What factors should be considered in selecting a strategic alliance partner?

A strategic alliance is a loose partnership between non-competing businesses that can add profit to each other's bottom lines. This calls for commitment rather than investment but the right partnership can pay serious dividends

Since strategic alliances do not have the backing of a legal agreement, they usually require time to build up the working relationship. This involves regular reviews to refine and develop the agreement. In short, partnerships are long-term strategies that also require short-term activity.

In fact, the reason strategic alliances are so often overlooked as a strategy is because of the level of dedication, commitment and time they require.

Your mindset is also important; you do not want to think of this as "getting" something from your alliance partner. There is a powerful concept used in business networks known as "givers gain". It's best to think about how you can help your partner first, then you can think about how that partner can potentially help you back. Your alliance will flow much more smoothly as a result.

What makes a good strategic alliance partner?

Just as you identify the characteristics of your target customers, you also need to draw up a picture of your ideal partner.

Start by considering other firms that supply your customer base. For instance, if you are a business-to-business company, potential partners could include stationery suppliers, accountants, lawyers, financial advisers, cleaning companies, business coaches and so on. If you are business-to-customer, think about other complementary retailers, service providers or local organisations.

Once you have a long list of potential suppliers, you need to whittle that down to the strongest contenders. Here's what to look for in a potential strategic alliance partner:

1. They have a similar audience

Their audience does not have to be exactly the same as yours, but it definitely should be a similar clientele. For example, if your target person is usually wealthy, then you want to target services that are more likely to have wealthy customers, such as financial advisors or high-end retail.

2. They are not your competitors

Your service should be adding value to their customers, not competing with their services. If your product is too similar to theirs, why should they want to help you promote yours when they can promote their own? You will get the greatest benefit from those who have a distinct service from you but a similar audience.

3. They can give you access to new customers and prospects

Ideally, you want them to have a database of clients and/or prospects that you can easily access. It could work to your advantage if they are not making the most of their database. Imagine if you could offer to help them a) build their database and b) communicate with their prospects and customers with an offer in a positive way. That adds value to them straight away; but it also gives you access to new prospects.

4. They want to work with you

This is an important point. If the potential partner is already satisfied with their sales and marketing and they cannot see any benefit from working with you, you should probably move on. Qualify all your potential strategic alliances the same way you would your sales leads. If they are not as excited about the partnership as you are, then it probably will not work out in the long term. They may look like a good prospect but they are just not that into you.

5. They want something you can offer

You need to be able to offer something that they want from you. Within the core products or services that you offer, there should be something that is valuable to your partner's customers. If you can identify that, then in the long term you can be a giver. And, as we know, givers gain.

With thanks to Shweta Jhajharia, principal coach of ActionCOACH.

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Shweta Jhajharia

From a solid foundation as Unilever’s Global Marketing Manager, Shweta Jhajharia is now one of the leading authorities on Business Value Building and the creator of the unique 6M Model. She has been recognised by external bodies and industry panels as the top business coach in the UK through

The past 18 months have been unprecedented in many ways. It is therefore not surprising that company leaders are looking for solutions to help them stay ahead of the curve, and for many strategic alliances are on top of the agenda.

Indeed, strategic alliances offer characteristics that make them an attractive option in today’s world. For companies operating in an industry undergoing rapid digitisation, like the financial services industry, strategic alliances can offer a fast and sometimes less risky access to assets and intellectual property compared to ‘build’ or ‘buy’ strategies. In financial services, two specific use cases for strategic alliances are co-investing with existing suppliers in new / improved technology solutions, or forming a strategic alliance with other industry players to build a marketplace or ecosystem of service offerings.

Importantly, Corporate Strategy and M&A departments that have a track record of successful alliances, use this as a convincing argument to win over new potential alliance partners.

But harvesting value from alliances is no simple task. When entering into an alliance, partners need to be aware that delivering the ambition and achieving the benefits does not happen on auto-pilot.

At Deloitte, we have identified five factors that companies should consider when entering an alliance:

1. Prioritise collaboration on matters that drive value for both partners
2. Clearly define the responsibilities of all partners and put the right people in charge
3. Ensure the alliance connects with and contributes to the ‘business as usual’
4. Design the governance as much for effectiveness as for adaptability
5. Invest time to define a roadmap, performance metrics and rigorous tracking mechanisms

While strategic alliances are not the ‘silver bullet’ for all the strategic challenges companies are facing in today’s world, they offer specific opportunities in certain circumstances. Strategic alliances have therefore an important place in the toolbox of each Corporate Strategy and M&A department.

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