Channel-driven organizations have traditionally focused on nurturing sales partners. After all, pay-for-performance sales partners are a cost-effective route to new revenue. However, in the new era of partner ecosystems, another group of partners — strategic alliances — are gaining increased attention for their ability to drive sales and customer retention.

Partner ecosystems are networks of businesses that rely on each other to enhance their offerings, improve their reach and drive revenue growth. Typically, partner ecosystems are created by companies to deliver greater value to customers than they can on their own, with the goal of increasing customer retention and growth. In the tech channel ecosystem, for example, partners include transactional partners like resellers and agents but also influencers and retention partners like systems integrators, ISVs, MSPs, agencies, consultants and alliance partners, which we’ll be discussing here.

“[E]cosystem building is a critical pathway to build growth and resilience, with close to 50 percent of resilience leaders pursuing ecosystem strategies,” according to McKinsey & Co., which notes such partnerships “can rapidly unlock value at potentially lower risk than going it alone.”

Let’s look at the role of strategic alliances as part of the partner ecosystem, their benefits and best practices for success.

What Are Strategic Alliances?

Strategic alliances are business arrangements between two or more companies to collaborate to achieve business objectives while retaining their individual brands and independence. As such, strategic alliances can take various forms, including:

  • co-marketing initiatives
  • co-development of products or services
  • research and development collaborations
  • technology integrations
  • deployment or implementation
  • managed services
  • more

Significantly, strategic alliances are based on mutual trust, shared risk,  joint investment and shared vision or strategy rather than tactical or transactional goals.

Why Form Strategic Alliances?

Generally, companies form strategic alliances to achieve objectives that may be challenging, time-consuming or capital-intensive to reach on their own.

Objectives may vary by company, partnership, industry or market conditions and are not mutually exclusive. Generally, they include:

  • Gaining access to new markets (e.g., segments or geographies) where alliance partners have a strong presence
  • Enhancing competitive positioning by pairing technology or intellectual property to fend off competitors
  • Sharing risks or costs of entering a new market or launching a new product
  • Achieving economies of scale in production, distribution or marketing by pooling resources
  • Accessing complementary skills and technologies instead of investing in in-house development
  • Accelerating speed to market by leveraging an alliance partner’s offering rather than taking time to develop it in-house
  • Expanding or diversifying offerings by adding the alliance partners’ products or services
  • Filling product or service gaps by adding alliance partners’ products or services
  • Improving the customer experience by leveraging alliance partners’ expertise for pre-sale or post-sale service or support
  • Increasing customer retention by offering additional value that makes customers less likely to churn

What Are Ways to Maximize the Impact of Strategic Alliances?

Strategic alliance partners offering complementary products and services can achieve their objectives by leveraging one or more of the following joint go-to-market strategies:

  • Bundled offerings — Combine products or services to deliver a comprehensive solution to customers, making the joint offering more compelling and competitive.
  • Integrated solutions — Integrate products or services seamlessly to deliver a streamlined and enhanced experience.
  • Cross-promotion — Offer each other’s services to their respective customer bases to expand reach and grow wallet share.
  • Joint marketing — Co-sponsoring events, launching joint advertising campaigns, or collaborating on content creation can stretch shared marketing budgets and broaden audience reach.
  • Unified sales strategy — Train each partner’s sales teams about the complementary benefits of a joint solution so they can effectively pitch the combined value to potential customers.
  • Co-branding — Develop marketing materials, events, or products that feature both brands, increasing visibility and leveraging customers’ trust in each brand.
  • Shared Distribution — Leverage each partner’s distribution channels to access new markets or segments more quickly and efficiently.
  • Joint workshops — Organize events to educate potential customers about the advantages of using your complementary products or services together.

What Are the Best Practices for Successful Strategic Alliances?

Strategic alliances can lead to a stronger market presence, more satisfied customers and accelerated growth while minimizing costs and speeding time-to-revenue. Take the following steps to make the most of strategic alliances:

  • Align goals — Both partners should have mutual goals and a clear understanding of the benefits each brings to the table. Conflicts and misdirection can arise if the partners do not share a unified vision and objective for the partnership.
  • Open communication — Insufficient, unclear or infrequent communication can lead to misunderstandings, missed opportunities and a lack of coordination. Instead, engage in open dialogue about challenges and successes to address potential issues and optimize strategies.
  • Streamline Interactions — Improve communication and coordination by automating workflows with alliance partners using a partner relationship management (PRM) platform like ZiftONE built to support ecosystems.
  • Build trust — Partnerships are based on mutual trust. Distrust can stem from perceived inequities, lack of transparency or previous negative experiences. Respect each other’s contributions and uphold commitments to ensure a long-lasting alliance.
  • Review performance — Measure the effectiveness of joint initiatives and adjust strategies based on real-world performance data. Not setting clear performance metrics or not regularly reviewing the alliance’s ROI can make it difficult to gauge success or areas of improvement.
  • Put the Customer First — Strategic alliances create opportunities for both partners, but they should focus foremost on providing the mutual customer with a better solution than they can get from either party (or a competitor) alone.

Investment in Strategic Alliances is a Down Payment on Growth

Strategic alliances are “strategic” for a reason; they’re formed to achieve critical business objectives, not simply to beef up a roster of sales partners with the hopes that the oft-cited 20 percent perform. Alliances require a greater level of commitment. As Deloitte notes. “When entering into an alliance, partners need to be aware that delivering the ambition and achieving the benefits does not happen on autopilot.” With all hands on the wheel, you have the opportunity not to simply grow margins but to multiply revenue from your mutual customers.