My last column introduced the Five Ways formula, five key, profit-generating areas that drive every business: lead generation, conversion rate, average dollar sale, average number of transactions and profit margins.
The core of any business — the business “chassis” — includes the same areas, no matter what size. Therefore, any business can use this formula to identify and implement simple strategies that will impact the bottom line.
In many sectors, business marketing has become very sophisticated. A well-planned marketing campaign targets potential consumers and uses many techniques to generate leads — the “ideal” clients or customers for their particular products and services.
One less common, but very economical and effective lead-generating strategy is the strategic alliance. For the purposes of this article, the definition of a strategic alliance is “an agreement between two or more non-competing businesses working together to achieve common objectives (www.businessdictionary.com).
Consider a hair stylist that has a solid core of regulars, but few new customers. The owner knows that a bridal shop down the street has clientele preparing for one of the most significant days of their lives.
The hair stylist might offer the bridal shop a free service for each of their customers. She would generate a letter and also mail out the promotion.
The bridal shop partner wouldn’t incur any expenses, but the promotion would suggest that the bridal shop is offering the gift.
The letter would be sent to the bridal shop’s customers over the next few months, and would read: “You are our valued customer. As a special thanks, and to show our gratitude, I’ve arranged a special gift for you — a complimentary cut and style with Julia’s Hairdressing. I highly recommend Julia and her team and I’m certain you’ll appreciate their creative expertise too.”
The benefit to the stylist is clear. A potential customer base will receive an irresistible offer and a personal recommendation.
A mailout to 200 customers might cost $250. Even a 10 per cent response translates into 20 new, qualified leads.
What are the benefits to the strategic partner? Without paying a cent, the bridal shop’s customers receive a $30 gift. These same customers feel valued, which translates into repeat business and will even send referrals to the bridal shop.
Another successful model involves several businesses that form an alliance to share marketing expenses to purchasing product in bulk orders.
Two successful strategic partnerships that I know of in Red Deer promote each other’s business by offering discounts and in-store promotions to their customers. In some cases, joint sales and promotions will drive a new leads to a partner’s location.
What makes a successful strategic alliance?
The right attitude
A co-operating business may not be familiar with this strategy, but to ensure a win-win arrangement, they must see the opportunity and be committed to the proposal. If you’re met with hesitation or resistance, the alliance will not be successful.
The mindset must be one of equal opportunity and a willingness to “share” customer information. All partners require a high level of trust and commitment to the alliance.
A successful alliance depends of your ability to define your ideal customer in terms of age, sex, interests or income. Analyze what other businesses share those same client definitions and choose non-competing businesses that are related to your line of work.
A strong offer
Your proposal must be well thought out and clearly demonstrate the benefits to each business. It must include a strong, risk-free offer to your partner’s customers.
Remember, the objective is to share customers and new leads.
Customers should be thrilled with the gift. They’ve already heard “good things” about you, so are less cautious and anticipate friendly and professional service. It’s up to you to provide that stellar expertise.
Once you’ve established an alliance, you need to maintain it. Keep regular contact with the allied business, offer plenty of feedback, and share successes. This will provide a basis for future arrangements. Commitment to the alliance means that future promotions will be successful.
Learn about other lead-generating strategies in articles to come.
John MacKenzie operates ActionCOACH in Red Deer, helping small- to medium-sized businesses in areas like succession planning, systems development, sales and marketing, and building/retaining quality teams. MacKenzie’s blog can be found at bprda.wpengine.com and he can be contacted by email at email@example.com or by phone at 403-340-0880.