How to boost your profits by partnering with other businesses?

One of the best ways to generate business is to have other businesses generate it for you. We all know word of mouth can be very a very powerful marketing tool; getting organizations to promote or recommend you to their clients is akin to word of mouth on steroids!

So how do you go about finding the right partners and inducing them to endorse your product or service? Before getting into that it is important first to understand the underlying dynamic in all word of mouth activity. Successful word of mouth, whether from individuals or businesses, essentially comes about in three stages:

1. Prompt

The first step, often overlooked, is simply to ask (and keep asking) people or other businesses to recommend your service or product to anyone they know who would benefit from what you have to offer.

2. Educate

Secondly it is important to teach potential referrers on what your target market looks like and on why they should be interested in talking to you. As an example instead of saying: “if you know anyone who may be interested…”, say “if you know any young mums living in Sydney who are struggling with work-life balance” or “if you know any local small business owners in the IT industry who are currently hiring”. Similarly make sure potential referees understand everything you have to offer and what makes you stand out from your competitors.

3. Reward (optional)

Depending on the situation, it may be appropriate to offer a reward to either or both the referrer the referee.

Keeping this process in mind, let’s now have a look at how you can solicit word-of-mouth promotion from another business rather than an individual.

The first step is to identify a list of potentially suitable partners. To do so it is crucial that you know your target market. Be as specific as possible: “females who are between the age of 20 and 30 living in the Sydney Eastern Suburbs, have no children and are interested in healthy lifestyle” or “businesses which have a turnover between $500k and $1m, between 1-5 employees, are located in Sydney and have been in business for at least 2 years”. Once you have a clear idea of whom your target market is, you can start putting together a list of organizations that tick some if not all of the following boxes:

– They serves exactly the same target market as you;

– They are not competitive to you;

– They have an excellent reputation;

– They have an extensive and up-to-date customer database (and are happy to share it with you).

The next step is to approach the companies on the list and pitch the idea to them. The key point here is to think through what it is you can offer – what’s in it for them. It is important to highlight from the start that you are not just wanting them to send you leads but are looking for a mutually beneficially relationship, a win-win partnership.

The partnership could take different forms.

The first one is a full-fledged strategic alliance. This is where the two companies agree to recommend each other to their respective customers and/or prospects on an ongoing, long term basis. The promotion to each other databases can include newsletter articles, joint seminars, blog entries etc. or simply verbal communication with clients. This type of alliance typically requires quite a bit of relationship building upfront, and for it to be successful it will require you to keep proactively managing the relationship as the partnership may wither after a while when the initial enthusiasm has ebbed.

The second form of partnership is a more short term, possibly one-off promotion called a host beneficiary. This is where you come up with a compelling offer or giveaway to pass on to the other company’s customer database. A good host beneficiary is a win-win: one company gets new leads, the other gets more customer loyalty as customers appreciate the value of the “gift”. As an example, a beauty salon could approach a hairdresser serving a similar type of clientele with a special offer for a beauty treatment. The hairdresser sends this offer to its database, presenting it as a gift to thank their clients for their loyalty. Later on, the companies could swap and the beauty salon could forward a special deal from the hairdresser to its client database. Host beneficiaries are powerful because prospects receive the offer from a trusted source, who therefore lends their implied (or explicit) endorsement to the product or service. A host beneficiary can be a better option if you are looking for a quick boost in leads, as strategic alliances tend to be a slower drip-feed of leads.

P.S. Whenever you are ready…