Posted by admin
May 18, 2020 | 4-minute read (781 words)
Although you may view your competitors as mortal enemies that must be overtaken, the reality is that many businesses may find great success by shifting their mindsets to think differently. By forging connections with your competitors, you might find that your business will work harder, innovate, improve and develop ongoing methods to evolve and grow.
Even though you often compete for the same customers, revenue and profits, there are times when you are stronger together to encourage change. If planned well, a competitive collaboration (known as “coopetition”) can mutually benefit or create win-win scenarios for competitors. Coopetition can serve as a tool to secure new projects and expand those already in existence.
Although it may seem intimidating at first, you’ll typically find that you have more to gain by chatting with your competitors occasionally than you have to lose. You can reach out to the related companies in your industry through a group on social media or at an event. Consider the following ways to connect with your competitors in a mutually beneficial way.
Join to Support a Charitable Cause
The simplest way to collaborate with your competitors is to engage in common corporate social responsibility activities and volunteer efforts. This will help you forge a stronger bond with the other corporations by operating in ways that can benefit society and the environment while boosting your brand.
Work Together to Enter a New Market
Strategic business alliances are effective ways of entering new markets, particularly internationally. Partners can share their market knowledge, establish marketing strategies and develop distribution systems for the expansion. Join forces to define the long-term plans, milestones, framework conditions and responsibilities that ensure the products get to market faster.
Plan Joint Negotiations with Vendors
If you regularly purchase a commodity that your competition also buys, consider joining together to negotiate with vendors. Consolidating purchases with a higher volume will create cost savings for both partners.
Share Advertising and Media Buying
Run a joint promotion and share advertising and media purchases to stimulate interest in your shared industry. Co-sponsored events, webinars and marketing campaigns create a good platform for sharing promotion opportunities that elevate the status of both brands.
Join Together for Cross-Selling
You can provide discounts for combined purchases, joint-produced products or more to attract interest from customers. This strategy works well in the case of retail or consumer goods and tech products and services. You can sell your products or services with add-ons made by others while keeping a percentage of the revenue. Such offerings can increase sales growth for both.
Amazon's partnerships with third-party sellers, Ford and Toyota collaborating to design a new hybrid vehicle, and Apple and Samsung joining to bring iTunes movies to smart TVs are few examples of successful coopetition approaches.
Share Experience and Knowledge
Conferences and events are great places to meet people and share industry and community knowledge from competing businesses. These opportunities can help you to understand your target market and discuss potential ideas.
Collaboration in technology has brought huge success to different industries. Today, pharmaceutical companies are teaming up to share resources and information to speed up the creation of lifesaving drugs. Hackathons and open APIs (Application Programming Interfaces) can further help businesses to recognize their problems and opportunities that would have been difficult to spot alone.
Before working together, understand where the partnership can add value. Once you’ve got a clear idea of what you need from a partner, identify how and when to implement the strategy. Here is a three-step approach to help your business create valuable partnerships:
- Clearly define the vision, goals, strategies and terms of engagement to ensure all partners are on the same page. Establish objectives for possible collaborations, find parameters to assess partnerships, set the budget and lay down the criteria for the choice of partner. Both companies should be aware of the market reach and limitations their partner offers.
- Create a detailed partnership agreement to set the legal parameters of the partnership. This will help you define the investments of time, resources and money and what happens at the end of it. It must mention actions and responsibilities so if any issues occur, you can review the original agreement and refocus.
- For successful coalitions, you need to establish benchmarks to measure your success. Once the goals of the partnership are achieved, all partners can go their separate ways. Coalitions are explicitly contingent, even if they are long-lasting, on the fact that the separate nature of the parties has to be maintained. In the end, it should be a profitable deal for all parties.