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24 Reasons to Form Online Strategic Alliances

Aug 9, 2008
Strategic alliances are valuable affiliations or partnerships with similar or complementary businesses. They are not reserved for large corporations. Because of the nature of the web, you can easily link in with like-minded businesses to pool your resources and capture a greater share of the global market. By aligning yourself to carefully selected organisations and sharing your strengths, you can fast track your online success economically.

The success of strategic alliances depends on what each party brings into the relationship e.g. assets, experience and commitment and on what terms and conditions the relationship is defined e.g. joint venture, endorsement or partnership.

Strategic alliances can be useful to extend your product line, add new points of sales and consequently increase your turnover. They can also help you gain more exposure, position your business and enter new markets.

Here's some of the benefits of strategic alliances...

Product sales and development

1 - Expand your range of products

Offer a wider selection of products by adding those of your strategic alliance partners to your regular offerings without incurring the cost of producing and distributing the goods. In some cases, you simply need to provide a link and direct product enquiries from your customers to your partner's website. If a sale is made, you receive a referral commission. This type of alliance creates a new source of income.

2 - Cross-sell products

A customer who enjoys your products is more likely to seek and follow your advice for future purchases because you have gained credibility. Recommend the products of your strategic alliance partners and receive a pre-negotiated referral commission on product sales. Because of your trusted recommendation, customers benefit from a shortened purchasing process (no need to research and review) and reduced element of risk in trialling new products.

3 - Supply holistic solutions

Provide 'complete' solutions that require bundling your products with those of your strategic alliance partners. This is similar to the one-stop-shop principle where you find all products and services under the roof (in this case a website). Buying a package deal for a fixed price is convenient, quick and relatively easy for the customer to order.

Example: Some web site designers bundle their design services with hosting and domain name purchases. On the one hand, customers benefit from not having to deal with three different entities (web designer, web host and registrar) and having to work out the logistics. And on the other hand, web designers receive a commission on sales of their strategic alliance partners' products whilst adding value to their own services.

4 - Create products jointly

Develop new products drawing on skills and knowledge of each partner. Shared resources and expertise will gain lead time, reduce product development costs and may also widen the appeal of your product.

5 - Develop new applications

Tailor products from your strategic alliance partners to meet the needs of your own market and likewise, your partners can find new uses or applications for your products.

Example: My book '200 Marketing Ideas for Your Website' has found a new lease of life with one of my strategic alliance partners. It is now sold as a human resource management tool for recruiting staff and volunteers on the web.

6 - Invite an expert

Form a strategic alliance with an expert in your field who will answer questions from your website visitors. Advertise your products on the sidebar where the answer to the problem is displayed and have the expert recommend your products when appropriate. From this arrangement, the expert can benefit from free publicity for his services and possibly a commission on your product sales.

7 - Increase perceived value

This is a win-win-win situation. By offering a product from a strategic alliance partner as a bonus, you add value to your own product, the customer benefits from a freebie and your strategic alliance partner gets a special introduction. Naturally, this can be a reciprocal arrangement where a strategic alliance partner offers your sample or promotional product.

Example: Give away a half-hour introductory consultation with your partner or a promotional ebook valued at $29 with each sale of your product. All parties benefit from this transaction.

8 - Gain product acceptance and credibility

To increase the attractiveness of your products or services, have a reputable expert in your field endorsing them. As part of the alliance, give a commission on product sales and advertise the expert's own products and services on your website.

9 - Pre-sell products

Recommend products and services from your strategic alliance partners. When a product receives a favourable mention, as in an article or review, it is usually 'pre-sold' to the customer i.e. the customer has already made his mind to buy the product, before the click on the purchasing link to the partner's website. You may want to produce articles and reviews for your own products that your strategic alliance partners can publish on their websites.

10 -Increase your sales force

Your strategic alliance provides an additional sales force. With more people and more websites to promote your business, your sales should increase.

11 - Develop new distribution channels

Add new points of sales for your products using your strategic alliance partners' locations to service your customers. This will reassure those customers who are uneasy about purchasing over the web.

12 - Exchange knowledge and products

Save on operational costs by trading products and services for free or discount prices with your strategic alliance partners.

Example: Within the National Speakers Association, we 'pick each other's brains', refer customers and sell each other's books. This strategy enables us to increase our knowledge base and provide new distribution channels for our products.

Positioning and promotional benefits

13 - Position your business

Strategic alliances position businesses in the minds of customers. That is why your choice of strategic alliance partners is critical in securing your desired business image.

Example: If you are associated with a University, people will perceive that your offerings are supported by scientific evidence and academic ethics. If you are a member of a home-based business association, people will see you as a cottage industry or ... one of those professionals who have a great lifestyle!

14 - Trade invitations

A special invitation to your customers for visiting your strategic alliance partners' website or subscribe to their newsletter can increase your customer base and result in extra sales when reciprocated. Viral marketing, the online word-of-mouth, is more credible and powerful than any expensive banner advertisement.

15 - Exchange testimonials

Reciprocal testimonials serve as endorsements of each other's businesses. It costs nothing but reassures potential customers in regard to your trustworthiness and expertise. It makes people more receptive to your commercial message.

16 - Swap adverts

Partners of a strategic alliance can save on promotional costs by exchanging website adverts from their business. This a good way to increase traffic to their sites at no cost.

17 - Increase search engine visibility

An increased number of inbound links (links towards your website) will boost your search engine ranking. One of the factors that determines ranking on search page results is link popularity, which is based on the number and quality of inbound links. Reciprocal links from strategic alliance partners will increase search engine ranking for all concerned.

18 - Cross-promote your businesses

You can pool financial resources to maximise your promotional efforts.

Example: You could publish an ebook on health topics or projects that recommend the use of products and services from both alliance partners. If you don't have the time or the writing skills to produce an ebook, share the cost of hiring a ghost writer. To increase the readership, give it away for people to post on their website. You may not make money from the publication of the ebook but you will increase your exposure.

New markets

19 - Increase your database

It takes time to build a valuable database of clients. Tap into your alliance partner's established list of qualified leads to grow your business quickly.

20 -Reach local markets

With people increasingly performing local searches on the web, create alliances with businesses located in different geographical areas. This way, you reach a global audience of local searchers.

21 - Enter closed markets

Gain entry to restricted or closed areas where your target market is congregating.

Example: If you want to reach the members of a professional association to which you don't meet the criteria, create a strategic alliance with that association. This type of sponsorship can entitle you to advertising privileges in exchange for your products or services provided free or at discounted price.

22 - Protect your market share

Align your business with key players on the web. Combining forces can erect a barrier to competition.

23 - Obtain competitive intelligence

Share sensitive information about competitors' moves to set up appropriate strategies.

24 - Share market research

Exchange data collected in your market researches.

When assessing strategic alliance partners, consider these important issues:

- Trustworthiness: check credentials of a potential partner

- Compatibility of ethics and core values

- Language and cultural differences

- Expectations and commitment

- Contribution: present and potential

- Reputation and other affiliations of potential partner

- Products and services: must be complementary and not competitive

- Ability and willingness to share data and knowledge

- Intentions: short or long term

- Terms and conditions.

On the web, with just a few emails you can form strategic alliances that will catapult your business into cyberspace. With like-minded people, you can build on each other's brand equity without incurring costs.

Strategic alliance? Think collaboration and competitive advantage.
About the Author
Henriette Martel is a website strategist, author of 200 Marketing Ideas for Your Website and director of the Australian Training Guide, Australia's A to Z Training Database and Resources for Speakers, Trainers & Coaches.
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