84% of people trust recommendations from people they know [Nielsen] and social voice (i.e. online and offline word of mouth) can increase marketing impact by up to 54% [Market Share].
So it is clear that word of mouth is an effective form of marketing. However it’s also very difficult to control and measure. Only 34% of the marketers surveyed by the Word of Mouth Marketing Association think they can effectively measure the ROI of online social media, and 22% for offline word of mouth.
So how do you build a strategy that is as effective as word of mouth but can also be controlled and measured?
According to Shweta Jhajharia, founder of The London Coaching Group the answer lies in forming strategic alliances. These can multiply the quantity and effectiveness of your referrals in a systemised manner. A strategic alliance is a "loose partnership" between non-competing businesses that can add profit to each other's bottom lines. There are rarely any legal documents involved, so it usually requires time to build up the relationship and should be considered a long-term strategy.
It is important not to think of this as "getting" something from your alliance partner. Think about how it is that you can help your alliance partner first, then about how that partner can potentially help you back. This way your alliance will flow much more smoothly.
What Makes a Good Strategic Alliance Partner?
Jhajharia says you should start by asking yourself who are the other suppliers to your ideal clients? What other services do your customers need?
If you are a business-to-business company, this may be stationery suppliers, accountants, lawyers, financial advisers, cleaning companies, insolvency practitioners, business coaches etc.
If you are business-to-customer, then their needs will be slightly different. Think about supermarkets, hairdressers, community centres and so on. There could be a lot more variety here.
Once you have this list of potential partners, qualify them by looking at the following areas:
1. Similar audience
Their audience does not have to be exactly the same as yours, but it definitely should be a similar clientele.
Your service should be adding value to their customers, not competing with their services.
3. Access to customers/prospects
Ideally, you want them to have a database of clients and/or prospects that you can easily access. This is important because ultimately their audience will determine how valuable this alliance will eventually be to you.
4. Wants to work with you
This is more of a subjective point, but it is still an important one. If the potential partner is already satisfied with their sales and marketing and they cannot see much value from you, you should probably move on.
5. Wants something you can offer
You need to have the ability to offer something that they actually want from you. Within the core products that you offer, there should be something that is valuable to your partner's customers – then everyone will benefit.
How do you identify your target strategic alliance partners?
Download and print off this graphic or alternatively draw a simple grid of six boxes on a piece of paper.
At the top of each box, Jhajharia advises her clients to write down a broad category of the type of supplier. For example, accountants, banks, marketing agencies, plumbers or financial advisors.
Within each category, write down three players. These may be companies/people who you already know and have had contact with, or those you know of and would want to target.
You now have a list of potential strategic alliance partners with access to a very wide audience – which can dramatically increase your warm, high quality leads.