This is a guest article from Francine Allaire, Revenue Acceleration Strategist
All too often businesses form alliances that offer great promise in the beginning yet fail to deliver the results both parties anticipated. Instead, they become mired in “strategic gridlock”: persistent problems that grind progress to a halt.
The fact is that creating a productive and profitable strategic alliance requires more than identifying a clear objective, conducting due diligence, securing a contract, and establishing an operating process. It’s of key importance that you look at your business’s reality before selecting alliance partners. Develop your alliance strategy to support your business’s vision, mission, and objectives. Gaining a thorough understanding of your objectives, competitive positioning and landscape, strengths, limitations, competencies, and capabilities helps you determine whether an alliance makes more sense than buying a company or building the capabilities internally.
So you’ve done your internal due diligence, you’ve found a strategic alliance partner you believe will add complementary resources and capabilities, enabling your company to grow and expand more quickly, efficiently, and hopefully, profitably – Now what?
Consider going through this “9-Step Value Creation Process” and be brutally honest. The process should be done before you finalize the Alliance Agreement. After working with alliances and channels for the past 15+ years, I’ve developed a “Success Tool Kit” that covers the entire Alliance Lifecyle. This 9-Step Value Creation Process is one of the tools I use.
1. Define the Value Proposition
- Name the Joint Solution
- What is the Joint Value Solution and what does it do?
- List of benefits/features to support key proposition
2. Customer Segments
- Identify the vertical/industry/ideal customer profile, market size, location (local, national, international, global)
3. Customer Relationships
- What is their compelling reason to buy?
- What problem are you solving?
- What kind of touch points and customer experience do you want to create?
- What are their other choices? Competitive Landscape – anything comparable?
- How do you educate the market?
- What’s the go-to-market strategy?
- What are the routes-to-market?
- Distribution Model (local, national, global)
- Market Penetration
- How is the solution currently sold – or part of the solution?
5. Revenue Streams
- Describe all the different ways both companies are going to generate revenue from this alliance?
- What’s the break even analysis?
- What is the proposed revenue structure between the partners? (including influence/referral revenue, rev share…)
- How will the revenue be divided up between the partners? Equally, based on investments….
- Pricing strategy
6. Key Activities
- Not all things are equal – what are the top 10 activities you must execute in order to gain acceptance, momentum and velocity for this alliance? (You and Partner)
- What is the timeline to perform each activity?
- Who is on point?
- Any barriers or obstacles to getting those done
- Timeline for Approvals, Agreement, Internal training
7. Key Resources
- Identify the internal and external resources needed – resources may include: human resources, financial resources, knowledge/expertise (product, legal, finance, SMEs/industry)
8. Key Partnerships – External – Internal
- External: Do we need 3rd Party Implementors, additional solution components, resellers for different locations (local, national, global), outside subject matter experts and/or industry expertise, industry analyst endorsements…?
- Internal: Do we have the buy-in from the key stakeholders: executives, sales, marketing, products, delivery, legal and finance?
9. Investment / Cost Structure
- How much money are you going to need?
- Use of funds and assumptions
- Investments of each partner (factoring in: people, technology, IP, knowledge and expertise, marketing and sales, delivery, customer base, customer access….)
Here’s to Profitable Partnering!
Let’s keep the conversation going, we can all learn from each other. I greatly appreciate your thoughts and comments.
About Francine Allaire: As a revenue acceleration strategist, Francine helps companies profit from their sales, strategic alliances, channels, business development and marketing initiatives by engaging customers and partners, and by providing solutions that generate results. Follow Francine on Twitter at @francineallaire
This article was initially published on July 1, 2013 at francineallaire.com.