As someone who has been responsible for developing go-to-market strategies for a number of different businesses, I’ve had my fair share of trials and tribulations when it comes to partnering with others to help with growth. Great promise has more often than not met with disappointment, in no small part due to a loss of focus post formalizing an agreement. I’ve learned that taking the time to go beyond high-level discussions to get into the nitty gritty of what should be expected during the relationship before formalizing it, can save valuable time and frustration thereafter.
Very public examples of such challenges abound. Perhaps one of the most significant recent failures involves two well-known brands. Swatch founded Tiffany Watch Co. in 2008 under an accord with Tiffany to develop, produce and distribute Tiffany-branded watches. They believed that sales through this partnership could hit $500 million in the medium-term and struck a 20 year deal. Less than 4 years later, it was filing for damages for the loss of planned long-term business and both Swatch and Tiffany were incurring large losses. What happened? While Swatch didn’t feel that their partner lived up to obligations to market their products, Tiffany felt Swatch was infringing on their rights regarding brand-management and product design. Constant bickering and delayed decision-making doomed the partnership.
Business development via equity and non-equity partnerships can take a variety of forms: Channel specific, reach extensions, complementary solutions, geography specific, marketing partners (in particular for Pharmaceuticals and Techs) and even where you need to cozy up to the “Devil”, where the partner “owns” access to a desired market.
Where it all can go wrong is that each of these types of scenarios involve a certain loss of control. The product/solution owner should know best how to sell their wares, particularly in the context of complex solutions, so handing this delivery off to a partner involves risk even in the best of cases.
Mitigating this loss of control requires approaching each of the types of partnerships differently, but consideration should be given to the following “5 Ps”:
- Product: Is it a product or solution that complements or enhances what the partner currently sells? Is it similar enough that they can understand it? Can delivery of your offering be made in a timely fashion? How are decisions made regarding product innovation?
- Promotion: How has the partner committed to providing awareness for it? How important is it to their Sales Team’s remuneration? Are goals and accountability set?
- Place: Is there any overlap between where you and they sell? Who decides if there’s any conflict or if any non-standard deal arrangements need to be made? How and where is service provided and its quality controlled?
- Price: Is there enough margin in it for all involved? Is there an understanding on how low they can go should they decide to use it in support of their other products? Are the payment terms to their customers consistent with their existing ones? Is the business model similar enough to avoid complications with their business processes?
- Personality: Is there a commonality of purpose or values between partners, a genuine belief that together they are stronger and that the customer experience is similar enough to build both brands?
Partnerships will often come up in the context of business planning as the path to greater success. Many examples of successful ones exist such as Disney’s deal with Google to promote their catalogue, and Microsoft’s deal with LinkedIn. But dependence on partnerships without understanding and addressing the 5 Ps during the delicate upfront courtship period can result in non-committed or worse destructive relationships that linger too long, making it difficult for corrective measures to be effectively put in place to achieve targets, rectify lost morale of your own sales team and worse still, to minimize damage to your brand.