Improving Customer Partnerships

Last Updated May 29, 2007 5:04 PM EDT

Partnering with customers can be a valuable strategy for expanding your business and increasing profits. Creating a meaningful partnership requires a substantial commitment by your company, combined with correct structuring and focus. Customers looking to form partnerships may seek technical expertise, cooperation, or in some cases, total solutions from the relationship.

What You Need to KnowHow do I approach a potential partnership with a customer?

Consider how you could strengthen the relationship with your customer and then put together an action plan. Determine the customer's most important business considerations and brainstorm the ways your company can contribute to the achievement of their objectives. Then, prepare and execute a plan for increasing the role of your company.

Can partnership help my customer achieve market leadership through innovation?

Yes. Consider how the technical skills and resources in your organization could help the customer's efforts to innovate. Consider offering technical resources, on a subcontract basis, to handle product development. This could enable their innovative progress without requiring investment in their own skills, providing the customer with new technology and allowing them to diversify in line with your specialist skills.

Are partnerships limited to technical cooperation?

No, the scope of partnership is far wider. When considering partnership possibilities with another company, consider ways to combine forces to reduce costs, increase capacity, create a nationwide distribution network, increase focus on core business, develop a stronger supply position, or improve margins.

Can partnership help customers save money?

Yes. For example, customers might leverage a partnership with your organization to become a value-for-money supplier, succeeding through competitive pricing. You might help them to reduce overall costs—perhaps your products and expertise can assist in decreasing design and manufacturing costs, or contribute to managing non-core activities more cost-effectively.

What to DoCultivate Customer Dependency

Partnering with customers can lead to their increased dependence on your organization, and strengthen the long-term relationship. It is important to develop a thorough understanding of customers' business goals and determine how your products or services can help them to achieve their objectives. In this way, you can demonstrate that your organization is equipped to make an important contribution to their business.

Make a Strong Commitment

When undertaking a business partnership, it is important to demonstrate strong commitment to its success. Consider the following attributes of an ideal partnership scenario:

  • The partnership service is a primary business activity, and you have invested in its future growth and development.
  • There are no internal or external factors that could have an adverse effect on your performance or commitment.
  • You have a statement of direction showing your long-term plans for development of the business, and you have the resources to achieve that development.
  • You have a record of innovation and excellence, and are highly regarded by customers and competitors.
  • Your customer base contains a high proportion of long-term customers.
  • Your involvement in industry associations or collaborative projects demonstrates your readiness to make a major contribution to the future of your industry.
Communicate Plans for the Future

A company's future direction has a significant impact on its partnerships. Because your partners can be greatly affected by your organization's future plans, it is important to develop and clarify strategies for future growth and development. By clearly communicating the plans for your future range of products or services, you will help your partners to develop and coordinate their own long-term strategies.

Capitalize on Your Market Knowledge

Your track record is a key factor in any partnership; it should demonstrate that your organization is capable of understanding your partners' requirements, and have already developed successful solutions in that market. Perhaps you are the market leader, or have a growing market share. Your market knowledge may be specialized—focused on specific niche markets or sectors that are of interest to your partners. Capitalize on this market experience when creating new partnership opportunities.

Substantiate Claims of Technical Expertise

Gaining access to another company's technical expertise is one of the major reasons for forming partnerships. Providing examples of technical innovation or leadership will demonstrate your existing capabilities, but partners will also be curious about your potential for future development. To substantiate your claims of technical expertise, prospective partners will want to see your annual expenditure on research and development, your track record in new product development, and a good supply of technical and research resources.

Display Strong Management Capability

Prospective partners will also seek assurance that you have the resources to manage your business effectively, and to provide them with the highest standards of service. You should present a seasoned, experienced management team. Your managers should have a sufficient amount of experience in the partners' business and possess a good understanding of their requirements. Furthermore, an established management training and development program helps to assure ongoing development of skills to meet changing requirements.

