Last Updated on December 6, 2022 by Selina Parker
WHAT DOES IT MEAN TO BE A STRATEGIC PARTNER?
Strategic partnerships, also called business relationships, are joint ventures of two or more organizations to achieve mutual benefit. It can take many different forms, but it typically involves some form of cross-promotion. Either one organization provides goods/services to another in exchange for services rendered, or both parties benefit from their combined efforts.
11 BENEFITS FROM PARTNERSHIPS
1. BRIDGE THE GAP IN EXPERTISE AND KNOWLEDGE
By having strategic alliances, you can access professionals who specialize in fields outside your company’s expertise.
It is helpful if critical areas of knowledge or skill sets could benefit your organization but aren’t directly related to its core business functions.
For example, an accounting firm might seek out other businesses with complementary capabilities and services (such as I.T. support or marketing) to form business partnerships.
It would give the accounting firm access to new resources and focus on its core competencies while still benefiting from the other companies’ expertise.
Both companies benefit from each other’s unique strengths and resources, such as knowledge or experience in a particular industry or market. Having access to these critical elements allows the combined company to make better strategic decisions about how they operate and therefore increase business success.
2. DECREASE COST OF ACQUISITION
Strategic partnering strategies can help you to reduce the cost of customer acquisition. When two or more businesses work together, they can pool their resources to create a joint marketing effort.
For example, suppose two businesses are both targeting the same market. In that case, they could create a co-branded advertising campaign with high-value content through a common value proposition aimed at your target market.
This type of business relationship can also help reduce costs associated with research and development. Each company can share information and ideas to help them move forward faster and more efficiently.
By working together, businesses can also share the cost of producing and distributing products/services, which can help to reduce expenses and increase profits.
3. CREATE AN INCREMENTAL BOOST TO SALES AND REVENUE
When two companies combine in joint ventures, they can create a linkage that results in a total lift in sales and revenue. It happens because the combined efforts of both businesses can lead to increased customer awareness, which gives them access to new markets where one company would not have been able to market on its own.
This increased market exposure will also result in an uptick in sales and revenue for both businesses as they tap into new markets and customer bases, making it mutually beneficial.
4. OVERCOME BUSINESS FEARS
Being a startup, you might be worried that you lack the resources, capital, or expertise to enter a new market on your own. But when two companies join forces, they can provide each other with additional knowledge and skillsets to operate more effectively in their respective markets.
Additionally, by joining forces, these companies can overcome any business fears they might have had about entering a new market. They now have the support of a partner who knows the ins and outs of that particular market and shares resources making it a competitive edge for both.
5. MARKET AND SELL MORE EFFICIENTLY
If you are a startup, you might be having trouble marketing your products or services. Although Facebook ads can give you some traction, sometimes it’s impossible to measure the return on investment (R.O.I.). It is because there aren’t enough people clicking on your ad yet.
When two companies join forces, they have access to more resources to market and sell their products or services more efficiently and give more value.
6. GAIN ACCESS TO NEW MARKETS
It is the most apparent benefit of strategic partnerships. When two companies join forces, they can gain access to new markets that would not have been accessible on their own.
By joining forces, both businesses can tap into each other’s resources which allows them to expand rapidly in a short amount of time and at little cost compared with if they were to try and do it on their own.
For example, if you are a small company that manufactures metal parts, you might not be able to penetrate the Chinese market on your own. But by partnering with a Chinese company already established in the market, you will quickly gain access to this lucrative market.
7. EXPAND YOUR REACH IN THE INDUSTRY
Now that you have tapped into a new market, you want to make sure that you reach as many potential customers as possible. Thanks to strategic partnerships, doing that is now more accessible and cost-effective.
When two companies become strategic partners, they can expand their reach in the industry more quickly and at a fraction of the cost it would take if they were to try and do it on their own.
8. GET A BETTER UNDERSTANDING OF CUSTOMER NEEDS
Sharing insights about customers is one of the best benefits that a company can gain from a strategic partnership. By understanding what the other company’s customers want, you can develop products or services aligned with their needs, making them more likely to buy from you.
Additionally, if you’re a startup, this information can be vital in helping you to develop a solid customer base. It is because you will be able to design products or services that appeal to the customers of your partner company.
Understanding customer needs can also help you price your products and services more effectively. You will have a good idea of what the competition charges for similar offerings.
9. REDUCE RISK BY PARTNERING WITH OTHER COMPANIES WHO ALREADY HAVE EXPERIENCE IN THAT AREA
Partnering with another company can also reduce your risk by allowing you to tap into their expertise in the industry. It is essential for startups entering a foreign market or arena because partnering with a well-established company will learn from best practices without making costly mistakes.
If you’re looking at expanding overseas, it’s often helpful to partner with another already established company in the market. It can give you a vital insight into what it will take to succeed and how you should price your products or services, allowing you to enter the market quickly and effectively without making costly mistakes.
10. CREATE AN ADDITIONAL REVENUE STREAM
Partnerships allow you to create an additional revenue stream by selling products or services jointly. When two companies team up, they can make a product or service that is unique and that targets a specific market segment. It allows them to corner the market for that product or service, which will result in increased sales and revenue.
11. INCREASE BRAND AWARENESS
Lastly, a company’s most common benefit from strategic partnerships is brand awareness. It can be difficult for companies to increase their visibility and attract new customers by themselves in today’s marketplace.
82% of executives stated that joint marketing efforts were essential or critical in raising brand awareness. This partnership between two brands will often result in increased sales, which is what you want if your goal is to grow the company.
A strategic partnership has now become part of every company’s marketing strategy. The benefits are clear, and the advantages are many. If you do not have a partner company, it’s time to start looking for one.
When searching for a partner company, keep the benefits mentioned above in mind to find one that will offer the most value to your business.
Need strategies to raise capital for your business? The Fully Method is a great way to learn more about the techniques you can use.
YOUR FEEDBACK WILL HELP US CREATE BETTER CONTENT IN THE FUTURE!
ABOUT THE AUTHOR
“What began as a life and career coaching services company to aide entrepreneurs through the early-stage challenges and tough transformations of starting a social venture has evolved over the years to include mergers and acquisitions, organizational consulting, and business growth advisory services to mission-driven organizations that strive to improve access to basic physiological, safety, and security needs while increasing their profit margin. Clients include founders and organizations with the purpose of addressing deficiencies in delivering quality healthcare and mental health services, sufficient employment, access to clean water and air, safe shelter, adequate food, and more.”