanding into other markets
Your company might be able to expand into new areas and reach a new clientele if you find the right strategic partner. Consider the cases of Google and Starbucks. When you think about coffee, Google is most likely not the first company that springs to mind. But when they work together, the two enormous companies may make an appearance in each other's markets.
What if, for example, Google created virtual Starbucks-like environments with identical appearances and textures? Starbucks would be joining the metaverse—a market that Google is familiar with but one it is new to—by doing this. In the same way that it doesn't often go after coffee enthusiasts, Google could be able to do so by working with Starbucks, creating new opportunities for expansion.