- When Johnson & Johnson launched the pain relief product, Tylenol 8 Hour, it partnered with U.S. gym chain Bally Total Fitness to get the product at the point of pain, where it would be most relevant to users.
- Disney teamed with BankOne to offer a Visa card. Among the rewards offered through their customer loyalty programs are discounted or free admission to the parks.
- The ClubMom Rewards Loyalty program, a component of the online affinity club for American mothers, allows moms to earn points for shopping at partners such partners as JCPenney, Payless Shoe Source, Nine West Stores, Pier 1 Imports and Radio Shack. Beyond gift certificates, members can redeem points for experiential rewards such as vacations, spa visits, romantic dinners for two and housecleaning services.
As experiential marketing is seen as a strategic branding strategy, marketing and promotion alliances created to deliver these experiences—and the need to manage these relationships—will undoubtedly increase.
But the question becomes: Are these deals going to succeed? Given the fact that the majority (70 percent) of alliances either fail outright or achieve only initial goals—and 55 percent fall apart within three years—chances are the answer is “no.”
There are steps, however, that companies can and should take to increase the likelihood of alliance success, what I call the Eight Golden Rules of Alliances.
Eight Golden Rules
- The first partner is not always the best partner.
Even if you are approached by a partner who appears to be appropriate, move quickly from a reactive to a proactive mode. Perform due diligence on the strategic fit of this and other potential candidates, and create an alliance implementation strategy. Too often, alliances are created without equal thought being given to both strategic purpose and ultimate implementation. Execution of alliance intent is far more difficult than the deal making, partner identification and wooing that precedes deal closure.
- Always consider the partners of your partner.
When evaluating alliance opportunities, savvy organizations strive to build a network of partners rather than bilateral relationships. Every partner an organization brings in has its own interlocking relationships with other partners, stakeholders and players in the value chain. These networks of relationships represent a web of opportunities and risks that could have an impact on your activities. The key to creating a successful partner network requires the disciplined approach of ranking each network member for risk and value, allocating appropriate resources to manage the risks and leveraging the value derived from integrated relationships.
- Be sure that there is an executive sponsor in both your organization and your partner’s.
The executive sponsor should be part of the team so that if one champion loses interest there will be another to take his or her place. Executive sponsorship is valuable only if it has a continuing influence on the alliance. This means adding “position power” to the influence the alliance manager has across the organization, as well as a conflict-resolution mechanism that acts as a deterrent to escalating conflict to higher levels of management. By identifying the executive sponsor, you emphasize the fact that the alliance concept is not just the idea of one visionary manager but resulted from the collaborative ideas of others within the partner organization. This prevents the alliance from becoming dependent on the personality of a single champion within either organization.
- Analyze the priority of the alliance for yourself and your partner.
Partnering companies must take into account what I call the “project personality type.” The alliance will require active management of resource allocation and conflict resolution if organizations assign different levels of importance to the project. An alliance that is of fundamental—perhaps even survival—importance to one company may be just a sideshow to the other. This will affect the resources—staff, money and time— committed to the project.
Every aspect of the alliance is affected by the project personality type, from negotiating the deal points to the choice of managers to run the alliance and, most importantly, the follow-up and continuing commitment of the partners to the project. An alliance that is of different priorities to the participating partners is not necessarily doomed to fail. If you recognize the differences before implementation, the partner for whom the project priority is highest can adjust activities and resources to accommodate the workload—its own, as well as that of the less interested partner.
- Create an alliance implementation plan that has legs.
A critical phase in creating the alliance implementation and operating plan is scenario-building, in which the partners participate in simulations of “what-ifs” that could happen during the partnership. In the scenario-building exercise, it is reasonable and safe to ask the kinds of questions that might not be asked in a real-life situation, such as: How will an upswing or downtick in the economy affect the alliance? What impact will higher or lower interest rates have on this partnership? If XYZ Company enters the market, we will have a major competitor to deal with; what will our contingency plan be? If the technology misses the deadline for completion, how would we deal with that?
- Identify the leadership characteristics that alliance team leaders must have.
Nothing will ruin a good alliance faster than a lack of leadership. If you have the wrong person at the helm, you will have challenges. Make sure that you are wooing and getting to know—in many ways, not just via email—the other team. Consider these10 personal and organizational characteristics that I believe drive alliance success: fearlessness, completion, commitment, inspiration, assuredness, penetration, intelligence, energy, integrity and being in the customer’s head.
- Conduct a thorough stakeholder analysis.
Often, partners are not managed effectively because they fall into nontraditional partner categories. You can identify these partners by conducting a stakeholder analysis. Stakeholders may include each partner’s angel investors, venture capitalists, lawyers, accountants, board members, consultants, executive search consultants, investment bankers and, at times, the government. Conducting a stakeholder analysis will help you determine which entities could sabotage or benefit the alliance. You will then be able to create and implement a plan to leverage or diffuse these people as required.
- Manage compatibility challenges.
Often, partnering organizations are not similar in corporate culture or lifecycle stages. More often they are in differing stages of growth—some in high growth, others in decline. Managing corporate cultural differences is a significant challenge. It is possible, however, to anticipate organizational and managerial behavior by tracking the lifecycle stages of each partner. This anticipatory knowledge gives all partners the opportunity to allocate resources and manage cultural differences without rancor. The recognition that different managerial personalities tend to thrive or struggle in different lifecycle stages also enables appropriate team selection to implement the alliance over time by changing team members and personalities to fit the circumstances.