5 Types of Strategic Business Partnerships That Work in 2021
The challenge is, how do you choose the right one for your business? In the B2B space, there are only so many avenues you can leverage to reach your target audience.
These are called "channels," and they're at the heart of a go-to-market strategy that includes partnerships as a customer acquisition tactic.
What Makes for a "Strategic" Partnership in Business?
When you plan for something beforehand, you're much more likely to see that plan succeed rather than be pulled in all directions. That's what a "strategic" partnership is all about.
The first thing you do is identify who your ideal partner is:
- Why are they suitable to propose what you sell to potential customers?
- What makes them the right fit for your brand and its culture?
- Where would they end up selling your product or service?
All of these questions are important parts of the planning process behind a successful partnership. The business part is embedded within the plan right from the start. That's because your ideal partner's audience (whether that be a small business network or a large audience) should match your ideal customer profile.
So, a strategic business partnership involves collaboration between two or more companies that mutually benefit from working together. The keyword here is mutual benefit.
There's truly no exploiting one side or the other but rather making the best of a joint effort, putting the emphasis on the sustainability of a partnership (i.e. the monetary gains).
What Type of Partnerships Are There?
When you're first starting out a business, the "obvious" partnership is to split equity with one or more business partners to distribute the risk of starting a venture.
However, that is a type of partnership that is covered by a variety of laws depending on your country, and it has its own set of rules and legal requirements to work out.
If your B2B company has already jumped the hurdle of gaining initial traction, you'll be most interested in "channel" partnerships rather than traditional business partnerships.
Where the latter involves an internal shareholding structure, the former is fully-dedicated to external providers who align with your brand vision and can provide value to your customers.
How Does a Channel Partnership Work?
Channel partnerships are a type of strategic partnership that involves aligning external providers with performance metrics related to your product that fit their existing marketing and sales efforts, effectively improving their margins and leading to a return on both ends.
These programs usually work on a tier- or contract-basis where the partner signs up with certain goals to meet in mind and the provider helps them achieve those goals.
The idea is to cultivate a salesforce outside of your internal efforts, branching things out down to the smallest of business communities you wouldn't otherwise be able to reach.
It's not recommended to start a business from scratch with a channel partnership; rather it's better to understand your target market really well before you make the commitment.
That's because you'll have to train external providers on what the target market wants to hear in the first place, and what shouldn't be communicated instead to keep expectations level.
5 Business Partnerships To Consider in 2021
There's no shortage of examples today on what a successful channel partnership looks like, however, there are 5 specifically which are worth your time more than others:
Business Partnership #1: Affiliate Program
Although affiliates are a relatively new partnership type, the scale that they can bring to a channel program is hundreds of times higher than any other partnership.
When you have a person who's been able to capture attention from hundreds of thousands of highly-engaged people, that audience is basically ready to purchase.
However, it's important that the right influencer pitch the right product or service to their audience, otherwise both their reputation, as well as yours risk a negative impact.
To create an effective affiliate program:
- Make sure you understand what size of engaged audience an influencer should have to make the effort of reaching out worthwhile in the first place.
- Prioritize the channels you'd prefer to appear on and how you want to be perceived by the target audience but hold off from reaching out to influencers yet.
- The best way to reach out to somebody is to already have an affiliate program in place, and the reason why is that the expectations will be set from the get-go; if you try to reach out without one, the influencer will try to negotiate a much higher rate.
- Use a software tool like Kiflo to prepare the affiliate tiers & commission per sale, share a link with them directly so they can sign up, and onboard them onto your program.
- Help the affiliate get through any links in the process so that they can effectively pitch your product or service to their audience without it sounding forced or unnatural.
It's important that you keep affiliates in the loop well beyond the first engagement with them. Good affiliate contracts will have anywhere from 5 to 25 appearances agreed beforehand.
Business Partnership #2: Co-Branding or Co-Marketing
Co-branding is the act of joining forces for a specific marketing effort, including guest posts, webinars, eBooks, research papers, and more types of content marketing.
B2B companies have gotten a lot smarter at capturing attention in recent years by inviting experts to simple "chats" or webinars which automatically spark the interest of both the experts' audience as well as the companies'. It's truly a win-win situation in most cases.
It is important to keep a few best practices in mind:
- Always have an agenda, no matter what you're proposing
- Don't rush anything to production unless you really believe in the value provided
- Take the time to understand what makes the two brands align and offer that as an upsell
When done well, co-branding is a great partnership strategy that can spark a chain of invites to industry podcasts and ultimately drive significant revenue for your business.
Business Partnership #3: Referral Program
Not to be confused with a customer referral program, this partnership is all about getting your partners to refer their existing business network to you for a % share of each sale or one-time referral fee.
Both affiliates and referrals can have one-time commissions for each sale, but referrers deliberately send customers your way, and set the expectations on your behalf.
Unlink affiliates which speak to a broad audience, referrers will send highly qualified customers your way and set the expectations on your behalf.
This means not only that you gain new business "out of nowhere," but also that the referrer acts as an advocate for your company, offering a level of trust that cannot be matched by other partnership types. This is usually rewarded with longer-term commissions.
For example, say a customer was referred by one of your partners—they could get 20% of recurring revenue generated from that deal for up to 6 months, after which it would drop down to 10%. Depending on the price of your product or service, that is a significant amount.
What Makes for a Good Referral Partner Program In 2021?
Business Partnership #4: Technology Integration
This type of partnership only works if you have a technology product that you can build certain integrations off of, sort of like a platform. You provide the partner with good developer documentation and they build a solution on top of your existing features.
There are plenty of examples of this:
- Airtable's marketplace - A place to build an app on top of a powerful project management tool that is used primarily by marketers around the world
- Zapier's "Platform" - A fully-automated development environment to integrate any app with Zapier's famous software that makes automations accessible to anyone
- ActiveCampaign's Apps - Where 100s of third-party apps are listed in one of the most trafficked email marketing tools available on the market
- Freshworks- A software solution to help businesses improve and manage their customer experience, sales, marketing, IT, and HR management in a simple and effective way, along with a successful partner program for SMB in the B2B tech industry.
Of course, technology integrations are a pretty advanced type of partnership, and it only really works with platform-like software tools that provide a certain level of functionality.
However, even smaller SaaS companies can benefit from this, integrating key third-party apps directly into their ecosystem to make for a more appealing package to specific users.
Business Partnership #5: Reseller Program
Perhaps one of the most powerful types of business partnerships for B2B companies is the reseller program. This is the most comprehensive of all third-party channel partnerships as it involves a complete pitch starting literally from zero and turning a lead into a customer.
Reseller partners are the ones that commit the most to a particular third-party offering as they are willing to include it as part of their sales pitch, significantly increasing the complexity of their work but potentially offering much higher returns once they successfully close a deal.
Read more: The Full Guide To Nailing Your Reseller Partner Program
Scale Your B2B Firm with a Channel Partnership
When you form a fitting strategic alliance, you access invaluable opportunities and insights for your brand, generating more revenue and exposure for your products and services.
Whether you want to reduce costs or create more brand awareness, a strategic partner can help you scale your business. For this, you need a way to manage and organize your partnerships.
Software tools like Kiflo give you all you need to make the most of your partner relations in a powerful environment called a Partnership Relationship Management (PRM) suite.
From the beginning stages to the final roll-out, Kiflo makes strategic partnerships easier for everyone involved as it keeps partners engaged while giving you full visibility into their performance. Get a feel for yourself with a free 7-day demo below.