Nothing is more important to a business than strategic alliances.
And there's a reason why. When we started out, there was nothing. Vast emptiness. Sure we had five or ten pages of good content on Psychotactics. But other than that we had nothing. No subscribers. No visitors. Nothing.
What's critical is that we also had no money. (Sounds familiar, huh?)
Well what's a company to do to get off the ground?
Today you have many sources of driving traffic. You have pay-per-click, you have online PR, you have stuff going. Back in 2002, there was um, a lot of nothing. So we went with Strategic Alliances. Um, actually one strategic alliance. And from nothing, we started getting fifty, a hundred, sometimes two hundred subscribers a fortnight. And despite a crappy website, and even crappier name (we were called “millionbucks” at the time), we managed to get over a thousand people on our list–when we had nothing to sell.
It's easy to forget where you started
It's easy to get all excited about all the new gizmos; the social marketing; the yada-yada. It's easy to be all giggly about Web 2.0 or Web 3.17, for that matter. What really worked for us, and continues to work for us at Psychotactics, has always been a solid relationship with alliances. The alliances sent and continue to send customers our way. Never expecting reward. Never expecting payback, the relationship is based on trust, and respect.
Strategic Alliances are easily one strategy I'd choose time after time, after time.
And there's a reason why. They created something out of nothing. And that's why strategic alliances are the most critical component of our business.
Especially if you start off with nothing 🙂
Here’s the #1 strategic alliance mistake:
miscalculation of the balance of power.
Turn your attention away from business, and let’s look at History. If you’re a small country and want the big country as ally, then you’ll have to be prepared to put a BIG offering on the table, our prepare to be sqashed, or – at best – to be ignored.
In business, if you want a strategic alliance to work, then you need to balance the “difference in power” with something, and THIS is what most strategic alliance initiatives overlook.
Example: you are just starting out, and you approach someone with a big list to promote you. You offer a 30% commission and believe you’ve done your work. No no: you need to:
– write the copy you’d like him to send out
– start out with a gift basket (instead of a lousy email)
– promise to put in ALL the work, so that the big-list-owner’s job is nothing else but press send
– provide a transparent affiliate system to measure results
– and in general, look like you’re eager to compansate the difference in power.
THIS can help anyone who’s just starting out to hit it big.
Thinking that your new product is God’s gift to big players will get you ignored – or at worst – squished.
Strictly speaking, the scenario you describe, I call a ‘joint venture.’ With alliances, I don’t have to give them anything other than what we’ve promised. The concept you’ve described is perfect, and just wanted to point out the difference between a ‘joint venture’ and ‘strategic alliance’.
What are the downsides to strategic alliances?
I thought of a joint venture as a form of strategic alliance — a partnership with revenue sharing.
The downsides to strategic alliances? I know of few. One is, that because they’re not motivated by money, there’s less momentum–that is they’re less likely to be motivated to help. But this hasn’t been true for me. Our alliances have literally built our business, and continue to do so. And the entire relationship is built on trust. And respect.
The downsides to Joint Ventures, I can list by the dozen. The essential problem with joint ventures is money. When the money dries up, so does the motivation. But it’s also an upside. I don’t know. Call me crazy. I prefer alliances over joint ventures.
Besides (and I think this is important): Joint alliances are done with everyone and sundry. So if you have my list, and details, you could probably do a joint venture with the same people, and hence the information becomes a little proprietary.
If on the other hand, I gave you my strategic alliances list, it would be pretty useless to you. Because the list would work on respect and trust, and not money. So you could steal a list from us, and it would be useless to you.
To have a source that drives hundreds, even thousands of visitors each year, and have the information out in the open, is kinda nice.
Sean,
I am having a hard time understanding what a strategic alliance is all about – please define it.
I understand that a joint venture is basically a shared project for the financial benefit of the parties involved, but then just what is a strategic alliance, and how does one get started creating them with those who already are way ahead of you in terms of business development?
