Who would contest that a healthy business partnership cannot function without one another? Yet, managing mutually beneficial expectations from each side is less intuitive than what common sense asks.
Early in my career, the after-sales wing of a global automaker pitched my employer, a multi-store wholesaler, to sign onto a “win-win” network alliance. Envision a Fortune 50 Goliath from Detroit recruiting a multimillion-dollar-a-year David in Concord, New Hampshire, to woo the hearts and minds of the independent professional installer segment. The joint strategy called for penetrating the market with the manufacturer’s brands and converting every auto repair shop to affiliate their name with the automaker’s. Outlined in concept, consumers would freely associate the automaker with service excellence. In actuality, the proposal devolved into disjointed visions.
Common goals were brushed aside by our giant supplier, who presumed that we could benefit from its knowledge. Exchanges about what our customers valued, and an understanding of our company culture, seemed deemphasized to the extent that I sometimes questioned whether we had subjected our company to an outright acquisition.
Unsurprisingly, the energy in the partnership ran low. Perhaps a higher dose of mutuality would have jumpstarted the mismatch back to life. Looking back to the start, my employer realized that its needs were dismissed. Nor did we not quite grasp the manufacturer’s agenda. Diminished decision rights and forced compliance fostered a distrustful environment.
Ultimately, my dad (who ran the 40-store outfit) had enough. He pursued a lower-cost alliance with a program buying group whose members charted actionable goals to widen scale, build complementary skills and foster customer loyalty.
Another instance of productive partnerships happened at the racetracks, specifically stock car sponsorship. Motorsports presented a lucrative opportunity to connect with our customers by personalizing our engagement without the hard sell. Going alone, however, would have been prohibitively expensive. Our marketing team enlisted support from several vendors to split the upfront costs. Because they, too, shared a common aim of folding auto racing into other forms of relationship-building.
Long before social media platforms took flight, we regularly brainstormed on the loyalty potential by communicating to the fan base. We shared promotional messaging in which the teams in the pits and the spectators on stands could relate to motor oil, filters, belts and hoses and the like with themes about solutions.
Naturally, along the way, complexities got addressed. Stakeholders, to the best of our ability, were looped into the partnership regarding planning. When circumstances demanded a shift, we pivoted. While some sales metrics were easy to track, other unquantifiable indicators required additional effort to let our vendors see that their brands had developed a following. And at scheduled intervals, we reviewed our priorities to validate that each business matched its unique outlooks.
This relationship taught us how lucrative partnerships don’t just spontaneously materialize. In year one and the subsequent ones, too, our teams witnessed growth in our commercial and retail segments. Our efforts produced measurable outcomes aside from the traditional financial return on investment.
Unremarkably, however, few of these actions that nurtured our business interests appeared revolutionary. Look around, and you’ll find an abundance of material on the virtuous cycle of collective alliances routinely published by business schools and consultant firms alike. McKinsey & Company, in particular, writes eloquently on four pillars.
- Agree to the primary objectives upfront — Explore which similar goals, aspirations and outcomes will drive the relationship forward.
- Stress transparency from day one — Stakeholders should know where each person’s role relates to the partnership, where the targets are positioned and which performance indicators to track.
- Keep governance alive — Whoever pioneered the partnership needs to stay engaged and hold themselves accountable with the planned reviews. These check-ins allow an opportunity to cast an eagle-eye on milestones and act upon shortcomings.
- Relationships evolve — Be prepared to adapt to unplanned external events and internal dynamics.
Active collaboration can also generate outsized value in the digital arena. RepairPal, an online app, practices this art by transforming individual alliances into multiple kinds. The virtual referral service that points motorists to certified repair installers built its platform on a garden variety of related automotive partners.
A singular connection with an auto parts dealer or a used car dealership is typically straightforward. Consumers know when it is time to find a reputable pro to service their vehicle. But articulating Repair Pal’s value proposition — what they’re best at doing — to an insurance carrier, an auto online financer, or a telematics vehicle diagnostics platform involves far more than dazzling salesmanship. To that end, RepairPal carries forth a stylized approach to clarity, engagement, accountability, and adaptability by tying in why the automotive aftermarket industry is a big piece to any business that touches motor vehicles.
Sometimes, however, the tables can turn, which happened to RepairPal. When Garen McMillian discovered that his competitors were prominently displayed on the RepairPal landing page, he signed up his reinsurance firm TruWarranty. He couldn’t afford exclusion from the amplification of network effects. “I’m a true believer in relationships, and I love the Silicon Valley influence,” said McMillian, who expressly wants to focus on marketing vehicle service contracts.
Registering with Repair Pal became a no-brainer because the reinsurance broker needed an affordable and streamlined digital network to help his clients locate a reputable facility. RepairPal gave TruWarranty the space to be the best at what they do: adjudicate the policy holder's claims while providing the highest satisfaction levels.
As for cultivating partnerships, McMillian learned the hard way. “It taught me to understand what people bring to the table and what they don’t.”
McMillian urges partnership managers to tread warily of organizations that overpromise but underdelivers. Furthermore, he emphasizes that companies must assess their inner strengths as those abilities relate to what the counterpart can do. That’s why TruWarranty now engages with other firms to bring in their expertise.
Attracting partners, generating mutually beneficial ideas and launching meaningful programs should not be limited to an academic exercise. Partnerships boil down to what the automotive aftermarket has strived for — nurturing relationships. Interconnectedness among people is a non-negotiable asset, which I firmly advocate remains an essential value creator that more than meets the financials.
