Thinking of a Martech Partnership? Ask These Questions First
March 18, 2019 | Contributed by: Jon Schepke
About half of global CEOs are going to pursue a strategic alliance to drive corporate growth or profitability. And that thirst for partnerships applies to the martech industry.
I thought a lot about the role of partnerships in martech as I read Tiffani Bova’s Growth IQ, one of the best business books I’ve read in years. In Growth IQ, Tiffani Bova shares 10 different strategies to sustainable growth. Those strategies range from product expansion to partnering. Seldom does a business succeed by pursuing just one strategy in isolation.
For example, a business that wants to expand its products in another market may choose to partner with another business that already has a well-established presence in the market. Doing so reduces cost and risk for the company that wants to do the product expansion.
What does Growth IQ have to do with the location marketing industry? Plenty. As Tiffani Bova argues, partnerships can’t be about avoiding risk or costs but rather about capitalizing on a new opportunity. The next phase of growth in martech will center on providing smarter, hyperlocal marketing services that bridge the online/offline worlds and go beyond customer acquisition to create loyal relationships. This growth will necessarily come from partnerships.
On the marketing side, large consultancies and agencies want to understand how their clients’ customers think and, more importantly, how they think about their clients down to the location level. Services companies need a deeper and broader pool of data that they can use to tell their clients what customers think about them pre- and post-purchase – but it’s just too expensive and time consuming to build that data set.
On the other hand, technology firms have the deep customer data, including sentiment analysis. But for the most part they lack consulting expertise, vertical market know-how, and C-level access to achieve the kind of scale they desire. Hiring and developing consulting talent is also costly and time-consuming, not to mention the business model being different for consulting than for a SaaS-based company. So it makes more sense for the technology leaders in the location marketing industry to look for partners.
Here is where Growth IQ comes into play. Tiffani Bova argues that partnerships are the sensible answer for companies like ours. Others before us have gone down this path and succeeded. She cites the example of airlines forming partnerships with credit card companies to launch successful frequent flyer programs. Those programs would never have grown as they have without partnerships. She offers some valuable guidelines that apply to martech partnerships. For example:
- Any effective partnership depends on understanding where the value is. That comes from defining what each party brings to the table.
- They need clear expectations and measurable results.
- As noted, the partnership needs to be about growth, not managing costs.
- Partnerships should be used in combination with other growth paths such as market acceleration and product diversification.
- The tenets of effective partnerships are trust, fairness, and mutual benefit to both parties.
To make these principles work, you first need to do some honest self-reflection as you assess a potential partner. That self-reflection means asking:
What is your corporate growth strategy? What are the actual paths to growth you are going to follow? Product expansion? A new customer experience? Customer and product diversification? In the case of the martech industry, how does product diversification and expansion in location marketing fit within your growth strategy?
What value do you bring to the table? What can you do by yourself to achieve your product growth strategy in a cost effective way? What are the core competencies that you simply don’t want to turn to a partner for?
What value do you need from a partner? What are the competencies you lack that are just going to be too expensive for you to build from scratch?
If you don’t know the answers to the above questions, then you are not ready to pursue a partnership. If you do have a thorough, well-articulated answers to the above questions, then you’re ready to start evaluating potential partners, using a number of criterion suggested by Growth IQ, such as:
- Whether you and your partner will be able to structure a relationship that ensures trust, fairness, and mutual benefit. Not all potential partners will be able to do so even if they bring value to the table. Issues such as cultural fit might get in the way.
- How you and your partner will measure success tied to your mutual growth strategies.
Tiffani Bova put it best: you must be willing to step outside your comfort zone when the customer and market context change – and partnerships can be one of those ways. The next phase of substantial martech growth in location marketing will require all of the players to step outside our comfort zones and adapt through partnering.