Think about the last time you entered a Target. Did you walk in and immediately notice a Starbucks beckoning you with its hues of green and scents of espresso?
What you witnessed was a strategic alliance, and a powerful one at that. Now you’re cruising down the Target aisles fully caffeinated and ready to buy way more items than you had on your list. After all, who can resist salad tongs in the shape of dinosaurs?
While this particular partnership is an example of a retail application, strategic alliances are increasing in popularity in the B2B SaaS world as well. 72% of partner professionals who contributed to the 2022 State of the Partner Ecosystem Report said their company has a strategic alliance (aka strategic partner) program. This is nearly tied with 73% of respondents who have a channel partner program.
While the role of strategic alliances differs at every company, we’re going to walk you through the basic definition and why companies are choosing this type of partnership.
What are strategic alliances?
Strategic alliances, also known as strategic partnerships, are long-term, multi-department commitments with clearly defined goals for both companies. They differ from acquisitions and joint ventures because the companies remain separate entities (like how Starbucks and Target work together, within their own boundaries). However, strategic alliances have been known to lay the groundwork for acquisitions. But more on that later.
Strategic alliances carry different definitions for every company, and no two vetting processes are the same. Some companies enter into these agreements based purely on their customers, and which partners have similar existing customers. (Some even flat-out ask their customers what other applications are in their tech stack, and base their alliances on those answers.) Others lean on more criteria at the outset, like the prospective partner’s estimated number of new customers each quarter and their types of existing partnerships.
First, let’s tackle where strategic alliances fit into your ecosystem.
How do strategic alliances relate to other types of partnerships?
When thinking about strategic alliances, it helps to visualize them alongside the other types of partnerships.
Partnerships generally fit into three categories: technology partnerships, channel partnerships, and strategic alliances (partnerships).
Let’s go over the basic characteristics of each:
Partners: Tech partners or Independent Software Vendors (ISVs)
Arrangement: Often referred to as an “integration partnership”, this type of partnership is when your product sends and/or receives data from a partner’s product.
Reason: If an ISV believes their platform would benefit from additional capabilities and features, they partner with another ISV that can fill the product gap.
Example: Thanks to Slack’s tech integration with Google Calendar, Google sends calendar data to Slack so Slack users automatically receive messages with calendar invite updates.
These are sometimes referred to as “plugins” or “apps” that can exist within a company’s “integration marketplace.”
Partners: An ISV and a channel partner
Arrangement: A channel partner resells, manages, and/or delivers an ISV’s product to market.
Reason: The channel partner makes money through referral fees and/or selling complementary services (consulting, training, and customer support), and the vendors benefit from a faster go-to-market timeline.
Example: Freshbooks’ affiliate partners can earn up to $10 for each free trial signup they source and $200 for the trial signups that convert to a paid plan. The affiliates get the referral fees while FreshBooks can build its sales funnel without investing in additional lead generation efforts or sales teams.
There are different types of channel partnerships, many of which have overlapping definitions: including Resellers, Value Added Resellers (VARs), Systems Integrators (SIs), agency partners, indirect sales partners, affiliate partners, Business Process Outsourcers (BPOs), and Managed Service Providers (MSPs). You can read a breakdown of all these types of channel partnerships (and many more acronyms) here.
Partners: ISVs and/or channel partners
Arrangement: Often combines both technology and channel partnerships with a long-term vision for both companies’ growth. In addition, multiple departments are typically pulled in to handle PR, product, marketing, customer success, and sales initiatives.
Reason: Once a tool for larger enterprise companies, strategic alliances are growing in popularity as a means to obtain cost-effective growth in an oversaturated market. (We’ll break down the specifics later.)
- Bringing in key iOS features, like Siri Shortcuts and Apple’s Business Chat, into the Salesforce mobile app, and building industry-specific iOS apps to the Salesforce platform.
- A new mobile SDK built specifically for Swift, Apple’s popular programming language.
- A deeper integration with Trailhead, Salesforce’s education platform.
Salesforce now has a more integrated iOS experience and Apple has increased its reach into the enterprise. It’s a long-term and multi-departmental arrangement.
When do strategic alliances make sense?
A strategic alliance is a cost-effective growth solution that can help your company stand out. They can also help your company quickly go from A to Z, when other types of partnerships might only get you to B.
Here are some reasons you may embark on a strategic alliance:
Bring more value to your product
Remember how we said a strategic alliance often involves both channel and tech partnerships? Well, here’s where the tech partnership comes in. If there’s a product gap a partner’s product can fill with an integration, a long-term tech partnership with corresponding marketing and sales motions can be advantageous.
