Working with Your Co-Petitors - A Guide on Partnering with Others in Your Industry
August 30, 2016 by Stacey Papp
Here's how to create long-lasting win-win relationships.
The idea of partnering with a competitor seems to fly in the face of common sense. But many companies have found great mutual success by forming strategic partnerships – or even friendly cooperation – with their competitors. Believe it or not, this could actually help you and your business.
What makes you unique?
Every company has unique services, strengths and weaknesses. By collaborating with your competitors, you can be of service to your customers even when they are looking for something that might lie outside your core offerings.
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For instance, you might own a fleet that does yard maintenance and you do an excellent job that your customers value. But you like to focus on the maintenance and have no interest in expanding your offerings into landscape architecture. You might have a competitor who also performs lawn maintenance but also excellent at doing custom landscape designs. If you have a customer looking to update or refresh their yard with some custom landscaping, what’s the better option: saying you don’t do it or pointing them in the direction of someone who you know will do an outstanding job for them? Pointing your customers to a company that performs the services they're seeking is a great way to cement their trust in you.
Losing customers is always a risk. But think of it this way, would you rather they heard it from you and gave you credit for the great experience, or would you prefer they found your competitor on their own and were put in a position of weighing them against you?
Tips for successful cooperation
- Don’t do this ad-hoc. Look at your strengths and those of your competitors and build these partnerships formally by reaching out to them. Figure out your priorities and come to an agreement (more on this in a bit!) on how to collaborate for everybody’s benefit.
- Maybe you’ve got all the work you need for now, but you still want that customer you turn away to remember dealing with you as a positive experience – giving them a good reference is a great way to do that, and maybe the next time they’re looking they’ll remember that and you’ll have the space in your schedule to fill their need. This is an excellent way to build customer trust. They’ll see you as a business that wants to help them out and isn’t worried about a little competition.
- Every business owner has seen something that a competitor does better and wished they knew their secret. Well, a partnership is a great way to get a closer look at what they’re doing and learn something. Comparing yourself with your partners in the industry is a great way to see what needs improving and get a template for moving forward. Just understand that they will do the same thing. Everybody wins – especially the customers!
- And sometimes a job is too big for one company, so taking on a partner in the same industry may be essential to doing the best possible job. Everybody profits when you work together.
Not just for competitors
Don’t simply focus on competitors in your field. Think about ways other companies’ offerings that complement yours. Going back to the example of the landscape maintenance company, maybe there’s a swimming pool maintenance company that a landscaping firm can form an alliance with. While their offerings aren’t the same, they are similar enough that a partnership could help drive business. This might allow the firms to share marketing costs in looking for customers who need both services. It’s possible this way to widen the net for marketing services by taking on a partner – not necessarily more cost.
- Look for connections like the one in the example. What businesses out there are in related but not identical areas as yours?
- A fleet of plumbers could be a great partner for a fleet of electricians – or any type of home repair and improvement company. You get the idea.
If you agree that a partnership with a competitor is a good idea, that’s great, but don’t rush into anything just yet. Before you get in too deep, make sure you protect yourself in the process by checking with a legal expert and putting into place a contract if necessary.
- Something as simple as recognizing excellence in similar competitors so you can refer your customers might not require anything formal and legal, but...
- If you’re striking a partnership that includes any kind of sharing of proceeds for business referrals, get a lawyer and accountant involved to protect your company and your bottom line – not to mention your partner’s. The best agreements are the ones in which nobody gets burnt.
- And if you’re teaming up to partner on the completion of a job that’s too big for one of you to undertake, definitely get a formal, detailed contract in place that outlines levels of risk, areas of responsibility, shares of revenues and profits and more. Don’t try to manage this with a “gentleman’s agreement.” This is your business – protect your interests.
- It’s a good idea to start small and build trust when you’re looking to build partnerships. Put together a formal proposal with a limited time frame on a partnership – whether for a specific job or for a less formal ‘’co-beneficial referral” agreement. See how it goes, and then decide to move forward on more collaborations or to look for partnerships elsewhere.
- Or maybe you’ll find that partnering isn’t for you. The best way to do this is to try it out on a small scale and work from there.
It’s OK to look at your competitors and make sure you’re one step ahead of them. That’s business. But business is also a world of partnerships. Make sure you’re getting everything you can out of your business by considering all options – including which competitors would make for beneficial partners in growing your business. You might be amazed by the results you get by teaming up.
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