Lessons from the Food Court in Strategic Alliances

It is not at all uncommon for businesses in strategic alliances to see growth in an excess of 20% within the first 90 days of creating a reciprocity program.

Some decades ago the powers that be at Burger King learned the surest way to ensure the success of their hamburger joints was to build as close to a McDonalds as possible. The idea was that two restaurants in the vicinity of one another would establish a "food corridor" and actually create more business for both restaurants.

The strategy was so effective it is thought to have given birth to the food court which can be found in every mall in America today.

While on the surface the idea of even acknowledging, let alone locating near your competition may seem a dangerous move, the strategy has been proven not only sound, but strikingly effective.

Of course with service companies, where the company goes to the prospect rather than entice them in to a brick and mortar shop, it's not a matter of location as much as it is actively partnering with your competition.  And again, while this might seem counter to what we have been taught, leveraging your competition is one of the surest ways to explode your business.

Before you write this idea off, it is not at all uncommon for businesses that align themselves to see growth in an excess of 20% within the first 90 days of creating a reciprocity program. Not unlike stock car drivers that know the value of drafting (that is two cars racing close together can travel significantly faster than two cars that are racing apart) two or more businesses closely allied can generate more prospects than they could if separated.

To understand why you must know a basic tenant of business far too many business people never learn. No matter what your product, you business is marketing - PERIOD! You could be the only master finish carpenter in your town but if people are not aware of you, your business is on the fast track to nowhere.

And since you should be spending more on marketing that anything else except labor, being able to cut this cost by diluting it with other like-minded businesses is one of the surest ways to increase profitability.  The reason this strategy is not as dangerous as it might seem is simple. It's actually quite rare for any two businesses, even in the contracting fields, to offer services that overlap 100% of the competition, 100% of the time.

Yes McDonalds and Burger King both sell hamburgers. But if you want a fillet-o-fish sandwich McDonalds is your only choice. If you're craving onion rings with that burger - the King wins.
These might sound like trivial distinctions and they are. But trivial distinctions drive consumer behavior. For example let's say you sell vinyl, double paned, Argon filled replacement windows. There are as many window choices on the market these days as there are holes to put them in.

Every window has its own unique features. Some have grids between the panes of glass, others external. Some come with Argon, others Krypton. Some offer wood grain laminate, others are made of real wood. One window costs $99.00 while another could run as high as $1500.00. The options are nearly endless.

Why, once you have spent probably a hundred dollars or more to generate a prospect, would you ever lose one because your window only comes in white? Of course if you're like many companies you could arm twist your prospect to buy your window. You could drop the price to near break even. You could even go so far as to actually paint the window. Or you could simply refer them to the window company that has what the customer wants - a brown window.

Of I'm not suggesting you create these strategic alliances with every other company in town. The point is to find companies that share a similar prospect demographic - that does not provide the exact same products your firm does and create a mutually-beneficial relationship.

When you adhere to this strategy some very interesting dynamics begin to unfold. First your company's product offerings expand to encompass products your competition carries without the burden of having to actually add new lines. In the case of the window example we are able to "sell" this customer a brown window without actually having to carry brown windows.

Moreover as your alliance group grows you will you position yourself to make money on every call you make because whatever product your prospect has in mind you have access too.

The point is to not just refer the customer to your competition but to receive a "commission" from him as well. In this example you have recovered your marketing cost, helped your strategic partner by eliminating his lead cost (shared marketing expense) reinforced with your prospect that you can provide a complete array of products and earn money on a sale that without this strategy you would have lost anyway. The benefits are amazing.

Of course you want to only align yourself with companies whose products, services and reputation you trust. When you do the opportunities are endless. I work with one company in Alabama that has seen revenues jump from an average of $300,000 a month to north of $700,000 per month in less than 180 days - strategic alliances leading the way.             

Another form of alliance building - start here if you're the skittish type - is what is commonly referred to as Horizontal Marketing. That is, aligning your business with dissimilar businesses that share common prospect bases.
For example if you own a termite and pest control service, share your data base and marketing efforts with a local plumber, an HVAC contractor, a foundation company, Duct cleaning service, landscaper etc.

In either case the point is to locate similar businesses with similar ethics as your own and piggyback your marketing efforts. In most of the contracting fields there is more than enough business to go around. So make your prospects needs the number priority by making certain they receive the best product and service from the best company for their specific situation and the future success of your business is all but assured.

 Michael Hart is a speaker, author, talk radio host and shameless publicity hound. His marketing and publicity strategies have been featured in numerous magazines including: Selling, Forbes, Entrepreneur, Sales and Marketing Executive Report and many others. He is the host the "Michael Hart Radio Show" which can be heard on stations across the U.S. He can be reached at 205.362.6419 or [email protected] .