This week’s blog is by Paul Terlemezian, owner and founder of iFive Alliances, LLC, which focuses on building revenue-producing strategic alliances for training, consulting and technology companies.
The concept of “Strategic Alliances,” or partnerships, is often used interchangeably and loosely. There are at least 16 different types of alliances. For this blog, I will focus on alliances that are intended to produce revenue for each company as a result of the intentional collaboration to deliver a product or service to a third party. The third party pays for the service and the alliance partners share revenue.
Strategic alliances take a long time to build – usually six to 12 months or much longer. Then the alliance has its sales cycle with the third party, although there is no guarantee of success. Each partner is risking time, money and brand. But when effective, a strategic alliance promises to save time and money while building or strengthening brand.
Here are some useful ideas for reducing risk and building more effective strategic alliances:
- Focus on one-way streets. Alliances need to have a mutual benefit, but do not require both partners to do business development. The mutual benefit should be a strategic benefit to the third party and the reason for the alliance should be evident to the buyer. A two-way street may lead to confusion regarding selling effort or account management. I recommend separate agreements and rules of third party engagement for each direction of the alliance.
- Establish an early focus on revenue goals and accountability. The primary reason for an alliance is profit for both partners. This will be achieved by gaining revenue from third parties. The partners need to agree on how much revenue, the time frame and the process for creating the revenue. The partners will also have to agree on being accountable to each other regarding operational tactics and financial matters.
- Deal with the difficult issues up front (e.g. account ownership when the alliance ends). Discussing difficult matters will either “kill the alliance” or strengthen it. If it dies early it was probably going to die later and at least you save time, money and energy. On the other hand, knowing how you will handle difficult matters in advance will allow you to move forward more effectively.
Alliances are a combination of art and science. There is a professional association for alliance practitioners, Association of Strategic Alliance Professionals, and LinkedIn groups such as “Alliance Best Practice” and “Association of Strategic Alliance Professionals.” These resources can help you grow and maintain your knowledge while introducing you to other alliance professionals.