Business alliances enable companies to create strategic partnerships that support mutual goals. However, while executives understand that collaboration can be critical to long-term growth, few organizations have the necessary processes in place to ensure said ventures are successfully executed.
According to the CMO Council and BPI Network's "Grow from the Right Intro" report, companies of all sizes and industries continuously strive to establish such partnerships in an effort to acquire customers, drive revenue, and enter new markets, yet most lack the knowledge, connections, and management capabilities needed for maximum impact. Sponsored by Powerlinx, the study surveyed 330 senior management executives to underscore the strategic value of business alliances and compatible partner matching, and to explore the average company's inability to manage and conquer the challenges of today's complex market.
The following statistics highlight how executives perceive partnerships overall, their overarching goals for said alliances, and the skills that require increased attention and investment:
- Eighty-five percent of companies view partnerships and alliances as essential or important to their business, yet only 33 percent have formal strategies in place and nearly half (43 percent) report failure rates of 60 percent or higher. Only 1 percent of those executives polled claim that 100 percent of their partnerships are successful.
- Of those surveyed, 42 percent aren't satisfied with how they leverage partnership and alliance potential. Only 7 percent feel their company consistently performs extremely well in this regard.
- Only 10 percent of respondents believe they're extremely good at identifying, qualifying, and securing partner introductions, while 60 percent are currently focused on developing strategies for sourcing alliance opportunities and building contact networks.
- While acquiring customers (68 percent) and increasing revenue (66 percent) are the primary benefits of strategic partnerships, the need for new ideas, insights, and innovations (44 percent), the complexity and pace of business (35 percent), and the desire to grow an increasingly diverse customer base (34 percent) also drive the pursuit of third-party linkages and alignments.
- Most companies (67 percent) have fewer than 10 strategic partnerships annually, and 42 percent invest less than $100,000 each year, emphasizing the fact that most businesses have limited resources and expertise, leading to an insufficient focus on partner acquisition and management.
- When it comes to the challenge and complexities of developing, managing, and maintaining strategic partnerships, companies typically struggle with keeping the partnership active and mutually rewarding (45 percent), building an ongoing win-win relationship (42 percent), and allocating sufficient resources and mindshare (32 percent).
Key takeaway: Before companies can create long-term alliances, they must first establish the formal structure necessary for partnership acquisition and development. Both parties must ensure that their end goals are aligned and that the services provided complement one another so all involved will benefit from this collaboration. Once the initial agreement has been determined, the partners must constantly reassess the alliance to guarantee the relationship remains lucrative for each company. Markets evolve regularly, so organizations must enforce open and honest communication, while monitoring business outcomes, in an effort to sustain success. Companies must also be willing to recognize and admit when an alliance no longer serves its original purpose, and therefore, must meet its end. Truly profitable partnerships hold each company's best interests at the core, and effective collaboration means understand what does and doesn't work for each party, even if that means starting from scratch.