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Press Releases:
THUNDER FACTORY
Ranked Twentieth in the
Silicon Valley
Business Journal’s fastest
Growing Private Companies
THUNDER FACTORY
Names Marketing
Industry Veteran,
Barry Green, to
Board of Directors
THUNDER FACTORY
Accelerates Growth
in Southern California
Fleetwood Rv, San José
State University Choose
Thunder Factory For
Integrated Marketing
Programs
Business Growth at
Thunder Factory Spurs
Headquarters Move,
Expansion into L.A.
and N.Y.
In the News:
Entrepreneur Profile:
PATRICK DI CHIRO
Marketer Adopts
Innovative Tactics
Thunder Factory Wins
Fleetwood RV, San José
State University
Article List:
Confusing Spin
With Strategy
- Patrick Di Chiro
An Open Letter
To Al Ries, Ad Age
Columnist
Here's Where to Find
Integrated Marketing
- AdAge
Getting a Bead on 'Buzz'
- Virginia Postrel
Survey: Network TV
Does Worst Job of
Proving Advertising ROI
- Judann Pollack
Stratgic
Partnership Marketing
- interview w/ Thomas Edwards
Toughening Your Brand
- Lynn Upshaw
Coffee's For Closers
- Patrick Di Chiro
The Role of Key Opinion Leaders (KOLs)
in The Pharmaceutical Industry
- Joseph Gutman, MD
Playing the
Search-Engine Game
-Mylene Mangalindan, WSJ
At Last,
a Way to Measure Ads,
- Michael Totty, WSJ
Small Firms Can
Survive Sqeeze
By Revamping Marketing Efforts
- Jeff Bailey, WSJ
Study Says
Marketers Shifting
Toward Internet, Direct Mail
- Erin White, WSJ
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The Value of Strategic Partnerships
An interview with Thomas Edwards,
President, Partner and Loyalty Marketing of THUNDER FACTORY
Q: How would you define strategic partnerships?
TE: A strategic partnership a long term relationship that is a cornerstone
of your business. Too often however, the term is loosely used in business in that
strategic connotes importance. We're talking about a partnership that's part of
each company's strategic plan, where both companies see it as having significant
value to their businesses.
Q: What kinds of benefits can companies derive from strategic partnerships?
TE: There are a wide variety of benefits. For example, an alliance which leverages
a partner's existing channels can dramatically reduce your customer acquisition
costs, and also build revenues because you are talking to an existing base of
customers. An alliance which gives your customers access to additional products
or services can deliver benefit in terms of greater loyalty and customer satisfaction.
It's far easier to build upon existing opportunities than to try and start a value
creation process from zero. It's important to be able to see benefits beyond dollars.
One piece of advice I offer to clients is not to miss the opportunity for purely
cash reasons. Just because the alliance doesn't involve a direct payment doesn't
mean there isn't significant value, whether in exposure to potential customers,
or use of a partner's channel to enhance your business. Similarly, there are many
partners you can use for your benefit that don't cost you anything. I've been
using this methodology for the last 15-20 years, and more often a company's ability
to identify the non-cash opportunities is the skill that creates the greatest
value.
Q: Do you think that skill is present in most companies?
TE: In many cases companies have difficulty assessing these opportunities.
I sat in meeting recently where one company was unable to evaluate and clarify
how much value their access was bringing the other company; they couldn't monetize
it, so it fell apart.
Q: Many high-profile partnerships fall apart. What are some of the other
pitfalls to avoid?
TE: Both companies need to make the partnership a priority. Too often deals
become one-sided because there is no focus on the partnership. Frequently this
happens immediately after the deal is done, and the partnership does not grow.
That's where they fall down most often. A partnership also needs to have top-down
focus. Each company needs to create business and management objectives to manage
to their partnerships. If there are no MBOs that say there are objectives, written
into the partnership, then the alliance peters away. You also get the situation
where there is a budget for partnership, but it is not attached to the objectives
in the partnership. This is a waste.
Q: How do you define a partnership's success?
TE: Success may be measured in revenue growth, customer acquisition and satisfaction,
margin improvement, nearly anything. What's important is that managers determine
what success is prior to creating the partnership or there's no reason to go into
the partnership. It depends entirely on each company's needs.
Q: So what are the critical success factors for a partnership?
TE: The following list is a good start, and these aren't difficult to implement,
as along as there is significant benefit for both sides. It's also a good idea
to write as many elements as possible into the partnership agreement:
- Setting expectations of what is strategic to each partner
- Agreeing upfront on what defines a successful endgame, identifying what
must be accomplished for mutual success
- Setting milestones for the partnership
- Placing ownership at the highest levels possible in the corporation,
things that aren't focused top-down and bottom up usually don't succeed. Priorities
at top and bottom can vary, so strategic partnerships need to be a senior management
priority.
- Tying strategy to business objectives, which need to be tied to management
objectives · Acknowledging that the alliance may have multiple goals, different
for each company
- Holding regular meetings to discuss progress
- Reviewing and modifying the plan as business and needs change
- Speaking the language of the partner. Every business speaks in a different
way, so it is imperative that you go in and speak the language of whomever you
deal with.
- Avoiding over-commitment
Q: What kinds of companies in which industries would benefit most from
strategic partnerships?
TE: The only ones who do not benefit are those who don't know how to capitalize
on a partnership, those who lack vision. AOL/Time Warner is a good example of
a successful alliance. If you look at what Bob Pittman has done versus what was
going on previously at Time Warner, you see significant value creation. Even in
big companies, alliances can exist among business units, and Time Warner is a
good example of that. Where you once had units competing against each other for
the same business, now you see promotion across properties. Alliances can exist
synergistically both inside of existing companies, as well as in separate companies.
Enormous opportunity exists in getting business units to talk to each other, and
in bringing other corporations together. But to reiterate my earlier point, if
you do not have the top-down focus, this will never happen. Bob Pittman has said
to his organization, "If you cannot play together, you will not be around
for long." And he has successfully cut costs by doing it. Infighting and
working in silos is the norm; unfortunately most CEOs aren't drilling down into
their own companies to stop it.
Q: How does THUNDER FACTORY help clients develop partnerships? Does it
focus on all the elements we touched on, or just strategy?
TE: We at THUNDER FACTORY, bring to the table not just ability and experience
in developing and growing partnerships, but an understanding of our client's business
and relationships we've already developed that we can leverage on our client's
behalf. We also bring a clear, external perspective that helps us take clients
in new and profitable directions. Often times it's just a matter of getting them
to focus on what is important.
The THUNDER FACTORY approach focuses on all the elements of making a partnership
successful, well beyond strategy. We don't just tell our clients what to do, we
help ensure that it goes right from start to finish, and that the organization
learns from the process.
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