Developing strategic alliances is a proven way for businesses to run better, grow faster and make more money. By leveraging relationships with other organizations that are aligned with your target markets, your small or midsize company can gain sales momentum and outperform the competition.
But how does an organization go about creating those critical strategic alliances? What should be done? What steps are essential? Below, you’ll find answers to these important questions.
What is a strategic alliance?
Companies seek to establish long-term relationships that build their businesses in much the same way that countries form alliances based on mutual interests. A strategic business alliance creates a long-term relationship that is mutually beneficial and creates value for both parties. The more value created, the more strategic the affiliation.
In these mutually beneficial and strategic business alliances, both organizations can win through what’s known as authority marketing. Authority marketing allows your company to dramatically amplify its ability to communicate with a specific audience (and convert sales) by positioning your organization as a go-to resource in the marketplace.
Examples of such alliances can vary to fit your company’s size and offerings. But, in general, formal alliances tend to be more common among companies with 25 or more employees.
So, while a small business with a hyper-local service could become a “preferred vendor” recommended by its city’s chamber of commerce, a strategic alliance is more complex than that.
One example of a true strategic alliance is when a company partners with an industry-specific association to reach a target market. Through the alliance, the business shares thought-leadership content that helps establish the company’s expertise and keeps it top of mind with important decision-makers.
When considering and planning for new strategic alliances, there are five steps for developing this critical strategy to turbo-charge your sales, marketing and business development efforts.
1. Align and prepare
The first step to developing a strategic alliance requires that you identify key industry influencers and determine if a joint value proposition exists. In other words, what is the measurable benefit for you, your prospective partner and your shared customer base that will come from the alliance?
As you evaluate the joint value proposition, you’ll need to make sure your alliance execution model aligns with your corporate development plans, desired market influence, revenue goals and sales targets.
Successful alliances will help your company generate and expand its influence in key industries. Client acquisition plus consistent, predictable and incremental growth comprise the holy grail of any successful alliance.
But a word of caution: Do not build the alliance solely on sales metrics. Focus instead on bringing value and the opportunities to generate incremental revenue.
Hiring for an alliance mindset
Once you’ve got your basic strategy in place, you’ll need to identify which of your employees are right for the job of helping you manage your alliances. Or you may need to consider hiring a person (or team) with the right mindset if they don’t already exist internally.
First and foremost, your strategic alliance managers must be strong negotiators and problem-solvers who enjoy fostering innovation in the workplace. People in these jobs are in a constant state of negotiation, both internally (with cross-functional teams) and externally (with partner leadership teams).
In order to get a strategic alliance off the ground, you’ll need a strong, optimistic leader with equal amounts of people skills and business acumen. This key position needs to be someone who builds trust and rapport while striving to extract results that address both organizations’ fundamental business objectives and interests.
This manager should be someone who:
- Has strong interpersonal skills
- Remains as open as possible when dealing with others
- Can be tough on issues and soft on people when facing difficulties
- Listens and communicates well
- Is highly assertive and task-oriented
- Is creative and visionary when seeking solutions
Perhaps most of all, this leader needs to be comfortable operating with a certain amount of uncertainty. As this person works to design and implement new pathways for your company to gain clients, they will be working between the two organizations, people and ideas.
2. Invite and commit
Steps one and two are the time to explore market analytics and business intelligence to make sure you’re making alliance decisions on actionable data.
During the second step of developing a strategic alliance, you’ll reach out to industry groups you’ve identified as prospective partners and open a dialogue. During this time, your business will begin to outline the processes, tools and activities you’ll use to identify and build an alliance with this other organization.
For example, if your business specializes in insuring data centers, you might seek to form an ally with a trade association whose membership comes from Silicon Valley and Boston’s Route 128 technology corridor.
You might negotiate for your company to host a quarterly webinar on a relevant topic or consider building an elaborate engagement plan to position your company as an authority within a targeted industry community. In return, the association may receive an incentive package to ensure your products and services are promoted to its constituents.
3. Design and build
Step three is the time to decide upon specific terms and sign contracts. You’ll set goals for both organizations individually and jointly, decide on your measures of success, and begin to outline roles and responsibilities in the alliance. This is also known as a governance model.
Think of your governance model as your roadmap for mutual success. This requires that both organizations in the alliance consolidate the key structural elements of your engagement program to ensure cross-functional team alignment.
This is the stage where you solidify the joint marketing plan, create a process for developing high-value content, and determine the appropriate campaign framework and marketing cadence.
This phase also requires partner alignment and team coordination. A great method for achieving this alignment is known as the agile process.
Be prepared for this phase to require the most work of any stage since what’s been theoretical up to this point now becomes reality.
4. Go to market
Once the alliance framework is finalized, you’re ready to build an alliance engagement plan and go to market.
Your ultimate goal is to reach groups of industry influencers and decision-makers, and to do that you must first design a marketing plan with a variety of tactics to go to market with your alliance.
At this point, your company may close a few quick deals and fill your sales pipeline. Regardless, now’s the time to take steps to ensure your internal team is prepared to handle rapid company growth.
5. Sustain and deepen
Once you and your strategic alliance partner have the program up and running, you’ll need to continue to work to sustain the momentum.
This is the phase when you’ll deepen your collaboration by:
- Expanding even further into the industry
- Tweaking offerings to better align with customer needs
- Discovering sub-groups within your target market that need specialized products and services from your company
As you solidify your alliance, you should be able to refine the exchange of customer data and design new, innovative ways to reach your ideal client. Throughout this process, your cost of acquisition for new clients should always trend down.
As the alliance proves to be a revenue-generating juggernaut, you’ll learn how to quickly identify new markets with other partners and replicate your success.
Finally, you’ll know you’ve institutionalized the program when the revenue generated from your program starts to appear on your alliance partner’s financial statements and budgets. That’s a sure indication that both organizations are mutually dependent and joined at the hip for future success.
Want to explore another type of strategic alliance that can facilitate your organization’s growth and minimize its risk? Learn more about how a professional employer organization can benefit your business by downloading our free e-book: HR outsourcing: A step-by-step guide to professional employer organizations (PEOs).