The best businesses develop sound business models that outline strategies for the business’s success. These business models detail target customers, strengths and weaknesses, anticipated expenses, and most importantly, how the company’s products will be sold. Although there are countless sales methods a business can choose to utilize, the sales method should align with the company’s goals and the purchasing habits of their customers.
One type of sales method that can be applied to nearly any market is partnership marketing. However, many of the benefits partnership marketing strategies provide are misunderstood. Business owners focus on the negative aspects of these relationships instead of realizing their value. However, if used correctly, these strategies can be of tremendous benefit to a growing company. Selecting the sales method and partnership opportunities that best fit a company’s need can be the most influential decisions made for a business’s success.
Types of Partnership Marketing Businesses Can Pursue
There are five common partnership marketing methods that companies consider when developing their business model: content sharing, affiliate marketing, joint ventures, co-creating marketing, and distributor partnerships. It is important to understand each type of partnership marketing because they all have their own benefits and drawbacks, but they can be strategically selected to match the company’s goals. Each of the models are briefly described below.
Content Sharing – the simplest form of partnership marketing that is fulfilled simply by having another company or individual share your content. This can be through a social media post, in-person speech, a feature in a blog, etc.
Affiliate Marketing – this method involves giving commissions to individual sellers of the business’s product. There is no limit to the type of products that can be sold this way or how the product is sold (online, in person, etc.).
Joint Venture – this partnership requires two or more companies to merge their assets for mutual benefit, but the efforts are limited to a single endeavor. Since resources are shared, profits are shared between companies as well.
Co-Creating Marketing – this partnership relies on the collaborative efforts of the business and its customers. This strategy is unique because it results in need-focused products while creating a strong customer-company relationship.
Distributors – this partnership makes products available to consumers. To do this, one company utilizes another’s channels and connections to promote their own products.
Reasons You Should Consider Distributors for Partnership Marketing
Many businesses are wary to embark in a partnership agreement because they all require the business to share profits in some way. However, distributor partnership marketing arguably gives businesses the largest access to direct customers with the least profit-sharing requirement. The business (also referred to as the supplier) will sell their products to a distributor at an agreed upon discounted rate. The distributor then sells the product at market value or slightly above and profits the difference. In this case, the business is in control of how much of their profits will be shared with the distributor. In return, some companies also give credit to distributors by referencing them on their website.
Distributors are gaining value in profit shares from the supplier, but they also provide additional, non-monetary benefits to the supplier. Distributors have reputation in a specific field and a larger sales and marketing team that small businesses don’t have and can’t compete with. Companies also benefit from an increased brand awareness from having their products listed in several different channels. The distributor is never involved in manufacturing, but they serve as a network hub connecting manufacturers and to consumers who will directly benefit from the manufacturer’s products. Although companies are sacrificing profits from individual product sales, they are gaining value in a larger number of sales overall.
Tips for Securing a Distributor Partnership
When trying to land a distributor partnership agreement, it is important that the supplier can showcase their products in a way that the distributor can see their value. Distributors want to know that their marketing efforts will lead to sales for both companies.
With that said, tips for the supplier include:
- Don’t be afraid to reach out. Take the time to research local or international distributors that have a customer base you’re looking to reach. Contact them to begin building the relationship.
- Highlight the need your products are fulfilling in a convincing way. Distributors are unfamiliar with your technology, and it is your job to ensure they understand their benefits. Use data to support your claims. Include information about current sales so it is clear how the market is accepting your products.
- Once you are ready to formalize the partnership, clearly review the terms of any agreement contract. Don’t give discounts to the distributor that result in negligible profit margins for your company. Be sure that you can leave the contract if the distributor is not meeting their sales projections.
- Don’t be afraid to walk away. If the distribution agreement does not fit the goals of your company, it is okay to look for alternatives. Find the distributor that best suit your needs.
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