Possibly the most effective way to win new customers and retain existing customers is to form alliances and strategic partnerships. These relationships take some effort to create but the return on your investment can be tremendous.
Build an alliance, an informal or formal partnership, with your customers and you will be hard to beat. One way to do this by providing customers with information and support that your competitors cannot duplicate.
Industrial suppliers often use this customer relationship technique to give them a competitive advantage. Companies work with customers to plan ordering, offer supply chain management and warehousing, and other value-added services that elevate then from a vendor to an essential part of their customers’ businesses.
But Customer Alliances are not limited to industrial suppliers. They are a critical part of the customer relationship in almost every sector. For example, a major food service company offered its restaurant customers weekly reports with pricing forecasts for key items including expected order quantities based upon each customers’ past history. The restaurant owners could use this information to make sure that they were not blindsided by a dramatic price increase on a major ingredient, and could adjust their pricing and menus accordingly, or stock up prior to the price increase. The restaurateurs could also this information to plan specials and new menu items that featured lower cost items.
Not only was this a great tool for their existing customers, but the food service company found it provided an excellent way to start a dialog with prospects. The account reps offered to provide a pricing forecast for restaurant owners who were not customers. This gave the food service company a natural opportunity to also provide a pricing comparison with the prospects’ current supplier and bid on their business while demonstrating the unique value they could provide.
Of course, you can only offer a service like this if you can provide your customers with accurate price forecasts. Just imagine how angry a customer would be if they removed a very popular item from the restaurant menu because of an expected price increase and the price increase never happened. Or worse, if they ordered 100 lbs. of salmon fillets because the price was going up and instead the price went down. Two or three big mistakes like this and you would have an ex-customer.
Start with your core competencies. In the case of this food service company, they knew the future pricing because they purchased with long-term contracts. There was no risk that they would get the future price of salmon wrong, for example, because they already owned the salmon at a set price. All they needed to do was communicate this information to their customers who purchased salmon accurately and in an easily usable manner.
Establishing strategic partnerships is an extremely effective sales growth strategy. Find a company that offers a complementary service or product. Then develop a strategic partnership so that you can support each other’s sales and customer relationship efforts.
The most difficult challenge is to identify the right partner(s). The best strategic partnerships are between companies that have similar target customers but different customer bases. This enables the companies to immediately cross-sell to their partner’s customers and can result in significant, short-term sales.
Sometimes the best way to set up a strategic partnership is to hire a third party to negotiate the deal on your behalf. A third party can bring expertise about how to set up a strategic partnership that will be effective, how to structure the deal and protect confidential information throughout the process. It also gives you the opportunity to let the third party be aggressive about terms and conditions without damaging your future relationship with the partner.
There are countless ways to set up strategic partnerships but there is one requirement for success – all of the partners must both be advantaged by the arrangement.
What are your experiences with partnerships and alliances?