Critical Parts of Successful Collaboration
Over our last 15 plus years in business and consulting, I’ve run into many cases of small businesses attempting to work together to deliver better client value, win larger projects, and share marketing and sales costs.
This is one example of what it often looks like:
- Five to ten small firms targeting a similar target market form a marketing group or shell company.
- They all remain autonomous and independent behind the scenes.
- They promise to work together on proposals, share leads, and cross-sell to their clients.
What ends up happening is:
- Some of the partners have overlapping products and services.
- When times are tough, they take on work where they are not the experts but “could do it”, so they can generate revenue.
- Everyone is waiting for everyone else to share leads and clients first.
- Everyone continues to market and sell separately.
- There is no group marketing budget or skin in the game.
- They have a loosely defined process for reviewing and enforcing the working relationships.
- After a period of time, the marketing group dissolves.
At the end of the day, everyone ends up with a bad experience and no longer believes such a structure could work for them. Yet, it can work well if you follow some guidelines.
It Starts With Brand
Your brand is how your target market perceives the value you provide as an organization. The key here is you can influence your brand, but it is ultimately the word on the street that matters.
Your target market includes your past, present, and possible future clients. For most businesses, most of your target market has not had any direct experience with you. When prospects consider purchasing from you, they then attempt to validate your brand promise. This often starts off with looking at your marketing and maybe a meeting with one of your salespeople. If there is a disconnect between what they see and what they expect, they won’t proceed. In a relatively small and highly connected industry such as oil and gas, the other approach is to ask someone you already trust for a recommendation.
If you partner with companies that have a drastically different brand reputation, at best, you will come out on the average, and at worst, you will all be perceived at the level of the lesser partner.
A few of the things to consider:
- Matching core values of the organizations.
- Ability to deliver including quality, reliability and consistency.
- A shared commitment to serving clients better through the partnership.
- Ability to deal with problems as they come up.
You may believe in the companies you partner with, but if the market doesn’t, you will have to fix that or find other partners.
You probably won’t partner or collaborate with an organization where trust doesn’t exist when the relationship starts. But it doesn’t stop there. You have to work actively on and reinforce that trust. This normally means being willing to go first on providing leads and work to others in the group. If you are always looking for win-win arrangements, then eventually others will naturally reciprocate. If they don’t, you have not chosen your partners well or you need to structure the agreement differently. Fortunately, you can measure the results of trust in business.
Build a System for Collaboration
This is where you will likely generate success or failure in collaboration assuming you have addressed the other two first.
Define the Relationships
This comes down to figuring out and documenting:
- How tightly is the partnership going to work together?
- How will revenue be shared?
- How will contracting work?
- Who is the primary owner of the relationship (as much as you can own a relationship)?
- How will the group be represented and marketed?
- Will there be referral fees or will you trust the group to cross-refer?
Define the Processes
This will flow out of the first part, but don’t leave success to chance.
Get Skin in the Game
The best way for everyone to take things seriously is for there to be skin in the game. This could mean monthly fees that go into group marketing and sales. It could also mean a minimum commitment for joint marketing and sales efforts, or it could be revenue targets.
Track and Measure
Track and measure how things are going. This will allow you to adjust things to optimize for additional wins. Ultimately, if the relationship is not working and it can’t be fixed, it needs to dissolve.
Nurture the Relationships
Put in a process for keeping the relationships working well. Think about all the people from the working level to the most senior.
The Other Way to Make It Work
Doing all the work to partner, collaborate, and cooperate extensively is not an insignificant undertaking and still relies on other parties to succeed. There is another way to get most of the benefits while putting the risk more into your hands. You become the lead in the marketing, sales, and delivery, and you subcontract to the partner vendors you trust to deliver those results. You still need to vet and manage the brand, trust, and collaboration, but you retain more control and can more easily change up who you partner with if they fail to deliver.
We are currently moving forward with this model. It allows us to add depth for clients who want to manage their perceived value from end to end including brand, marketing, sales, and the ability to deliver value to their clients. As we build further trust, we can always consider the other options.
Here are the two key questions to consider:
- Does the collaboration benefit the client?
- Does it create a true win-win for you and your partners?
Article originally published in the January 2016 issue of the Oilfield Pulse.