All you need to know about creating partnerships between companies
What do you mean by partnering?
A partnering is like bringing together peanut butter and jelly, bacon and eggs, clotted cream and jam.
Two separate elements that brilliantly complement each other, producing someone brand new.
So, what does this mean in business?
The concept is the same. You bring together two separate companies that work in different areas and join them together, which produces something innovative, collaborative, and brand new for their combined existing and future clients.
Well, first off, it can make something delicious taste even better!
Being serious now. There are so many different reasons why companies partner with each other.
The most common reasons are:
- Strategic growth and development
- Access to a wider customer base
- Gain access to additional resources
- Access to different products and services
- Bringing something new to market
When considering partnering with another business, make sure to do an analysis around the benefits, advantages, and disadvantages of such a venture.
So, to start.
What are the benefits?
1. Wider reach of potential clients
Each company has their own focused customer base. By partnering together, this customer base is combined, but also expanded with the development of a new product, service, and solution, potentially targeted to an entirely new client base.
By partnering, you are able to potential secure work that may have otherwise been out of your reach.
2. Increase in productivity
Companies are always looking for ways to increase their productivity. However, it can be a challenge to significantly improve without growing the business as big as fast. Partnering can support this, by removing traditional company barriers between the client, both parties win and benefit, with the partnering companies becoming more efficient and competitive.
3. Bringing something new to market
So, you have an idea, a concept, but you don’t have all the resources you need to bring it to life. Partnering up with another business can help resource and develop this solution and also package the service or product together under this partnership.
4. Larger than you seem
This ties into the previous point around resource. By partnering up you essential have access to your own team but also the partnering business team as well. This doubles your reach and lets you spread the risk in a demanding project, activity, or product development among other members in both businesses.
Your existing and future clients can have more confidence in your ability to complete and achieve your milestones and targets due to your expanded team.
What you need to think about before partnering
A partnership between businesses is like a marriage, and like a marriage it is based on finding the right person, someone you trust, and enjoying being together within four walls.
If you end up partnering with an incompatible business, this can cause harm to both companies, their brand, their reputation, and their client relationships.
Make sure you understand each other’s ways of working and company culture, so that you understand how you each approach your services.
Understand how much investment is needed upfront to make sure partnering really works.
Look at how you will communicate the partnership with each set of employees, so that they are motivated to collaborate together.
Make sure to have a fair and clear agreement in place when partnering. Money can easily kill a partnership before its even begun.
Collaborating together can make a business feel vulnerable. As it’s not just about working together, it’s about sharing information together. Partnerships can’t work if businesses don’t understand each other’s processes and information. By sharing together, you may feel vulnerable, but you end up stronger and more competitive.
Who to partner with?
Now this is a great question.
It depends what you offer, how your customers interact with your brand, what other activities they do while working with you.
Think laterally and outside the box to understand how else you can reach new customers, offer new services and products. Don’t just think you need to link up with a similar business. It could even be from a completely different industry.
Here’s some examples of some successful partnerships that looked beyond their reach, their scope and their typical customer.
Uber and Spotify formed a partnership in 2014, enabling Uber users to DJ their rides. They sync their Spotify accounts when hailing an Uber, select a playlist (either their own, or Spotify’s city-specific playlists) and have music already playing when they open the car door.
This partnership enabled Uber to provide a personalised ride experience.
Spotify were able to encourage millions of Uber users to start paying for the premium Spotify accounts to take advantage of playing DJ. Uber and Spotify based this partnership on the key knowledge of where people listen to music: in their homes, on the go and in their cars.
In 1993 Starbucks announced they had partnered with Barnes & Noble to exclusively supply coffee for the American bookstore retailer.
This move was made “to provide a consistent, quality cup of coffee for readers to enjoy while perusing the latest best-sellers.”
This not only encourages shoppers to buy and enjoy a cup of coffee, but it also encourages shoppers to stay in the bookstore and shop for longer, changing it from a quick shop to a full shopping experience.
Both these brands focused on travel (although providing products and services from different perspectives).
BMW partnered with Louis Vuitton in 2014 to create the ideal travelling kit for the, then new, plug-in hybrid BMW i8. This collaboration resulted in an exclusive collection of four suitcases and bags.
With the first hybrid designed BMW car, it represented innovative craftmanship. With this partnership Louis Vuitton were able to match this innovation by creating sophisticated luggage made from carbon fibre.
The material usually used in the aeronautics and automobile industry was woven into a charcoal grey fabric with the iconic Louis Vuitton pattern. The luggage included a business case, a garment case and two different weekender bags.
These partnership examples show what can happen when two or more brands and businesses come together to create something innovative and brand new. Delivering on the customer journey experience, exclusivity, and competitiveness.
Partnership can be incredibly powerful, but this is only true when the partnership works, is fair, and benefits both parties. Make sure you understand both the benefits and the risks. Each company should understand the other and learn their ways of working and business processes.
And above all, you need to communicate clearly, truthfully and transparently. That’s the best way to build trust, promote effective collaboration and best of all, innovation.
So what will your partnership be? Peanut butter and jelly? Clotted cream and jam or bacon and eggs? Or something altogether completely new?