Think of the cartoons Calvin and Hobbes. They have no financial gain. One’s a little boy (bent on destruction). The other is a tiger (who’s really a stuffed toy). They have no financial gain, and have limited impact by themselves. But together, they have a lot of impact.
They’re able to build snowmen faster.
They’re able to go downhill faster on the toboggan.
They’re able to do stuff they could only do so much of, if they were individuals.
In real life, you have a graphic designer. And a copywriter. And they’re like Calvin and Hobbes. On their own, they can do their bit, but if the designer constantly refers clients to the copywriter, and the copywriter refers clients to the designer, then there’s an alliance at play. In many cases, there’s no financial gain (so there’s no money exchanged as commissions, and there’s no measurement quota of how many referrals go back and forth).
So if there’s no money, why bother?
You bother because of the concept of Calvin and Hobbes. Together you have far more growth potential.
So with that question out of the way, let me answer the next one: How does one get started creating them with those who already are way ahead of you in terms of business development?
Every relationship is unequal.
Take a husband and wife for instance.
That’s an alliance of sorts.
They don’t get together for financial gain. You may argue that they get together for sexual gain, or for other sorts of gains, but in fact, you’ll notice that the ‘best couples’ are mirror-opposites of each other.
One takes over the cooking.
The other takes over the fixing.
One takes over the accounts.
The other takes care of the decor.
They’re two individuals that by themselves, are completely lost (in a way). But they work out a deal between themselves and away they go.
So how do you align yourself with someone who’s not quite the equal? How do you align yourself with a Tiger Woods? Tiger Woods has no need for your money. Or fame. But a five year old kid could get Tiger’s attention. But how?
Here’s how.
The kid gets Tiger’s respect. He does so through his tenacity, through his ability, through whatever. The key is respect. When a person has respect for your abilities and perseverance, they don’t behave like they’re bigger and you’re smaller. They treat you like someone they respect. And hence recommend you to others.
Ok, go to go to the next installment of this answer (see below)
So when we started out, our list had five people.
How do you get to 5000?
Or 10,000?
You can advertise and drive people to your business. Or you can have others get people to drive people to your business. When Red Bull launched their product, they didn’t advertise. They sought out strategic alliances. They sought out the most influential groups in universities, and gave them cases of free Red Bull for these University parties.
And the less influential saw the more influential drinking Red Bull (because you don’t just drink it at a party), and so everyone started catching on.
But Red Bull wasn’t a big brand. No one knew of Red Bull. One student in one university group, had more influence than Red Bull. But Red Bull found a way in.
The way we’ve gotten in to others is through creating top-class information. Not just information, but really good stuff that people would pay for. And then we’ve approached individuals (just like Red Bull approached the University groups). And then we’ve played the dating game. One date, second date, third date, fourth date.
If the person keeps responding.
If they keep asking for more.
You’re building up a relationship.
You’re building respect.
And when you build respect, you’re no longer unequal. You’re treated as an equal.
And that’s the short story of how you build strategic alliances.
Sean,
This is RICH!! Thank you!
I like how you use #10 to illustrate your point.
But there are differences in cultural settings though for example I know that the western world don’t buy that “we are unequal crap”. A lot of westerners believe in the 50 – 50 module. period
Now to my point. I understand the concept behind building joint venture relationship.In fact that is one of the things my business does(connect two parties together with the goal of making sure that both benefit handsomely)
Building strategic alliance, I think the danger there-in is that if party A betray your trust(Human nature), it is going to have a grave effect on your business though.
I trust you agree with me, don’t you?
In that case, how do you rectify such a malady? I am sure you know how serious it is once your reputaion online get tainted.
What sayeth thou?
If there’s one thing you have little control over, it’s your reputation. You can do what you do. And do it well. And people will still see it through their own eyes.
I wouldn’t worry too much about reputation.
I would worry about doing what I do, in the best way I can do it.