New business partnerships are announced daily. LevelUp and Sprint, Apple and Wells Fargo, Verizon and Comcast, Ford and Microsoft to name just a few. But big names aren’t the only ones to benefit from strategic partnerships.
Why so many big name partnerships and why is collaboration so vital for business growth? First let’s look at one area that almost every business spends a tremendous amount of time and money on: new customer acquisition. There are relatively few ways to grow business revenues. You must get new customers, generate more revenue per customer by raising prices, increasing the frequency with which they buy or bundle/upsell more services. Cost cutting can also impact margins as well as improving retention rates.
Our focus will be acquiring new customers – always a major expense for any business. If you ask any business owner they will likely tell you that increased competition coupled with the consumers ability to shop from home and massive technology changes have all affected their marketing strategy. Acquiring a new customer is flat out hard work. And while some businesses have done well with theses changes, many have not. Spending marketing resources on Adwords and social media campaigns can be confusing and expensive. Many businesses may have tried both these avenues and more, only to have been disappointed or possibly duped by people claiming they can deliver the world.
So how do you get new customers? By partnering with businesses that have customers with similar demographics both businesses can benefit via cross promotion. The carpet cleaner that partners with the local flooring company to consistently promote the others services. There are many examples on the local and national level that can drive more clients to all involved. Taken a step further you can have a network of “preferred partners” all endorsing other members. Great way for all businesses involved to grow. Strategically implemented you could have multiple partners referring your business as you in turn refer theirs.
Another reason for partnering is to strengthen your product line. One example would be a homebuilder that offers custom storage in their new garages. They partner with a garage storage company and receive a referral fee. There are many variations of these partnerships.
Perennial Software Co-Founders, Michael Marks and Don Faybrick, completely understood the financial and accounting needs of their customer base when they set out to create SedonaOffice (www.SedonaOffice.com), the #1 Financial Software for Security Companies. The problem is that by only providing an accounting solution they (a) were not best meeting their client needs and (b) would be in direct competition with established accounting software providers.
Perennial Software saw needs for integrated payment processing, statement mailing, fleet management, quoting, sales management and more. They recognized that seeking out partnerships with companies having expertise in these areas met their customers’ needs best. Through their partners’ willingness to work collaboratively Perennial Software is able to provide a best in class solution.
What started as a business with a few clients has evolved to be the dominant solution provider to security companies. For me, a sign that a business has reached a next level is when other businesses spring up to support it. That has now happened with Perennial Software and they also have been able to expand their product line. AlarmBiller (www.AlarmBiller.net) provides a sophisticated easy to use application for client billing.
By recognizing the value of partner offerings to their client base Perennial Software created a better product that plays a vital role in their customers’ business growth.
It is becoming increasingly difficult for a business to operate as a silo and compete solely on their product or service. Technology and the Internet’s ability to deliver knowledge and solutions has commoditized multiple industries. Think about POS credit card selling, web hosting, real estate offices to name a few. Only those providers that differentiate themselves can remain viable businesses. Forming business partnerships is great way to separate your business from the competition. The question for you is: how can you build and leverage partnerships to grow both your business and your partners?
The alternative? Going the route of the dinosaur.
