Influence of a partner on your brand

Case Study: your product / service, in the face of stiff competition, has been reduced to a commodity and you have hit the end of the road selling those products and services.

Early warning signals: Whenever price is the only factor that decides whether you, as a product or services vendor, win the business or not, then it is evident that you have hit the “end of the road” with those products & services. Such products or services are termed as “commoditised” products or services. You are compelled to sell such products / services on compromised margins where you can barely earn profits. No “out of the box” sales strategy will be of great help in scaling these commodities.?This is an early warning signal for you to look for new areas for growth.

I am not getting into new product development in this paper, but I would like to outline sales strategies, once you are ready with the new product / service

Sales Strategies

Top – Down approach: Once you have these “niche” products / services in your portfolio, one of your key sales strategies should be to approach CXO levels of top end customers. It is not very difficult to get a meeting with the CXO levels of prospects if you have a promising niche product / service and have a value proposition to pitch.

Top-down selling strategy has its own benefits, a few of which are:

a.???Easy to reach your key customers / users in a large organization

b.???Easier finding a champion within the organization when your product is recommended within the organization by top management.

c.????You may still find resistance but it is a far better strategy then the “Bottom-Up” strategy, because you have convinced the Top management on the benefits of your products / services

d.???If you are convinced that your product / services can resolve the pains of this prospect and if you have a “buy-in” from the top management then you have already won “half the battle”. The remaining half is to reach the actual customers / users within the organisation and convince them, after overcoming resistance, if any.?

Right partner: The next important strategy is finding the right partner and this is imperative to scale your product / service. In all my years of experience I have seen that it is worthwhile looking for companies that sell complementary products / services to the same customers that you are chasing. The following are some of the key benefits:

e.???If a company out there is selling products / services to customers and is not catering to certain needs of the customers where you have products / services that can fit in like in a “Jigsaw,” then it is worth spending time and effort collaborating with this partner to reach those customers

f.?????This kind of partnership is like a “symbiotic” relation, you get access to the partner’s customers and likewise your partner gets access to your customers. Eventually you are adding value to your customers and your partner is doing the same for their customers.

g.???This is a great strategy for “scaling” your product / service

h.???This partnership works best when the partners are clear with their “missions” and are sure they wont tread on each other’s toes

Influence of partner on your Brand Image: Selecting the right partner most certainly affects your “Brand Image.” When you are with this new “niche” product / service, you must cautiously build your brand and must be careful not to deploy any strategy that might be “detrimental” to your brand in the long run. I wanted to highlight the importance of this point with a real-life example so that you are aware “what could go wrong if you don’t go with the right partner”

i.?????One company (call them Tango) that I know of, created a “collaborative” strategy with a much bigger company (call them Charlie), at least 10 times larger than themselves in terms of top line as well as number of employees. Tango had a product that was selling like “hot cakes” with a very good brand value. With the awareness of their product’s success in the market, Charlie selling complementary products to the same market, approached them with a “carrot”. ?Charlie’s pitch to Tango was as follows:

Charlie is a successful business house selling complementary products to the same market as Tango.

?1. They see Tango’s product as a right product fit for them, as at this point in time they don’t have a similar product in their portfolio

?2. They are aware of the success of Tango’s product and can do more justice to Tango’s product with their size and infrastructure

?3. They have a much better marketing / sales and dealer network, and therefore have a far better outreach than Tango and will be able to achieve far more sales volumes than Tango.

When Charlie showed them the sales projections they could achieve within a year, Tango got lured into thinking that this could be the best strategy for them to scale their product and take their production to almost 100% capacity with an assured business. The only “caveat” in the deal was that Tango had to “white label” their product to Charlie and Tango did not see anything wrong in doing so. I do not want to get into the details of what happened eventually to this deal but what I want to do is, to analyse this strategy from here with appropriate scenarios:

a.???Scenario 1: The product finds a fit with both collaborating partners, from all perspectives, including “price” and product quality -Charlie takes a sizeable chunk of Tango’s market and even though Charlie’s product is manufactured by Tango, the brand image of Tango’s product erodes significantly, and not only that, this very collaboration leads to creating a competition, and eroding a sizeable pie of Tango’s existing market share. With passing time this relationship eventually turns into Tango contract manufacturing for Charlie. End-result completely in favour of Charlie, - Tango’s brand has almost “vanished” from the market and Charlie has successfully launched a new product brand in the market.

