Everyone has heard the old adage “it’s not about what you know, but who you know”, so it is surprising how often companies either overlook the importance of developing strategic partnerships or don’t utilize these relationships to fullest. While there is often a great deal of legwork that goes into identifying and establishing connections with potential partners, when done properly, the benefits easily make up for those efforts. Cultivating strong referral relationships should be a high priority for any company as it is a highly effective way to boost visibility of your business and increase your customer base without spending a fortune on marketing.
On the surface, starting the process of forming strategic partnerships may seem like a daunting task. However there is a reason why you are looking to form these alliances. Once you figure out what you are looking to accomplish, you can start researching which potential partners align with these goals. Researching prospects can be one of the most time consuming parts of this process, however it is a crucial part of ultimately finding the right partners.
Here are some factors you can consider when seeking out potential partners.
One of the most obvious things to consider is what commonalities exist between your company and potential referral partners. Seek out companies that offer products or services that cater to a similar industry or niche. This increases your chances of working together because these companies typically have a similar customer profile and they can easily identify what customer needs exist in the space. When you initiate the discussion of a strategic partnership, they will easily be able to identify if this is an opportunity that would benefits their clients.
Another factor to think about is, does this company provide a complementary product or service. For example, if you are a lender that specializes in real estate investment loans, partnering with a company that provides proprietary data on foreclosure inventory throughout the country is a no brainer. Finding a company with a complementary product or service allows you to provide your customers with additional resources they might not otherwise have access to with minimal effort. This creates a clear advantage over competitors.
A final factor to consider is, are companies you perceive as competitors, truly your competition. One of the most common mistakes companies make is discounting a potential referral partner because they assume they are a direct competitor. Much like your company has a specialty, a “competitor” also has their established niche. There are often things that your competitor can’t or won’t do.
For example, RCN Capital has established referral relationships with numerous other lenders that, at the surface, seem to offer identical loan programs. However, maybe these lenders can’t lend nationwide and receive loan requests from states they can’t do business in. They will send these requests to RCN. In return, maybe they offer programs that we don’t, like new construction loans or loans for small-balance commercial properties. We will reciprocate by sending those requests to that lender. These pseudo-competitors often make the best referral partners because their customer profile is nearly identical to your company’s. Plus, you now have an additional resource for customers that may be looking for something you aren’t currently offering.
Once you’ve completed your research and identified potential partners that align with what you are looking to accomplish, it’s time to pitch the partnership to your prospects. When putting together a proposal, it’s important that your partnership clearly outlines the benefits for both involved parties.
“It can be easy to focus solely on what another company can bring to the table but in order to form a long-lasting relationship, you must create a win-win scenario for both sides.”
Developing a mutually beneficial partnership is often as simple as having an initial open conversation with your referral prospect. Start by discussing what synergies exist between your companies and discuss what mutual goals a partnership could accomplish. From there, develop a plan of action with clearly defined deliverables on each side. Remember to take into consideration how much effort will be required from each company to achieve these deliverables. Potential partners may not have access to or be able to devote as many resources as you may think, so it’s important to be willing to be flexible with your ask in these situations. If either you or your prospect are concerned that the referral partnership would tax company resources, come up with a plan that starts with smaller deliverables or goals that are spread out over a longer period of time and agree to revisit and modify the partnership on a quarterly basis once you know what is and isn’t working. It is common for partnerships to start slow at first and ramp up over time.
Finally, once you have come to a verbal agreement, make sure that you put that agreement in writing. This protects both your company and your strategic partner in the long run. It gives both you and your prospect one final chance to review the terms of the agreement prior to proceeding. There may be things that were not taken into consideration in your initial discussions that come to light when other members of the company review the agreement. Plus, not only does it solidify the terms of your partnership, but it gives both parties something to refer to should there be any question of what needs to be done and when it needs to be accomplished by. As previously mentioned, there is nothing wrong with including language that the agreement can be revisited or amended in 3 month, 6 months or even at any time to keep the partnership more flexible.
Once your partnership agreement has been signed by you and your referral partner, you figure that the hardest part is over and its smooth sailing from here, right? The answer to that is yes and no. While meeting set objectives to satisfy your agreement seems like a piece of cake in comparison to the work you’ve put in to get here, it’s not always that easy. One of the most important things to remember is that communication is key to maintaining a successful referral relationship or strategic partnership. Many referral relationships fail because of lack of communication. You never want to assume that things are fine because no news is good news. You took the effort to initiate a partnership, so make the effort to maintain it.
As your referral relationship is getting off the ground, make sure that you’re checking in with your new partner regularly. This gives you the opportunity to discuss progress on any objectives that are in the works, see what is and isn’t working out thus far, and it ensures that all expectations are being met. These touch points don’t necessarily need to be anything time consuming. Something as simple as an email allowing your partner to review the progress of a project promoting their company so that the messaging is in line or a brief call confirming that some of the leads you agreed to send ended up being a good fit is usually all it takes to keep things running smoothly. Once you figure out the sweet spot of communication frequency, stick to that schedule. In the same token, don’t be afraid to ask for progress on their side. Strategic partnerships are more likely to end because one party feels like the other isn’t reciprocating the effort. Speak up should you feel that things aren’t in line with your agreement. As long as you have said your piece and offered a solution, there is no reason why things can’t be adjusted and resolved.
Developing strategic partnerships and referral relationships are a crucial part of building a successful marketing strategy as well as your business as a whole. While there is a great deal of time and effort required to initiate and ultimately maintain these relationships, the monetary cost is minimal, if there is any at all. When done right, these partnerships are well worth it and you never know what other doors may open for your business as a result.
This originally appeared in the May edition of the National Mortgage Professional Magazine. View the full article here.