Use strategic alliances to quick start your business…
publication date: Sep 15, 2007
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author/source: Olivia Stefanino
Unless you’ve got bottomless pockets, spending money on advertising that isn’t specifically targeted can be the fastest route to bankruptcy. So what can you do if you haven’t got a large budget and you want to attract local customers?
One of the keys to maximising your promotional spend is to work with other non-competing professionals who are targeting the same market as you. By creating a strategic alliance in this way, you can create an arrangement in which everyone wins – you, your strategic alliance partner and your clients.
The aim is for each partner to make an offer which benefits the other partner’s clients. For example, let’s say that Sue runs a nail bar while her friend Lyn runs an aromatherapy practice. Both women are, to some extent, targeting the same individuals. At a rough guess the majority of their clients are likely to be women, live within a 10-mile radius and have enough money to afford to pamper themselves.
Rather than simply recommending the other woman, each therapist could do better by making the arrangement more official – possibly by printing “special offer” vouchers.
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In our scenario, rather than merely offering a discount on her services, Sue could offer Lyn’s clients a free pedicure with every new set of acrylic nails or a free bottle of nail varnish with every manicure booked within a specific time frame. In return, Lyn could offer Sue’s clients a free bottle of scented bath oil with every massage booked – or a free ½ hour’s reflexology session with every aromatherapy session booked within a specific time frame.
Creating a strategic alliance in this way means that everyone’s a winner. You get more clients for less than it would cost you to advertise in order to attract them, your strategic partner is appreciated by her clients for adding value to her service and the client wins because she gets a special deal!
Of course, in order to make the system work, you need first to know how much it costs you to attract clients through the “normal” channels, like advertising in the local newspaper. Calculating this is pretty straight forward.
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For example, if you know that you place a weekly “small ad” in your local newspaper which costs you £25 per insertion and usually brings you in five clients a month, each client effectively costs you £20 to “find”. (The calculation is four insertions @ £25, divided by five clients equals £20.) You now know that your cost per sale is £20, which means that you can afford to offer the equivalent of £20 to your strategic alliance partners without any effect on your bottom line!
Now the interesting thing is that with advertising, it’s money that shows as a straight loss to you and a straight gain to the publisher – whether or not your advertisement actually wins you any clients!
But with a strategic alliance, you can make a value added offer to your partner’s clients which are only payable as and when you gain a new client. And the beauty is that if you’re offering valued added services or products, the perceived value is usually much greater than the cost to you!