June 21, 2022 | 4-minute read (613 words)
Many entrepreneurs start out by seeing their competitors as staunch adversaries. But the reality is, building strategic alliances with competitors can spur innovation and push you to work harder.
Forging connections with your competition naturally requires a shift in perspective since you are accustomed to vying for the same customers and market share, but there are a plethora of benefits. Collaborating as a united front can precipitate mutually beneficial changes. It may open the doors to potential new projects through referrals and broaden those already in place.
Talking periodically with the competition may initially seem uncomfortable, but you have more to gain by communicating with them than you have to lose. Consider reaching out to businesses in your sector via social media or through one of the methods below that are conducive to a win-win alliance.
Partner on price negotiations
Do you and your competition routinely purchase the same commodity? If so, teaming up to negotiate with the seller could create cost savings for both parties as together you have more leverage.
Team up for charity
Consider participating in volunteer efforts or initiatives that boost social responsibility in conjunctions with competitors. Not only will you create a connection with other businesses, but you will also feel good about helping your community in the process and in a way that helps your brand stand out.
Jointly establish a presence in a new market
Savvy entrepreneurs realize that teaming up to enter a new market, especially an international one, can be highly effective. Both parties can benefit from one another’s market insights to create marketing plans and implement distribution networks for growth. Ultimately, working together will help ensure your products enter the market sooner than if you tried to do this solo.
Prompt interest in your shared sector by executing joint promotions in which you share advertising and media buying. For example, consider co-sponsoring a webinar or events in which both brands enjoy promotion opportunities and enhance their status.
Capitalize on cross-selling
Pique potential customers’ interest by offering discounts on combined purchased or jointly created good. Perhaps you may sell the items or services with add-ons produced by other while keeping a part of the revenue, which increases sales for both sides.
Though many such events have moved online for the time being, even virtual conferences and seminars are a solid opportunity to meet others in your industry and trade information with competing businesses. This presents a change to further understand your target market and to delve into ideas.
Before you get started
Prior to deciding to work with a competitor, first assess how the alliance can bring value. You need a well-formulated vision for what you need from your partner and to lay out a strategy in advance to implement it. Use this three-pronged approach to forge mutually beneficial partnerships with competitors:
1. Delineate your goals and the terms of your agreement in advance. This will help ensure participants are working from the same page and avoids hard feelings. Lay out possible opportunities for collaborating and create a budget. Each side should be apprised of the partner’s market reach and limitations.
2. Write a comprehensive partnership agreement to establish legal boundaries for this partnership. Lay out how much time and money will be invested and the intended results. The agreement should stipulate action items to be undertaken in the event any issues arise.
3. Create benchmarks you can use to measure progress. After your partnership attains its goals, parties can go their separate ways. The partnership must be predicated on both parties being separate parties and maintaining that separation. Ultimately, the partnership must be beneficial for both parties.