5 Ways to grow your business through the Power of Strategic Alliance
 

In the month of June 2005, Hitwise, an Internet Traffic Analyst company noticed a large crossing web traffic from Video Ezy website to I-tech, an online computer reseller. The question you may ask, what can the video store do with a computer shop?

The answer is simple, Video Ezy sells and rents a lot of game DVDs while I-tech sells a lot of game consoles. They have the same target: young game players.

More than 20,000 corporate alliances have been formed worldwide over the past two years, shown by Booz, Allen & Hamilton's study, the number of alliances in the United States has grown by 25 percent each year since 1987.

Soho Natural Soda, a startup producer of natural carbonated beverages, was operating out of a Brooklyn kitchen. With no money to build, rent or operate any bottling facilities, it persuaded a regional beer company to use its excess capacity to bottle the beverages. Soho then got brewer Anheuser-Busch to distribute the product. In 11 years it grew from a kitchen table to $11 million in sales, with little overhead or cost.

If you are running a business, whether small, medium or large, you can not neglect the importance of strategic alliance. It is a simple, low cost lead acquisition method, clever and probably the most effective way of marketing.

Consider these 5 ways of Strategic Alliance:

1. Partner with a key customer. If you are selling a substantial amount of your product to one client, it is best to explore opportunities for strategic alliances with them. Your goal is to preserve the relationship - imagine losing 20% (the amount of products in Woolworth stores Nestle supplies) of your business on one single biggest account. You need to cement the relationship into a long-term formal alliance to help mitigate the risk of losing your biggest customer and market.

2. Partner with a brand leader. Most small businesses will benefit from alliances that add value and prestige, not just money. If a brand leader wishes to join forces with you – a “small fry” – grab the offer immediately! Business association with a well-recognized industry name can generate immediate credibility for you. It's like receiving a stamp of approval from the best in the industry. Even if the partnership does not offer direct financial remuneration, you can leverage your formal association with the brand leader in the advertising and marketing for your company.

3. Partner with an industry association. Consider the possibility of joining forces with the non-profit organizations such as trade associations, nonprofit groups, local community organizations, etc. Such partnerships may offer great opportunities for financing some advertising and distribution expenses while building credibility for your business.

4. Partner with a competitor. Your competitors, if handled properly, can be a very good alliance partners. By understanding the capacity and capabilities of your competitor, you may be able to tap into their unique strengths for your own advantages. You may work hand-in-hand with a competitor over contracts that may be too large for you to handle by yourself. You may also refer customers and projects to your competitors if your manpower resources are tightly squeezed. If you cultivate a good harmonious relationship with your competitor, they may also reciprocate and pass on to you projects and contracts that they feel you can do much better! As the saying goes, “if you can’t beat them, join them!”

5. Partner with a complimentary business. Joining with a complimentary business to develop a strong referral arrangement and offer a ONE-STOP service to your customers. For example, a handyman, a cleaner, a plumber, a tree cutter and many others can work together to bring a complete home service package.


How do you make Strategic Alliance work:

1. Make sure your alliance has the same target market. Of course make sure they are not your direct competitor unless you have read No 4.
2. Then make sure they have the same market positioning eg. price and quality
3. Make sure their customers like them and they like their customers.
4. Make sure they are open minded and willing to try different ideas.
5. Make sure you and your alliance both intend for a win-win outcome.
6. Make sure you test and measure the results.
 

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