The Definitive Guide to Creating Profitable Strategic Partnerships

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In 1980, Microsoft partnered with IBM to bundle Microsoft’s operating system, “DOS”, with IBM computers. Not only was Microsoft paid a royalty for every sale, but they also continued to sell their own version simultaneously. When the IBM PC debuted, Microsoft was the only company that offered an operating system, programming language, and application software for the new computer. By 1983, Microsoft reported $55 million in sales and was widely recognized as the most influential software company.

By the 90’s, Microsoft had captured over 90% of the world’s PC market share. Fast forward to 2016, Microsoft reported a market cap in excess of $481 billon and Bill Gates is the richest person in the world, with an estimated net worth of $81.7 billion.

In 1984, Nike signs Michael Jordan to an endorsement deal and the era of “Air Jordan” is born. The original contract between Michael Jordan and Nike was for $500,000 per year for five years. Today, Jordan Brand earns in excess of $1 billion per year for Nike. Don’t feel too bad for Jordan though, he still earns about $100 million from Nike and has a net worth of $1.24 billon according to Forbes.

In 2003, Nike signed LeBron James to a $90 million endorsement deal before he ever played a single game in the NBA. In early 2016, the tandem made headlines for a lifetime endorsement deal to the tune of $1 billion. (Yes, with a B)

I say all that to say, strategic partnerships matter.

Why Strategic Partnerships?

The ability to align yourself with strategic partners can skyrocket your business into another stratosphere. When launching a new business, product or service, it can be very resource intense just to get to market let alone stand out and be profitable.

Strategic partnerships allow you to align yourself with other businesses in a way that removes some of the burdens and barriers to entry.

The method I’m about to share with you is great for getting new high-quality customers at little to no cost and make them stick.

But before I wax deep, let me show you some of the benefits of establishing high-quality strategic partnerships.

The Benefits of Strategic Partnerships

Remember, the right strategic partnership can transform your business. Think Microsoft and IBM.

Here are just a few of the benefits of high-quality strategic partnerships:

Increased Visibility and Credibility

On the surface, strategic partnerships are glorified third-party endorsements with monetary benefits.

People do business with brands they know, like and trust. So when brand A announces a partnership with brand B, it immediately benefits from the goodwill of its partner.

More Sales

Strategic partnerships should also result in more sales. Simply put, you’re getting more exposure and access to a customer base that you wouldn’t otherwise be to reach as easily or at all.

My good friend Rob “YB” Youngblood of YBConnects helps speakers, authors, entrepreneurs and sales professionals to attract more clients on LinkedIn.

YB is a world-class connector and master of increasing visibility and enhancing credibility, I’m talking Mr. Miyagi status.

Part of YB’s genius is his formula for probability:

Profitability = Visibility + Credibility + Consistency × Confidence

As you can see, there’s a direct correlation between credibility, visibility and profitability.

Strategic partnerships allows you to leverage and maximize all three.

Lower Customer Acquisition Costs

According to the Harvard Business Review, acquiring a new customers can cost anywhere from 5-25x more than retaining existing ones. That said, it’d be in your best interest to minimize your customer acquisition costs as much as possible.

Strategic partnerships helps you do this.

Access to your partner’s customers saves you money on marketing, and the borrowed credibility dramatically shortens the sales cycle.

How to Create Profitable Strategic Partnerships

1. Identify Strategic Partners

The whole point of creating strategic partnerships is to create a mutually beneficial relationship that results in profit-generating outcomes like getting more leads, more sales or cutting costs.

To do this, you’ll need to find businesses that serves the same market you do, preferably ones that are more established or are strong in your areas of weakness.

They don’t have to be in the same business you’re in, in fact, that would be terrible. However, you want to provide a product or service that directly compliments yours or something you know your customers and clients want or need.

2. Craft an Irresistible Offer

Create a free or discounted offer tailored specifically to your strategic partner’s customers or clients, preferably an introductory offer or a loss leader.

A loss leader is a product or service priced below market value but is sold or offered strategically to attract new customers or sell other highly profitable products and services to those customers.

This is a great pricing strategy if you’re launching a new product and it’s very attractive to potential partners.

Pause right now and make a list of everything you could potentially offer to your strategic partner.

3. Pitch the Partnership

Now that you’ve identified your potential strategic partner and created your irresistible offer, it’s time to pitch this partnership as win/win offer they can’t refuse.

(Enter: The Godfather theme music)

Approach your potential partner and position your offer as a reward to their customers and clients with no cost or effort on their behalf. (major key ?)

Here’s a word-for-word script that you can use to set up the initial meeting:

Headline: Can I treat you to (coffee/lunch) to hear more about (their business)?

Hi (Name),

Hope all is well.

(If you don’t know them personally, tell them who are, what you do and who referred you, if any.)

I noticed that your company serves (target audience). Since we serve the same clientele, I’d love to (how you want to connect: phone call, coffee, etc.) and find out more about what you do and how I may be a resource to your customers/clients.

Any of these times convenient for you?

(date and time)
(date and time)
(date and time)

If those times don’t work, please let me know. I’m happy to work around your schedule!

