Cluster Alliances

Many business owners tend to spend less money and effort on marketing in a tough economy, which only exacerbates an already difficult situation. There are many ways to market your business more effectively without spending more money and one of the most effective methods is to develop a strategic alliance.

Strategic alliances follow the principle of using other people’s assets, in a mutually beneficial way. The two companies that work together are not competitive, but complimentary. These companies can be at a different stage in the purchasing process, as in the case with someone remodeling a home. They may need a plumber and carpenter to complete their project so the two businesses can work together by sharing their leads or customers.

Other companies may have an advanced distribution system, products, or manufacturing methods that they can leverage to work with other companies. You see these partnerships all the time. For example, when you go to a McDonald’s restaurant, it is common for them to have decorations or Happy Meal toys that are from a newly released movie. McDonald’s benefits by having popular toys that attract young customers, and the movie benefits by getting more publicity and word-of-mouth exposure when the child takes the toy over to a friend’s house. By working together, these companies are able to save time and money, as well as increase sales.

Rick was a client who owned a jewelry store and much of his business came from engaged couples, particularly the soon-to-be groom who purchased an engagement ring. His challenge was to effectively market to couples who were in the market for a ring. He felt his only solution was to spend a lot of money on mass media to keep the name of his store on the minds of couples. This was not only expensive, but it was difficult to track and know which of the media was more effective.

As I brainstormed with him, I realized that a lot of my other clients also had engaged couples as their target market. These were businesses such as photographers, caterers, a bridal gown store, and a cake decorator. My solution for him was to form multiple strategic alliances with other businesses that clustered around the specific target market of engaged couples. I call this model a cluster alliance. I approached many of my clients as well as new businesses that would form a good fit for the concept. The initial project worked okay, but it needed to be fine-tuned to make it more effective.

It took several months, but I finally perfected a method that easily and effectively captured the leads of couples and then those leads were shared with my clients. Initially, there were over 20 businesses in the cluster alliance, and they each paid a monthly fee to be a part of the group. It was so effective that practically no one left. The concept was eventually expanded in two other areas with more than 50 businesses participating.

People create informal cluster alliances through networking groups or because they’ve formed friendships with other business owners who can benefit from some asset they control. What if you could purposefully create a cluster alliance that was mutually beneficial to all who participated? The group could meet regularly to share leads, or there could be a formal agreement to pay a commission on any sale from the lead of one of the alliance members.

Think of your different customer groups and what they have in common. Next, think about other businesses that are complimentary to your own, and that have the same target market. Get together for lunch and explain the cluster alliance concept and brainstorm some ideas about the best way to share your leads with each other. You may also want to discuss the best method of compensation if a lead results in a sale. Be sure to treat each business as an equal and make the compensation fair to everyone.

Encourage each participating business to recommend participating businesses to each other. If you want to keep it simple, you can purchase a rack that displays several business cards, collect the business cards from each participant, and then display the cards of each business at the point of sale.

I can tell you that a cluster alliance, whether it’s formal or informal, will be the most cost-effective marketing strategies you can use to effectively attract your customers to your business. It can be ongoing and provide leads for many years if you set it up right from the beginning.