There are essentially 3 ways to make more money:
- More New Customers
- More Business from Existing Customers
- Charge More Money
Pete Forde reminded me of this business truth recently, which made me reassess the fundamental importance of strategic partnerships, across all 3 of these growth trajectories. The defined responsibilities of business development vs. sales can be contentious at times, however what seems to be arguably the universal core value of business development consists of leveraging assets, existing or distressed, to help drive business growth.
If we put on our growth glasses and look through the lens of this 3-point framework above, we can see how key account management and strategic executive direction has the ability to influence points 2 and 3 respectively. However, what I’d like to zoom in on for the rest of this post is the first point, in order to discuss how we can start to acquire more new customers by leveraging external 3rd party assets in the form of strategic alliances.
Back in 2009, Marketo created a fantastic study, which outlines their lead to opportunity conversion rates over a 12-month time period.
PRO TIP: A large percentage (64.5% in Marketo’s case) of new business lead sources will be generated through word of mouth or inbound sources. This is great, however the challenge with these lead sources is that you cannot always accurately identify what caused the prospect to seek you out in the first place. Other lead sources are much better at identifying the direct lead source, such as Partner and Employee Referral.
When trying to determine what business development lead generation activities are worthy of your time and energy, you may want to consider this mix, which I’ve borrowed from my friend and fellow business development consultant, Ted Mercer.
You’ll notice that this biz dev mix is fairly representative of Marketo’s study. Within each of these 5 strategies is their own unique funnel or radar, tactics, tools and metrics. Let’s place partnerships under the microscope and take a look at how you can start leveraging these assets to help you generate measurable new business activity.
Over the past few years we have witnessed the decoupling of the Agency Of Record (AOR) relationship within the client-agency marketing landscape. Similarly in web technology, we are witnessing the unbundling of the social network, with specialists becoming more predominant.
Don’t believe me? Take a look at Facebook, who are the perfect case study of an unbundled social network service. Specialists in photos (Instagram), instant messaging (WhatsApp) and disposable web (SnapChat) services have been massively successful at achieving critical mass land grab with their narrowly defined expertise, resulting in a global mobile user base that is keeping Facebook at the edge of their seat.
What we’re witnessing is that the most successful digital product companies or digital agencies today, all have one thing in common.
They do one thing and do it better than anyone else.
Along with the digital products/services above, you can also take note of these globally respected digital service firms, who all have defined specialties including:
- MetaLab – Interface Design
- Teehan+Lax – User Experience Design
- Xtreme Labs (acquired by Pivotal) – Mobile Development
There’s been much documented about the benefits of specialization, however what seems to be overlooked is the economic benefits of comparative advantage for these specialist firms. Discovering and building partnerships with firms who are more efficient from a value and cost perspective, can be extremely beneficial for achieving a more holistic customer acquisition game plan.
The czar of strategic alliances, Peter Simoons, has a definition of strategic alliances, which is one of the best out there:
“A strategic alliance is a strategic cooperation between two or more organizations, with the aim to achieve a result one of the parties cannot (easily) achieve alone.”
When deciding to pursue partnerships, there are many types of strategic partnerships or alliances that you can establish. Peter has created the strategic alliance spectrum that allows you to visualize the types of partnerships based on the amount collaboration and complexity involved. The breakdown of each can be found in his post The Alliance Spectrum, or by downloading his e-book on Successful Partnerships & Strategic Alliances.
Aside from the degree of complexity and collaboration, firms should also take into consideration the motivation for both parties involved. Questions you might want to ask yourself include:
- Are we looking to optimize and reach economies of scale?
- How will we reduce risk and uncertainty?
- Should we focus on acquisition of resources or key activities?
If you’re interested in digging into some examples of partnerships, a few of personal favorites include Nike integrating Apple into a line of running shoes and Nespresso teaming up with coffee machine manufactures to create an entirely new “single portion espresso” industry.
We’ve entered an era where the most powerful business models no longer live in isolation. Being able to understand business model network effects and connecting these different models is mission critical to making your partnerships sustainable and successful.