Strategic Partnerships: Definition, Types and Benefits
Strategic partnerships are not new. Companies have worked together for decades. Businesses like Starbucks, Google, Spotify, Uber, McDonald’s, and Coca-Cola have teamed up to mutually benefit. Although these companies might not appear to share much, the best strategic partnerships create new ways to reach new markets and expand existing audiences. Combining forces can help you build brand awareness and secure profitable futures for both companies.
What are strategic partnerships?
Strategic partnerships are collaborations between two or more entities that pool resources technology, resources, and financial success. Non-competing businesses often choose to collaborate to reduce risks, such as the need to expand marketing efforts into unfamiliar territories. This can be costly and not always successful. Working with a strategic partner to market your business is a great way to increase its ROI. This allows you to rapidly expand your customer base at a very low cost.
Sometimes, a strategic partnership is also known as co-branding. This allows businesses to exchange information, services, and other resources that they might not otherwise have. This allows each business to grow at lower costs.
Types of strategic partnerships.
There are six types of strategic partnerships.
- Integration partnership: This type enables customers to integrate separate operations or services in order to make their lives easier. Sales-as-a-service companies often create integration partnerships that allow them to connect with other services. One of the top email marketing services might partner with multiple content management system vendors to allow customers to seamlessly connect, modify, or move data between programs.
- Technology partnership: This arrangement allows one company to employ another to help provide technology services. This could be as simple as two companies working together in one office to split the cost of a costly piece of equipment such as a large-format printer.
- Financial partnership: A common partnership involves a business working together with an accounting or financial company to add value to their organization through the review of data. The partner financial company usually audits the business and completes a market analysis. They then generate a forecast and insight to assist the business’s leaders in making decisions.
- Marketing partnership: This partnership, which is very common, can simply be two businesses marketing their products or services together to increase their reach. Marketing partnerships that work in similar areas are the best. For example, a local general contractor works with an interior designer.
- Supply partnership: This partnership is where a manufacturer partners with a vendor in order to stock their shelves. An electronics store might partner with an audio manufacturer in order to sell headphones only. An example of this is an office that only works with one manufacturer to stock cleaning products.
- Supply chain partnership: This arrangement is common among larger companies and involves multiple companies working together in order to create a product. A company selling televisions might work with multiple businesses to make their product. One company may develop the screen, while another company produces the electronic components, and the third is the housing.
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What are the benefits of strategic partnerships?
Strategic partnerships are, as the above definitions indicate, essentially symbiotic relationships. Every partner can benefit from working together, be it by sharing resources or decreasing costs. We’ll be looking at some of the more tangible benefits below.
1. Access to new customers
Expanding your reach is one of the most crucial aspects of growing a business. Strategic partnerships can open up new opportunities for advertising and access to customers. You may be able to reach clients of another business by partnering with you. This is a great way to market your business.
You can double your clientele by expanding your reach.
2. Opportunities to reach new markets
Your brand can gain access to new customers and expand into new markets if the right strategic partner is chosen. Take Google and Starbucks for example. Google and Starbucks are not the first companies you would associate with coffee. They can also benefit from each other’s markets when these two giant brands collaborate. Imagine if Google had virtual coffee shops that were similar to Starbucks. This would allow Starbucks to enter the metaverse. It is a new market, but Google has been in this market before. Google does not typically target coffee drinkers, but partnering with Starbucks would open up new territories for the company.
3. Added value for existing customers
A strategic partnership also has the benefit of adding value to your customers, and in turn what that value brings to your business. Your clients will be more loyal to you if your partnership offers them benefits. Because it encourages word of mouth, brand loyalty is crucial. Positive comments from customers about your business will encourage them to share it with their friends, which can lead to your business growing.
4. Better brand awareness
A strategic partnership can also result in an increase in brand awareness. Your small business can benefit greatly from your willingness to share your identity with the world. Partnering with influencers or other organizations increases the chances that people will see your logo and another branding. This creates organic curiosity.
Brand recognition can be a key step toward becoming a household brand. In terms of strategic partnerships, You could partner with a well-established company that has a large customer base. The business may start publicizing your company. You’ll get more attention and may also be able to attract other companies to work with you.
5. Building brand trust
A good business partnership can help build brand trust. Companies will support you more if they see that you are able to work with others and make money. This is all part of building a strong, stable, and productive business network. Want to develop positive relationships with others is important. Partnerships allow you to meet new people and help grow your business. A company that is already trusted by consumers will make your brand more trustworthy.
Also read: How to Use Webinars to Build Your eCommerce Brand
Examples of strategic partnerships?
Strategic partnerships are a common practice in many top companies. These examples can be a great source of inspiration, even though your company is smaller than those cited. You might be able to apply similar arrangements in your company.
Sherwin-Williams and Pottery barn
Both parties benefited from this strategic partnership by appealing to home-improvement enthusiasts. Users could coordinate Sherwin Williams paint colors with Pottery Barn furniture pieces on the Pottery Barn website. You can also find DIY tips and tricks on painting projects at the blog linked from this site.
Spotify and Uber
Although music streaming doesn’t seem like a common platform with Uber, the two companies have teamed up to allow Uber riders to use Spotify to manage their music. This arrangement makes sense. Spotify is a great service for busy markets, and Uber allows riders to create their own playlists.
Ford and Eddie Bauer
To create unique advertising opportunities, the car manufacturer partnered up with the apparel giant. Select Ford cars were equipped with Eddie Bauer features such as leather seats and Eddie Bauer accessories, like luggage, which was printed with Ford’s logo. This was a great way for both companies to raise their brand awareness.
All of the above partnerships were formal arrangements that were governed by contracts. A legal agreement is necessary to protect your business. This will be especially useful if you have to dissolve the partnership. It could be difficult depending on how closely the companies are connected.