Thank you and have a great day!

Best,

(Your Name)

Let’s unpack this so you can get a deep understanding of what’s going on here.

First, you want to make sure you’re adding value out of the gate. The subject line should communicate that you’re not just trying to “pick someone’s brain” (aka waste their time), but instead, you’re looking to feed them and learn about their business.

There’s three things working in your favor here: you’re adding value, even the busiest entrepreneurs need to eat and it’s a known fact that entrepreneurs love talking about their business (read: their baby).

Next, you want to establish credibility and create a connection. People are generally busy and don’t have time to waste with SPAM and nonsensical pitch fests from people on the come up. Let them know who you are and why they won’t regret opening your email. Be clear and concise.

Now that you have them reading, go in for the value-added ask. Remember, be clear about the ask. Let them know your only intention is to be a resource to their clientele.

Lastly, you want to do the heavy lifting when it comes to setting this meeting up. Be proactive and offer a couple dates that work for you. Be ready to be completely flexible if this doesn’t work. Don’t inconvenience busy people to have a meeting with you, that’s just wrong.

Hopefully all goes well and you get the opportunity to connect with your prospective partner. If you’ve asked all the right questions and listened closely, you’ll be in the perfect position to close this thing out a la Mariano Rivera.

Your follow up email should look something like this:

Headline: Follow up from our (phone call, lunch, etc.)

Hi (Name),

Hope all is well.

It was great seeing you at (meeting location).

I know we talked briefly about (their business) and the possibility of (your business) adding value to your customers/clients. I’d love to take you up on that offer.

I’d like to provide your customers/clients with {your irresistible offer}. However, if you have any other suggestions, I’d love to hear them too!

I really value your time and want to make this as hassle-free as possible for you. If you’d like, I can send you a [pre-formatted email, coupon, promo code] that you can send to your customers/clients, no strings attached.

Let me know what you think and I’ll send it over right away.

Thank you and have a great day!

Best,

(Your Name)

See what I did there?

Again, the idea is to add a tremendous amount of value at no cost (time, energy, money, etc.) to your partner.

I want you to keep this equation in mind: 100/0.

That’s right, I want you to give your best and expect nothing in return.

4. Send the Offer to Your Strategic Partner

This is pretty straightforward.

Supply your partner with the redeemable marketing collateral. A coupon, promo code, or letter that will allow their customer to redeem the offer.

Remember, make this as easy on them as possible.

5. Send a Follow Up Sequence

By now, you’re watching customers roll in and life seems great.

I’m gonna go out on a limb here and state the obvious: you need to over deliver.

This is your opportunity to make a first impression with new customers and you want to hit a grand slam.

Make sure this is the first of many times they come to you to solve their problems.

Here’s a pro tip though, when these customers come to redeem your offer add them to a nurture-focused follow up sequence or sales funnel.

You could set up a landing page with an autoresponder to send them 5-7 emails over the next 30 days or add them to a 5-day crash course on your area of expertise using something like Convertkit.

My point is, you need to deepen the relationship; early, often and continuously.

Examples of Highly Effective Strategic Partnerships

Example #1: A high-end hair salon offers a free “wash & set” to customers of an established women’s boutique.

There are a few things we know are certain in this life.

Roses are red. The sky is blue. Women like to shop.

These are obvious facts of life.

Keeping this in mind, it’s very wise for a salon looking to attract an affluent clientele to partner with a high-end boutique.

Again, women love to shop.

So after they buy an outfit in lieu of the evening’s festivities, the patrons of this high-end boutique can go get their hair done at no additional cost.

Genius.

I don’t know about y’all, but my wife has been going to the same hair stylist since she started getting her hair done on her own.

That’s a bond that doesn’t break very often, so if the hair stylist does a great job there’s a good chance they’ll earn a customer for life.

Example #2: A business coach offers a free or discounted training to Entrepreneur Magazine’s advertisers to help them get the most of their ads.

This seems pretty obvious right?

If you’re a business coach, you’re in the business of helping entrepreneurs grow their businesses.

Entrepreneur Magazine’s target audience is well, entrepreneurs. For a business coach, this is like putting a lion in a room full of gazelles.

But the training is for Entrepreneur’s advertisers, who are likely well established businesses.

This is a win/win for all parties involved; Entrepreneur Mag gets cool points for adding value to their advertisers (more ad sales), the advertisers get exclusive training on a platter (more revenue) and the business coach gets more exposure and direct access a group of prospects (more clients).

Example #3: A new restaurant offers a free appetizers to patrons of a nearby hotel.

The restaurant business is very competitive. Partnering with a hotel, especially an established chain can provide a substantial amount of foot traffic to surrounding businesses.

Hotels are like social hubs in the cities they reside in, just think of business professionals traveling on a daily basis. Not to mention all the families on vacation and the various events and conferences that take place in hotels every year.

Wouldn’t you want a piece of their business?

This can be applied to just about every product/service or market.

This is a great strategy, especially when you’re just starting out. As I mentioned earlier, this works best when you have a clear retention-based or loyalty program on the back end like a VIP club or membership site.

So let me ask you, what kind of strategic partnerships are you creating?

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