For example: SignEasy formed a strategic alliance with Apple to bring Apple’s face recognition into SignEasy’s digital signing platform. The integration was touted as both an extra layer of security and a faster way of signing a document.
Tech integrations are also helpful for increasing stickiness and decreasing customer churn.
Open up new verticals/geographic markets
If your company is struggling to break into the healthcare industry or you want to expand into a new geographic location, a strategic alliance is one way to do so. Partnering with a company that has a foothold in another industry or location can give you opportunities that would otherwise require additional hiring and resources.
For example: Monday.com’s channel partner Story Place & Human (SPH) had a strong knowledge of South Korean culture and best practices for lead conversion. Monday.com tapped into this geographic foothold to triple its revenue in nine months.
Target additional customers
Thanks to the emergence of real-time account mapping, it’s easy to see potential customer overlaps between you and a prospective partner. If you share an ICP with a prospective partner and account mapping has indicated your opportunities and/or prospects overlap with their existing customers, a strategic alliance can help you grow your customer base while decreasing customer acquisition costs and overall marketing spend.
Lay the groundwork for an eventual acquisition
If a company is looking to eventually acquire a company to fill a product gap or target a new market, a strategic alliance might be the first step.
For example: In May 2021, Demandbase acquired DemandMatrix seven months after launching their partnership. We detailed the steps that led to the acquisition, but in short, a strategic alliance, after a discovery phase, was the foundation.
Examples of strategic alliances
The framework of a strategic alliance hinges on a long-term vision. Demandbase’s long-term vision was to bring DemandMatrix’s technographic data into the fold for both internal use and its customers. This required multi-department collaboration from both partners’ teams (sales, marketing, and product), which is the second constant for strategic alliances.
Here are two more examples of companies embarking on strategic alliances with long-term visions and multi-department initiatives:
ActiveCampaign’s strategic alliance with Salesforce
ActiveCampaign and Salesforce completed their account mapping and identified their joint customers. They determined which customers would be most likely to adopt, and pitched a long-term, multi-department partnership to their leadership teams that would include an integration and complementary co-marketing initiatives.
The teams that were involved in the partnership included:
The companies’ product teams needed to build the integration.
Both companies needed to create co-branded landing page copy, along with other marketing assets.
ActiveCampaign invited Salesforce to co-host fireside chats with them at Digital Summits. The two companies participated in other events together, as well.
To further cement the strategic partnership, ActiveCampaign now has an entire engineering team (as of early 2020) and a marketer (as of late 2020) fully dedicated to the Salesforce integration.
When two supernodes combine to form a strategic alliance, the resulting partnership is often referred to as a supernoodle. Okay, so we 100% made that up, but here’s what is true about this strategic partnership.
Google’s channel partnerships team and HubSpot’s strategic partnerships team first discussed the idea for the Ads Optimization Events tool in Q4 2019. After a discovery phase, the two companies got to work laying the groundwork for the tool, which allows HubSpot Professional and Enterprise customers to send online and offline conversion event data to Google Ads to help marketers optimize ad performance.
The teams that were involved in the partnership included:
HubSpot and Google’s product teams launched the beta version of the Ads Optimization Events tool in the summer of 2020, with a rollout to HubSpot Professional and Enterprise customers in 2020.
HubSpot worked with its customer success team to gather customer feedback from customer experience surveys, analyze trends related to offline conversion tracking in customer support tickets, and review product feedback.
HubSpot looped in the sales team with an internal video that explained how the Ads Optimization Events tool benefits HubSpot and Google’s mutual customers.
HubSpot’s strategic partnerships team created a detailed integration guide to educate its internal customer success, marketing, and sales teams on product messaging.
HubSpot worked with its partner marketing team to help them drive integration adoption through customer conversations and co-marketing motions.
Both companies looped in their marketing teams to work on a case study outlining the early success customers had experienced using the integration. Google also hosted an invite-only webinar. While Google’s team created and presented most of the content, a HubSpot team member demoed the integration.
Google and HubSpot’s product, marketing, and sales teams participated in weekly check-ins to set mutual expectations and review each project’s deliverables.
The comprehensive GTM strategy for their integration resulted in a 232% increase in feature adoption just five months post launch.
As you can see, for a strategic alliance to work, there has to be teamwork across the board.
For more insights into strategic alliances, including how to build your ecosystem from scratch, download the Partner Playbook below: