"24
Reasons To Form Online Strategic Alliances"
By Henriette Martel-Lawson
Part 1 of 2: Product sales and development
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.
Here are a few benefits of product strategic alliances:
- 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.
- 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.
- 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 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
By forming strategic alliances with like-minded people, you can
build on each other’s brand equity without incurring costs.
In the next part, we look at how online strategic alliances can
increase the visibility and market share of your business and
conclude with a short checklist of issues to consider before forming
a strategic alliance.
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