Strategic Alliances And Partnering With Compeitors

Brendan Egan

Strategic Alliances And Partnering With Compeitors

No, I haven’t gone off the deep end.  There are plenty of situations where partnering with your competitors to form a strategic alliance could make perfect sense.  In the SEO industry things can get pretty heated and competitive, yet I’m very friendly with several SEO company owners and we even send each other leads from time to time.
I’ll start by saying that this doesn’t work in every industry, but it does work in the majority of industries and it actually can help both businesses grow quite quickly.

Why Partner With The Enemy?

Your competitors are probably viewed as your enemy, but that couldn’t be further from the truth. Chances are you specialize in one specific area of your niche whether you realize it or not, and chances are your competitor specializes on something slightly different.
For example I focus on small to medium sized business for SEO that have budgets generally ranging from as low as $400 a month up to $10,000 per month. One of my competitors only takes on clients who are larger than $7,500 and another one only takes on clients from $150 to $500 a month.
While we don’t have any specific alliance in place, we are always sending each other business. Sometimes I am contacted by businesses who have too small of a budget or too large of a budget for me to handle, so I send them off to one of my strategic partners. And likewise they get clients who are too large or too small for them so they send them my way. We don’t keep tabs of who sends what, but in the end we all benefit from additional clients.

How To Do It

If you’re looking to partner with someone who is identical to you, it won’t work. You need to find a strategic partner who is similar and offers similar services but for one reason or another they are different from you. That could include:

  • Price: This is probably most common — some businesses are low cost models, others are high quality, and others are in between.  If you’re a quality business, partner with a low cost provider and send one another business based on their price range
  • Type: This is probably the second most common — just because a business offers a product or service doesn’t mean they offer everything.  A pool supply store might offer only products/services for above ground pools and could partner with an inground pool supplier
  • Specialty: Some businesses specialize in one specific thing — such as a web design firm that only offers WordPress sites — they could partner with a general firm or another specialized firm
  • Compliments: I have clients and partners in various other business to business industries who send me clients, and I send them clients as well.  An attorney, for example, might partner with an accountant and send business back and forth to one another

There’s endless possibilities of who you could partner with and collaborate with to increase your business and help them increase their business.  Even if you view them as competitors, two minds are often better than one, and it can be a strategic decision for both of your businesses to grow by leveraging the other business and their experience to assist you along the way.

Why It Makes Sense To Form Alliances

One word comes to mind: specialization.  You can’t specialize in everything or offer everything.  When you look for an attorney, for example, don’t look for the guy who offers everything — look for the guy who specializes.  Whether its a divorce attorney, real estate attorney, tax attorney, or anything else.  This shows that they will be more than qualified to handle your needs.  Specialization means they have extensive experience in one field, and will likely do better than a general firm.
Forming alliances with people who specialize in different aspects of your niche is quite honestly a brilliant idea that often isn’t used enough because egos can get in the way.

Make Sure It’s A Two Way Street

The one thing you don’t want to do is get into an alliance or partnership, whether formal or informal, that’s going to be a one way street.  Sure you might not see the same exact number of clients being passed back and forth, but make sure there’s at least some benefit to both parties otherwise the alliance won’t work and doesn’t make sense to be in.
The bottom line to keep in mind is that it can make sense to partner up and form an alliance, just make sure it isn’t with an identical firm and make sure you’re both seeing a benefit to the relationship.  That truly will lead to both businesses seeing the benefit of the alliance and help make it a long term alliance to grow both businesses.