Highlight Financial Stability

Partners must have confidence in your long-term ability to provide them with high standards of service. Doubts about your financial stability will discourage their commitment to a full partnership with you as the sole supplier. Fully disclose your partners about the financial structure and performance of your organization. If your company is part of a larger group, explain the financial relationship and highlight the strength of the group's financial resources to demonstrate your own stability. Provide your partners with regular information on your financial performance.

Stress Quality Processes

Demonstrate to partners that quality is a critical organizational emphasis, and that you implement recognized quality standards. Your staff should display a commitment to quality and should be suitably qualified for their roles. Additionally, a partner highly committed to quality should be able to:

  • explain quality principles and demonstrate how these principles are driven by customer needs;
  • use customer satisfaction indicators to measure the effectiveness of quality processes;
  • describe the customer surveys, user groups, or other customer response mechanisms that will form part of the partnership process;
  • describe how quality processes might be applied to specific partnership activities;
  • explain how quality processes could be integrated with those of the partner.
Commit Sufficient Resources

Partnership should always be seen as a long-term commitment. Demonstrate the willingness to commit adequate resources to provide the level of service your partners need, both now and in the future. Prospective partners will use the key attributes of your organization—size, number of employees, location, turnover and profitability, national or international network, and infrastructure—to decide whether you can handle the intended level of business. For example, if your customers operate a national or international network of branches, do you have a corresponding network to meet their local needs? Do you have the production resources to handle increasing volumes of business, and can you invest in or automate any processes to increase your capacity? How many staff do you have, and are you using training to develop their skills?

Optimize the Organizational Structure

It is important for prospective partners to understand how you will make partnership resources available to them. The structure of your organization must reflect customer needs rather than internal requirements. Optimally, your organization should assist partners in making the best use of their own resources, in addition to enabling them to use your services. A single point of contact provides your partners with rapid access. Quality staff members who are committed to the highest levels of customer care demonstrate that your company is focused on your partners' interests.

Leverage Networked Collaboration Tools

There is a whole category of network-based products to enable productive collaboration of team members in disparate locations. Leverage these tools with your partners to increase productivity. Project teams in different locations can share files, hold brainstorming sessions, and perform many other collaborative tasks without necessarily working in the same building, city, or country.

Offer a Total Solution

In addition to providing specific products and services, you can support your partners with other added-value services, and enable them to gain maximum business benefits. A total solution might include consulting, project management, implementation, training, and/or facilities management. If you can demonstrate that you have the skills and resources to provide these services, you will be a more attractive partner.

Highlight Previous Collaborative Success

To demonstrate your commitment to partnerships, cite other examples of collaboration or partnerships in which your organization has been involved. Highlight the key success factors and explain how your capabilities have contributed to the success of the partnership. Describing your involvement in user groups or industry liaison committees will also demonstrate that you are capable of working closely with others to achieve joint objectives.

What to AvoidYou Confuse Partnership with Selling

Merely selling a product or service to a company does not necessarily create a strong relationship. It is by supplying added-value benefits that customer dependency is increased and the basis of an effective, long-term relationship is formed.

You Don't Communicate

A successful partnership requires ongoing, two-way communication. Your partners must always have a full understanding of your capabilities, and of any developments in your business that affect the partnership. Failing to communicate with a partner dooms the relationship to failure.

You Miss Opportunities

Partnership covers a wide area of collaboration—from technical cooperation and shared manufacturing resources, to joint ventures and shared distribution networks. The higher the level of collaboration, the greater the dependency of the relationship. Continually evaluate opportunities to expand a successful partnership; avoid artificially constraining the scope.

You Don't Encourage Internal Support

Partnerships are threatened when one participant lacks total buy-in and support within their organization. The importance of a partnership must be communicated internally, as well as the contributions that are required from different departments. Quality processes and documented procedures can help to ensure that the company delivers on its partnership commitments.

Where to Learn MoreBook:

Gage, David. The Partnership Charter: How to Start Out Right with Your New Business Patnership (or Fix the One You're In) . New York: Basic Books, 2004.

Web Site:

U.S. Department of Commerce: www.doc.gov