Someone once told me there are two ships to avoid: the dreaded Flying Dutchman and bad business bedfellows. Okay, so the two of them doesn’t have the word “ship” in them, but you get the point!
The right kind of partnership can provide countless benefits for a business. But when a partnership fails, its impact resonates far and wide. According to a whitepaper by SAP, almost 2 out of 3 brand partnerships fail – that is a 70% fail rate. This begs the question, would companies seriously invest knowing it will have less than 30% chance to succeed?
In 2011, at the ASAP Pharma Council in Basel, Marc de Garidel, Chairman and CEO of Ipsen scrutinized the importance of a strong partnership in his keynote. As much as 40% of the Ipsen revenue is generated from the alliances Ipsen has established. It would be a hopeless endeavour for Ipsen if their partnerships had a 70% fail rate. This fact alone represents how a partnership can rocket a business into extraterrestrial territory.
So, why DO partnerships fail? Let’s take a closer look at some of the inevitable obstacles B2B partnerships must overcome:
Marketing Methods are Outdated
Businesses that utilize trade promotions to augment their value, can be traced back to early 1920s. Researchers noticed the growing importance of sales promotions and they started to evaluate their effectiveness. In 2002, a research done by Sue Peattie showed that sales promotion continued to rise in importance, but marketing practitioners incessantly regard sales promotion as a solution to all their marketing problems. Despite 30 years of continual criticism from marketing academics, sales promotion has become an increasingly popular tool. An article in Marketing Week (Flack 1999) suggests that –
“the sector suffers largely from a poor definition – a price promotion is not the same as a value-added promotion but the two are often lumped together.”
If we progressed so much technologically, why are we still largely sticking to the same marketing strategy that was formulated in the 1990s?
Too Many Intuitive Decisions, Not Enough Unintuitive Decisions
Many co-branding decisions are made intuitively, simply because they know someone, or they just had a feeling. However, we are in the digital era where data can supplement you with accurate information than what someone is merely feeling. The problem with relying on intuition is, they are generally educated guesses being the operative word. Companies like Amazon, BDO, Netflix, Capital One, GE, Miniclip, Starbucks, Next Big Sound, and T-Mobile are using big data to improve their customers’ user experience by getting insights on their customers’ common behavior. So why the conventional partnership strategy when it has been proven time and time again that big data works?
No Back Up Data
This brings me to my next point, marketers are sticking to their conventional ways because:
- There isn’t a service out there that provides a tool for them to efficiently maximise their partnership efforts.
- Businesses slacked off on their record keeping when they did their partnerships. Once a partnership is done, it’s only stored in the minds of the people involved. Sure, it makes them more invaluable, but there is a limit to how much someone can handle before they are stretched thin. In the ideal world, if every company diligently did their record keeping, the world of partnerships would be pleasantly potent. Consumers will not be able to resist your cross-promotions.
Lack of Transparency
If you do a quick research, you will soon find that the nitty-gritty of B2B partnerships are hard to find. This is because businesses are very secretive when it comes to their marketing strategies. When they want to partner up with another company, they give as little information and get as much information as possible. This makes forming a partnership difficult which will inevitably cause misalignment in goals.
Now you are going to think, “if I share my company’s insights, it might give other companies an edge and weaken mine.”
If 70% of partnerships fail, we are looking at a $335 billion loss each year. There is a bigger issue at hand: an outrageous financial wastage. This is the cost of inefficiency at play. At this point, it is a lose-lose situation for everyone.
One cannot deny that partnerships are very draggy. So many factors influence the process; mismatched timing, disagreements, misaligned objectives, miscommunications, disinterest, complex contracts, and so forth. All these can pile on the minutes or weeks to months, and worse, causing the partnership to fall through.
To put things into perspective, all partnerships follow the same process:
- 80% of the time is spent on research, planning or waiting for data.
- 2 to 4 weeks on strategizing
- 2 to 10 months on selecting a partner
- 1 to 4 months to plan and launch a campaign
That is a great deal of time, and money. When the campaign does go live, CPA would have skyrocketed, and they are likely to not get their ROI.
This is something we fellow marketers should ponder on. It is high time marketers change their ways.
What do you think? Let us know in the comments below.
Metapair aims to democratize B2B partnerships with the help of automation. Visit us and help us help you build a better marketing community, one company at a time.