With the fallout of the mortgage industry and the bottom of the housing market nowhere in sight, consumers are shutting their wallets while retailers are feeling the pinch. As the indicators of an economic recession loom on the horizon, many people have asked me how they can continue to grow their sales. During the economic hot streak of the last five years, consumers spent in over-exuberance, and the question now remains: how can you grow your business amidst a potential recession?
The answer is through the creation of strategic alliances. With marketing budgets limited by the potential flat line of growth in revenues, strategic alliances offer an instant way to increase your market share without high advertising and PPC costs. This translates into higher revenues for you, while you enjoy lower operating costs.
Sounds good? Well, keep in mind that not all strategic alliances live happily ever after. It’s important to conduct a thorough examination of your potential partner before sharing information or signing a contract.
Characteristics to look for when conducting a strategic alliance line-up:
1. Reputation. Considered one of the most important factors of a strategic alliance, is your potential partner’s reputation? The last thing you want to do is get in bed with a company whose reputation is less than par as this can damage your long-term public image.
2. Client Relations. A company with a less than stellar reputation most likely does not have a good rapport with it’s customers, defeating the fundamental purpose of a strategic alliance. The only way a strategic alliance is effective is if your partner has a trusting, reliable, and credible relationship with it’s clients.
3. Synergistic Business Models. Finding a company that is synergistic to your goals is critical to developing a strong strategic alliance. Will their customer base be interested in your product or service, and vice versa? If you are selling wedding dresses, but decide to partner with a dedicated web hosting company, this clearly does not have the same synergies as a partnership with an invitation printing company.
4. Price Point. An ideal strategic alliance partner shares similar price points with your product or service. This further confirms the synergies between both your businesses. If your company sells adware software for $100, then you would want to partner with an anti-virus software company that sells their product in the similar price range.
5. Human Factor. Even if all of the numerical and financial aspects of the strategic alliance are in good order, it’s important to ensure the human factors are in place too. Indeed, it is the human relations of the other company that will determine whether or not the alliance will be successful. If your potential partner is difficult to communicate with, then that element negates all of the other financial factors. They must have an open mind, be flexible, and communicate effectively to be a candidate for a strategic alliance.
Benefiting from a strategic alliance is easy, but finding the right partner is the difficult part. Once you have passed a potential partner through the line-up, however, the probability that the alliance will be economically fruitful increases significantly.