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Alliances

Guest post by: Bill Boyer

Article Overview: As the development of new customers becomes more complex, the ability to develop alliances is becoming more critical to the success of your company

Alliances

When we talk about our relationships with organizations or people outside our company, we generally categorize these as customers and suppliers/vendors. I would like for you to think of some of these organizations or people as alliances, and not just as a customer or supplier. One definition of alliance is a merging of efforts and interests by organizations. This is the way we should approach our business dealings with some of our more important customers and suppliers. We should be working just as hard for their interest and growth as we are our own.

In the most recent Discussion Series, Cathy Williams of Wolseley North America reinforced this concept with her comments that businesses need to "team-up" with other businesses. Her concept was very similar, she just used different terms.

Meet with these people and explain that you would like to develop an alliance with them and define some of the benefits for each of you. This at times can be a hard sell as some are afraid of giving you any information that they feel could be used against them. Assure them of your true interest in both of your companies' growth and profitability.

Initially, the growth in business may not be equal for each party in the alliance; but generally, over time, the benefits will be balanced. However, before you propose an alliance, you must "do your homework" and be sure that the relationship will yield benefits for both.

For suppliers, we need to totally understand all of their product offerings. There may be some additional products and/or services that we could use to grow our business. And we may be able to recommend their product and/or service to some of our other alliances. If we can help them grow and expand their business, they will be willing to recommend us to some of their contacts. We may even be able to recommend that they add some products or services that could benefit us, and possibly benefit other potential clients. If we understand their business, there will be many situations where we can be of help to them.

And it is the same for our customers: our relationship should be sufficiently strong that we understand their problems and opportunities well enough that we can recommend additional product offerings. And we should be sufficiently aware of their products and services, and the strengths of their organization, that we can recommend some customers to them.

When your customers recognize that you are trying to help them to grow their business, they will be more reluctant to talk with your competitors and in the long term may not be as price conscious as they were in the past. And suppliers may not increase prices or may offer you a lower price than they charge to others. The suppliers may also give you the opportunity to be the first to use one of their new products or even help in the development of a new product or service.

A real example:

Years ago I owned a company that dyed shirts and pants with some very unique looks for many of the large retail companies. They often sourced the basic garment from many sources. We were able to recommend them to a new garment producer that had very high quality standards and excellent pricing for the quality. Our benefit was our customers directed more of their business to us and this garment supplier recommended that many of their other customers use our services. Additionally, we worked with the garment supplier to develop some new styles and make some modifications in the cloth used for the products that actually caused the product to be more "fit for a customer's specific use". Neither party received any direct financial compensation for the referred business. Each was compensated with the additional business. This truly was a "win-win" for both and resulted in a very long term relationship.

Consider expressing your appreciation to your customers for their support of your business. Also, don't forget to thank your vendors for their products and services, especially when they have "gone the second mile" for you. I would recommend a personal note, or a separate phone call (not related to another business conversation) to thank them. The recipients will know you care, that you are well-informed about their business, that your staff is aware of their importance, and that you will be looking out for opportunities for their growth.

In today's competitive world, there are many ways to create an advantage over our competitors. Developing alliances has proven to be quite successful.

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Article Tags: Alliances, companyu alliances, customer service, customers, developing customers



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Different types of funding - Business Relationship Funding This is another source of funds that can be overlooked. It may be possible to introduce potential alliances to add value to both parties. It may produce an ultimate exit route in the medium to long term. Joint Ventures: Requires a legal agreement embodying the deal and another company Partnerships: Two companies collaborate with possible funding. Joint working relationships: These are an informal partnership which may be more project specific where the parties can share resources. Agencies: These can be geographical or product specific and generally incorporates a payment for the right to the agency. Distributors: Very like an agency but may not necessarily involve up front payment. Alliances: These do not require a separate company and can be embodied by a legal agreement to work together. Trade investors: Otherwise known as Corporate Partnering. This can be a good way to involve a much larger company in the business with a view to possible trade sale further down the line. Associates: This can be a loose arrangement with no fundamental commitments either way, rather like a preferred supplier. Equity Swop: Two companies exchange shares to a similar value to develop both businesses. Franchises: This can allow the business to grow without further direct investment. Licensing: This involves licensing a product or service to enable others to sell it. This requires you to own the intellectual property.


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