I recently spoke at a Financial Innovation Summit on a panel about Using Partnerships with Technology Platforms to Offer Additional Services. Here are some highlights from that talk for you to keep in mind as you look to leverage partnership agreements to accelerate your growth.
For many startups and emerging growth companies with great ideas and niche products, partnering with more established players can be an effective way to access new markets and customers. Partnership arrangements can range from cross-selling to strategic investments, from joint ventures to acquisitions. Partners in adjacent industries or with complimentary solutions can be useful for increasing your reach and may add additional distribution. In financial services, there has been an increasing trend towards cooperation as 83% of investments went to collaborative fintechs in 2015 vs. 37% in 2010 (Source: Accenture).
Technology partnerships are increasingly becoming the norm as companies must learn to adapt to coopetition – cooperation and competition – to get ahead. We can’t do it all alone – it’s just not realistic for one company to be all things to all people, so it can be helpful for specialized products to find other players who need what you have to offer their customers additional services. Larger players are also well positioned to expand their market share by partnering with niche players or integrating services into their solution set. Structuring an effective partnership can help accelerate your growth.
6 STEPS TO STRUCTURING SUCCESSFUL PARTNERSHIPS
Here are some ways to ensure that you setting up a new agreement with any strategic partners to work for and with your business.
1) Identify Objectives: Clarify what you each hope to achieve by the partnership. Make sure there are specific goals in mind, such as increasing brand awareness, cross-selling services into existing clients or reaching new target markets. Determine how important this agreement will be and how each organization will benefit from this affiliation.
2) Measure Outcomes: Define how you will know that the partnership has been successful. For instance, will your goal be to close a certain number of joint sales or increase revenues by a certain amount or percent? It could also be that you are looking to expand your pipeline or have another organization become your primary sales channel so you can focus on product development.
3) Align Incentives: Confirm what each party is looking for and set up compensation or fees that help to drive the desired outcome. What is the percent commission or fee sharing agreement needed to drive focus on this sales opportunity as a business priority? Many sales organizations have multiple products to promote, so there needs to be a reason to make this specific initiative worthy of time and resources. Practically speaking, most people spend time where their bread is buttered, so make sure that these contributions are rewarded as an important undertaking.
4) Understand Market Requirements: Review what regulations, if any, might impact your ability to work together and who else is offering similar services in the marketplace. Having a sense of the competitive marketplace and whether there are other similar arrangements in place can be helpful in either differentiating what you are doing together (for instance offering a special agreement or added functionality) or replicating industry standards (such as offering similar connectivity).
5) Define Process: Develop a process that outlines how you will collaborate with clear roles and responsibilities and a plan for ongoing engagement. Will you review clients lists and schedule joint sales calls? Will you plan events or conference sponsorships together? Is joint sales collateral needed? Define how frequently you will convene to discuss progress and track performance.
6) Create Accountability: Designate a senior owner in each organization who is driving the partnership – their ability to drive results should be factored into their annual review process if possible. Define key benchmarks and assign responsibility for other important team members to lead different aspects of this initiative, depending on how many elements are involved (ie. technical integration, product development, sales and marketing). Regularly review the status of agreement and how things are progressing.
The best long term partnerships are based on shared goals, effective ongoing communication and successful execution. Pulling all of these elements together requires a thoughtful strategy, planning and ongoing review to keep a relationship on track. Often the most lucrative relationships result from clear synergies and coordinated efforts to maximize the benefits of working together.
If you would like some assistance in creating effective partnerships, please contact us to learn more
about how we can help you. We have facilitated partnership agreements, supported sales and marketing for strategic partnerships and developed other effective strategies to accelerate growth.