Strategic marketing partnerships are some of the most powerful ways to build profit windfalls into any business while insulating your company against long-term business risks like market changes, value chain disruptions, disruptive technologies and business model erosion.
Below I have listed 7 important questions you should ask about a potential strategic marketing partner before you approach them.
1. How large is the size of their client database?
Depending on what your company has to offer, a partner company with a large client database that needs your product or service could act as a powerful lead generation engine for your business.
2. How large is their prospect database?
Some business owners and CEOs do not guard their prospect database as jealously as they might guard against exposing a third party to their customer database. As long as a potential partner has a well segmented database, you may approach them to endorse your company to prospects whom they have not been able to monetize. Even competitors directly in your line of business may find it beneficial to endorse you to prospects who have refused to buy from them.
3. What is the annual client value in their business?
You may qualify the potential profitability of a referral relationship by looking at how much the customers spend with a partner candidate. You cannot intelligently structure a marketing partnership that is mutually profitable unless you have an idea of the initial transaction size (on average) and whether they are a relatively high margin business or not.
4. What percentage of their customer database are current customers?
One indicator of a healthy business is that a large percentage of their customers have bought from them within the last 12 months or in the most immediate buying cycle. The higher the percentage of their current clients, the more likely you are to profit from their endorsement.
5. How often are their customers used to hearing from them?
A business that does not communicate regularly with its customers is a business that does not offer much value from an endorsement. While there may be exceptions, this rule of thumb is generally true.
6. How often does their average client buy from them?
Frequency of purchase is another way of determining both marketing engagement and potential profitability. Companies that depend only on one shot transactions with their marketplace often don’t make for the most profitable marketing alliance partners.
7. Do they have ownership or resell rights to any information products?
Information-based businesses or businesses with strong information-based value propositions often enjoy high margins and customer bases that are more responsive to endorsed offers. Before you go into a strategic marketing partnership, think about how well a potential partner is leveraging their intellectual property with live and virtual education events, as well as with informational products.
Tags: client database, generation engine, margin business, prospect database, referral relationship