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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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