The decision to create business alliances with other companies in your industry can present a complex situation for business owners and execs. You may ask yourself: How can I know which companies will be a good fit? How can use alliances to strengthen sales? How does the alliance change my market position and the position of my new ally? My goal is to answer these questions and explain how a synergistic alliance can help you get more business and work to differentiate your company from the competition.
The web has given offshore companies an equal footing with American companies when marketing to American businesses. Several years ago the quality of the offshore contractor’s work was called into question but more recently they have cleaned up their acts and perform much better than in the past. None the less, it is still the offshore producers that position themselves as low cost providers rather than differentiating themselves by superior quality. This provides the domestic producer a unique opportunity to differentiate based on quality of personnel and service instead of cost alone.
American companies should be careful not to fall into the trap of the lowest cost producer. By leveraging strategic alliances and working to improve quality among their staff they should remain focused on producing higher quality service than they are in doing it cheaper than everyone else. In the long run this should prove to be a better strategy. American companies can meet this challenge by saying, ‘we understand American business in a way that a foreign company may or may not, that is a demonstrated risk. Using a domestic company with a proven track record greatly reduces that risk.’
A common co-branding alliance that is done between service providers and software companies is the use of licensing agreements, allowing companies or individual consultants become certified in particular skill sets known for their applications, like MCSE, MCNE, Sun Micro’s Java Application Certifications etc… or company wide certifications like “Microsoft Gold Partner” (Onshore Technology Services, 2007). This provides a springboard for consultants to gain entry into specialized software application situations and is a popular marketing tool for consulting companies to advertise their expertise, because the licensing defines a particular set of skills.
A second alliance technique is the development of synergistic alliances between companies with different, but complimentary, skill sets. For example a company that specializes in Search Engine Optimization would form an alliance with a company that specializes in Java Applications, or Networking, or some other specialized skill set that is related but doesn’t compete directly with their specialty. The key to making the relationship work would be to locate the right skill set to enhance the overall marketability of the two companies by increasing breadth of skills available to clients and improving overall customer service. These two methods can be put together to develop an alliance strategy.
Strategic Plan of Action:
1. Look to upgrade company and individual certifications to reflect a higher level of service in the industry. These improvement can apply to your customer service functions as well as your technical capabilities. Improved certifications can be used as a point of differentiation from the competition, so make these changes known in the marketplace, your advertising and PR should publicize these changes. The added PR may help you perform better in the next step, finding a strategic partner.
2. Find a strategic partner. Look to develop a strategic alliance with companies that offer complimentary services to your own. You will both need to create concrete plans on how to best implement the sharing of customers, leads and plan mutual sales force training.
3. Your website, marketing materials and sales force (don’t forget, by forging an alliance you have expanded your sales force with the sales force of your ally!) should be utilized to trumpet the superior credentials of your consultants, and improvements in service. They should emphasize the relationship between your pricing structure and the superior quality of your services
4. You need to provide for cross training your new ally’s sales and marketing departments (this goes both ways) to familiarize them with what you do and what you can offer their clients. A clear plan should be created on how best to share clients and service leads (this is why you formed the alliance to begin with, so this plan requires careful attention).
5. Another option is to develop a secondary relationship with a low cost service provider. Your new alliance will give you greater leverage and purchasing power. Perhaps you can outsource routine research or programming legwork as a measure to offer greater flexibility when negotiating pricing at the contract table. But, the objective is to differentiate on quality, not just price. It’s important to discuss the relationship between service quality and price in your negotiations.
These action recommendations are designed to work synergistically; you can employ them one at a time or all at once. They represent an integrated business strategy to improve your company’s market share, market positioning, and, your bottom line by creating synergy with other companies who have complimentary skill sets which you can both leverage to mutual advantage. Differentiate yourself by providing superior customer and technical service (in that order), your customers will be sure to sit up and notice.