b.???Even with the above outcome, Charlie’s challenge would be that (since they depend on Tango for the product), of compromised profit margins at the expense of creating a new brand. The next logical step for Charlie would be “product buyout” and if that gets too complicated, buying out Tango.

c.????Let us shift our focus to Tango’s performance during the same timeframe. For the first year, they produce huge volumes for Charlie, booking their production capacity (which was the main intent behind the proposed co-operation.) While Charlie makes a small profit margin (considering their sales and marketing expenses) Tango- the manufacturers- ends up making even lesser (After sharing a huge discount chunk with Charlie, in the interest of keeping their prices competitive).

d.???Scenario 2: If Charlie, for some reason, is not able to make the impact in the market with the new product in the first year, they don’t have much of a choice but to continue for some more time with the partnership in order to get the market slice they have been looking for. Having said that, it is a very rare case, when a brand conscious, large-sized company, with excellent marketing outreach fails to sell an established high-quality product, albeit under a new brand name.

e.???If Charlie does fail eventually trying to sell the new product in the market even in the second year, or if the sales fall far short of their projections, the option open to them is to look for alternative products from other manufacturers, thereby, dropping the product manufactured by Tango. Even in this case Tango has only to lose - a considerable market slice would eventually go to competition which could well have been their own if they had looked at alternative ways of improving outreach and scaling

The above example emphasises the detrimental effects on your brand because of not selecting the right partner for your scaling. I want to explain with another real-life example that amplifies the fact that the right partner can positively impact your brand.

a. Two Technology companies, of a similar size and turnover, having completely discrete product development missions, one that was established in 2002 (company A) and the other a startup established in 2018 (company B). Both were catering to the same end customers with their respective solutions. Company A had an existing brand in the global market and had global users as well. When they were approached by company B, to be considered as a partner, who had a technology to add value to the existing solution provided by A to their end customers, A got interested in partnering with B. Again, here I would like to analyse the outcome of this partnership

b. What has company A to gain from this partnership? – Since B’s offer is a complementary, value-added solution to the same end customers that A is catering to, A does not have to reinvent the wheel and develop the technology that B has already developed. Partnering with B and providing them a way to integrate to their own solution is a great way of “upselling” to existing end customers

h.???What has Company B to gain from this partnership – B has everything to gain from this partnership, one is that they piggy back on A’s customers hence get more visibility in the market and this in turn helps them build their own brand as well as gain access to all the customers of A. This is a great example of how a company can scale and successfully build a brand with the “right partner”

c. This partnership works successfully because both companies have discrete missions and have decided not to step on each other’s toes. Company A has a satisfied set of customers and in this scenario when they bring in B to their customers, as one providing added value, this already provides a great head start for B in the selling process. The same will be true for A when they are introduced to B’s customers.

Partnership - Lessons learnt

Most large-sized, brand conscious companies that start with “partnership” almost always end up “buying out the partner’s stakes” because big companies work relentlessly on improving their “Bottom Line”.

Size is what matters when you look to collaborate with a partner. You must be careful to find the right-size company as partners for scaling your products / services. As you have seen in the Tango-Charlie example they were not companies of the same size, Charlie being10 times bigger than Tango. If you look at the A-B partnership both companies were similar in size.

I am not saying that you should not sell your stakes in a product to the right buyer when opportunity presents itself, I am only saying you should do that, if needed, at the “right time” for you and not when it is the “right time “ for

the partnering company.

In contrast, the Charlie – Tango partner strategy was a “brilliant” brand building one for Charlie but quite the opposite for Tango. Therefore, it was not a “Win-Win”

On the other hand, the A-B partner strategy was a brilliant one for both partners hence a true win-win strategy.

Final Summary:

1.???Keep an ear to the ground: Be alert and look out for signals in the market to understand how your products / services are doing in the market

2.???Respond to market cues with the right “niche” products / services

3.???Find the right partners in the market. When you look for partners, size matters a lot

4.???No partnership strategy that is not a “win-win” will ever succeed for both.

5.???Keep an eye on brand building, deploy strategies to enhance the brand and do not end up with a strategy that will, in the longer term, compromise your brand.

6.???A right, fitting partner can help both scale as well as build a successful brand

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Author : Rengan Jayakrishnan

I am doing a series on Sales Strategies for different scenarios / problem statements. This is the first on that. Feel free to reach me at [email protected]