Most small companies live in hope of attracting the attention of much larger established businesses. Not just because they help to provide a stamp of approval which can be used to attract other large customers, but also because of the fact they have the potential to enable a SME to massively scale their business by gaining access to the large company’s customer base with partnerships.
In short: the right kind of relationship with a large corporate can be transformational for a SME, providing the sort of rocket fuel to growth of which any founder can only hope to dream of achieving.
Microsoft’s stratospheric growth from their early days was almost entirely due to a licensing deal which it struck with IBM to provide an operating system for its PCs. Without it, Microsoft would not have gained the early foothold in the desktop application market and Apple – which arguably provided better technology anyway – could have easily become the dominant player.
It’s little wonder then that the CEOs of many SMEs spend many hours thinking about suitable large partners.
A partner or a customer: Knowing the difference
Selling product to a large blue chip customer is usually fairly straightforward provided that you can demonstrate value and have a solution that will fix their problem. However, opportunities to partner or license are usually much more difficult to find and even more difficult to make successful given the significant differences which usually exist between large and small businesses.
When you sell a product into a large corporate you will usually be dealing with a small team of people who are trying to solve a specific pain point for the business. Partnerships and licensing deals meanwhile tend to feed down from strategic decisions made at board level, involve far more people and are considered to be a lot more risky if they go wrong. As with most big deals; the level of risk increases almost proportionately to the level of opportunity.
Finding the perfect partner
When considering a large corporate partner, SMEs need to ensure that there’s both a cultural fit as well as a commercial one. While your business might share goals with a larger company, and provide the most complementary offering for the other party, if your team clashes, the potential benefits will be outweighed by day-to-day issues.
In our experience of attracting large scale partners, we have a very clear proposition, which is to enable large data owners to sell profitably into the high- volume, low-value end of the market. We understand many of the issues of selling data into a self-serve environment and know the value that our platform and experience can add to these businesses.
Recognising that many of the large postal service providers are experiencing a significant decline in their traditional postal operations, we have seen a great strategic opportunity to partner with these businesses. Through these partnerships our model is to provide the technology platform and the postal service providers provide the data as well as the sales and marketing channels within their own countries.
The process of identifying and selecting potential partners is really no different from selling to any business. You find out what it is that the customer needs, identify how your service will meet that need and target businesses who fit the profile. Hopefully once you’ve landed the first one, you can then use the experiences and references gained from that to attract others.
Certainly, this has been our approach with our technology platform and with the postal service providers, when we came to the attention of Canada Post which resulted in a strategic partnership to sell their data using our platform within North America.
A value exchange
Working with large partners is never going to be easy, primarily because of the diverging priorities and internal architectures which are forced to align. Large corporates have established processes, move very slowly and are very political by their nature. For SMEs, this is understandably frustrating as they tend to be agile and make decisions very quickly.
Indeed it can also be easy to feel intimidated as well as flattered when large partners express an interest in your business. The key is to have confidence in what you’re doing and don’t try and force the pace.
Our overriding philosophy when dealing with partners is to make them look good. Whilst we aim to provide them with a level of support which makes them notice us, we are otherwise happy to take a back seat in the relationship on the basis that this enables them to take full advantage of our mutual success.
The best partnerships will allow a unique value exchange to occur, one where both parties become completely interdependent over a sustained period of time.
When a combined risk pays off, the rewards are mutually beneficial and both parties can cash in accordingly.
By Guy Mucklow, entrepreneur and co-founder of Postcode Anywhere