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The Business Development / Partnership Strategy is the plan for identifying, cultivating, and bringing to fruition new business opportunities that facilitate the long-term growth of the company. It is a critical component of the Business Plan that is based off of a thorough Situation Analysis, and guided by the goals articulated in the GrowthStrategy, Sales Strategy, and Marketing Strategy. It relies heavily on developing strategic partnerships in five key areas:
1) Product / Service
2) Sales / Distribution
An effective Business Development / Partnership Strategy will build off of the company’s existing strengths and network of contacts. It will target critical areas to develop new ones, and commit the necessary resources to building key relationships in pursuit of the business opportunities identified in the SWOT Analysis portion of the Situation Analysis. The five key areas listed above are expanded on below with descriptions and examples.
1) Product / Service
The focus of the Product / Service business development strategy is to grow the business by developing the revenue streams related to existing products and services, as well as identifying and executing the development of new ones. The target development areas detailed below are based off of the Ansoff Product / Market Matrix – a standard business plan tool for evaluating Growth Strategy opportunities.
A) Market Penetration
This strategy focuses on continuing to sell existing products / services into existing markets. The goal is to increase market share in the current marketplace by winning a higher percentage of new business opportunities, and / or taking customers from competitors. Typically, this strategy is most effective when the overall market is growing, and it is done by implementing one or more of the following competitive tactics:
- New targeted marketing campaign(s)
- Increase sales force / refine sales process
- Aggressive pricing changes (undercut competition)
- Value-added services aimed at dominating high growth market segments.
Example: Partner with a digital marketing agency that can create online lead generation programs to consistently feed the sales cycle with new target market prospects.
B) Product Development
This is the strategy of introducing new products / services into existing markets. The goal is to increase market share in the current marketplace by increasing revenue per customer, and attracting new customers in the current marketplace with new product options. This strategy is often part of the natural growth of organizations, however it requires the development of new competencies (often done through acquisition or strategic partnerships), which inevitably brings new risks and expenses. Example: Develop an OEM distribution or licensing partnership with a company that has a complimentary product or technology, which can be bundled in or up-sold to the existing customer base.
C) Market Development
This is the strategy of selling existing products into new markets. The goal is to increase revenue by moving beyond the immediate customer base, attracting new kinds of customers for existing products. Typically, this involves identifying new vertical market segments that have not yet been served, or international expansion. Example: Make the adjustments to an existing product or service so that it complies with the unique requirements of a closely related market. For example, a product or service geared toward the Education market may require only minimal changes / improvements (along appropriate marketing and product positioning) before it could be re-introduced into the Government marketplace.
This is the strategy of diversifying into new businesses by introducing new products into new markets. This is the most risky of the four strategies, and the least attractive option unless there is a unique circumstance that would warrant such a move. Also, Diversification can be a move into either a related business or completely unrelated business, but the former is almost always preferable. Example: Re-evaluate components of the SWOT Analysis portion of the Situation Analysis, and find a new business opportunity or strategic partnership that capitalizes on the company strengths, while minimizing exposure to weaknesses, and / or eliminates threats.
2) Sales / Distribution
The focus of the Sales / Distribution business development strategy is to grow the business by expanding the reach of your sales and / or distribution network. Depending on the type of product / service and industry structure, this will typically involve strategic partnerships that change the nature of the existing sales process. Below are four areas to focus the Sales / Distribution component of the Bus. Dev. / Partnership Strategy.
A) Direct Sales
Let’s assume that most of a company’s existing sales is done through a external sale team focused on selling the primary product to larger accounts such as Fortune 1000 level companies. There may be “lighter” version of the product or secondary products geared toward smaller companies that can be sold directly to the customer via the website. Changes to the website and online marketing strategy that facilitate this process can increase direct sales as percentage of all sales revenue.
B) Reseller / Dealer Network
Sometimes it’s better to build a network of contracted sales professionals in strategic geographic locations than to try to employ a full time sales team. These kinds of sales professionals will typically already have resources and relationships that will help bring your product to market quickly. The key to this strategy is building relationships with the best dealers, who essentially become your customers. You must have a strong program in place to train them and support them with marketing campaigns and materials.
C) Value-Added Resellers (VARs)
A value-added reseller (VAR) partnership is a strategic alignment with a company that adds features or services to your existing technology or product, and then resells it to end-users as an integrated product or complete “turn-key” solution. This is common in the technology industry, where a VAR might bundle a software application with supplied hardware.
D) OEM Distribution
An original equipment manufacturer (OEM) distribution partnership is when technology, products or components are purchased or licensed by a company and retailed under that purchasing company’s brand name. This can be a great way for a small company with a solid product or cutting edge technology to gain access to a larger company’s sales and distribution channels. And vice versa, it’s a great way for a company with established sales channels but a limited or dying product line to quickly build a new revenue stream.
The focus of the Marketing business development strategy (a.k.a. Partner Co-Marketing) is to build synergistic relationships with companies that deliver valuable exposure and other marketing benefits for your company at minimal cost. A typical co-marketing partnership involves a smaller company that utilizes the products or technology platform of at much larger company with a developed partner program. The larger company benefits from evangelism and product / technology dispersion provided by the network of smaller companies. The smaller company benefits from the partner program marketing exposure provided by the larger company. These kinds of marketing related partnerships are common in the enterprise technology industry (e.g. Microsoft Certified Partner, Adobe Solution Partner, Apple Developer Network, etc.). The following are four areas where the Marketing component of a Business Development / Partnership Strategy can provide tangible benefits.
A) Brand Name Recognition
One of the immediate benefits of becoming a certified partner of a major company in your industry will be use of the partner logo on your website, marketing collateral, business cards, etc. This lends immediate credibility to your product / service offering and will help to build brand equity. It tells prospective customers that your company and product line has already been vetted by an established authority.
B) “Go-to-Market” / Sales Referral Programs
Companies with established partner programs will often have a “Go-to-Market” or Sales Referral programs designed to help partners tap into their customer base or sales channels. These programs are designed to connect their entire ecosystem of partners, customers and affiliates, and will often require the partner to make adjustments to the product / service offering (including price).
C) Event Exposure
One of the easiest ways to take advantage of marketing partnerships is through events such as industry trade shows or affiliate conferences, particularly when the company you’re partnering with is a major sponsor of the event. Typically there will be multiple opportunities to meet other partners and potential customers, and in some situations event fees can be underwritten by the sponsoring company.
D) Custom Co-Marketing Projects
Many large companies have co-marketing budgets set aside to facilitate unique marketing opportunities that are custom designed by the partners. This could be co-written white papers, case studies, technology demonstrations, or anything that will advance the company’s marketing goals in a creative way. The key is finding the right contact inside the organization to “green light” the project, pitching the idea in a professional way, and making sure it delivers value for company so they will consider similar projects in the future.
The focus of the Technology business development strategy is to research, evaluate and implement the best available technologies to improve the business and continuously build competitive advantage. Below are four areas to focus the Technology component of the Bus. Dev. / Partnership Strategy.
A) Product / Service
This is similar to the “Product Development” section of the Product / Service area of the Bus. Dev. / Partnership Strategy (listed first in this document). It involves research, development, and often partnering or acquisition of other companies with new technologies that make the existing product / service better.
Example: Developing a new patentable technology that can be incorporated into a new and improved version of the product, which will help build competitive advantage.
B) Customer Pain Issue / Problem Solving
This involves extensive communication with customers to find out what they like and dislike about your product, what the perception of your product is compared to the competition, and what can be done to improve the customer experience. Often bringing in new customer service related technologies will not only help win new business, but will ensure that customers stay with you for the long term. Example: Introduce an online customer service portal with all necessary product information, updates, company news, support info, FAQ, customer forum, etc…
C) Business Processes
This involves utilizing technology the automates the internal workflow of day-to-day business activities with the goal of saving time and making the business more efficient. This can include the implementation of internally developed technology, or a bringing in commercial technologies. Example: There are a range of enterprise software solutions geared toward business processes under the following categories: Business Process Management (BPM), Enterprise Content Management (ECM), Digital Asset Management (DAM), Business Intelligence (BI), Web and Mobile Analytics, Workflow, and Collaboration.
Any good marketing plan will include the continuous evaluation of new technologies (both free and commercial) that can help achieve marketing goals. One area of the marketing plan where there is always a constant stream of new technologies to evaluate is the Digital Marketing Strategy. A good place to start is to partner with a digital marketing agency, or start with the myriad of free tools available. Examples: Social Media, Mobile Apps, E-newsletters, Automated Lead Capture, Blogging, Pay-per-Click Advertising, Search Engine Optimization, etc.
The focus of the Financial business development strategy is to build both investor and banking relationships that will facilitate the long term growth strategy. Typically this responsibility will be with the CEO and CFO rather than a Business Development executive, however he / she will inevitably be part of the relationship building.
A) Investor Relations
When a company is in startup mode, investor relations are more informal than in a large company setting. Typically the company will be trying to secure seed capital so there will be a series of Pitch meetings where the various components of the Business Plan will be a key part of communication. In larger companies Investor Relations takes on a more formal role with regular shareholder meetings, production of quarterly and annual reports, and communicating corporate governance policies.
A) Banking Partner
While building and maintaining adequate cash flow is essential to keep the business running and meet financial obligations, building a good relationship with a reputable banking partner is also critical when it comes time to expand the business (purchase equipment, open new offices, finance working capital, etc.). Working to build these relationships before they are needed will pay off when it comes time to secure a loan or line of credit to finance short-term and long-term growth opportunities.