If you have been following me for a while, you will know that I am truly passionate about creating Savvy Strategic Alliances with other professionals (a.k.a. JV Partnerships). I believe it is one of the fastest ways you can grow your business IF you do it right and you think strategically.
What exactly is a Strategic Alliance? It is a mutual beneficial relationship with formal agreements in place that enhances the growth and prosperity of your businesses. I have a small handful of Strategic Alliances that are absolutely core to my business growth and success. I’ve had Strategic Alliances that brought me in over $120,000 a year (and that is with one partner), with many being in the multiple 5 figures. I’ve had Strategic Alliances that yielded me $200, too. That is why it is crucial to Pick the Right Partners who share your ideal client, and pick the right partnering strategy given your collective vision and goals (Read more about choosing the right promotional partners here).
For coaches and coach-like entrepreneurs, I talk about 6 primary types of alliances you can create with other professionals:
- Referral Partner
- Promotional Partner
- Collaboration Partner
- Extension Partner
- Expert Team Member
- Joint Venture Partnership
Keep in mind that you could form each type of alliance with a single professional. I am a big fan of choosing partners wisely and creating as much leverage from a single relationship as possible. Most of my Strategic Alliances partner with me in multiple ways. However, in this next blog series, I’m going to break down each type of alliance individually so you can see what is possible with each. The most common – which I will talk about today – is a Referral Partner.
If someone sends you referrals without a formal agreement, be very grateful. This would be a referral source but not a referral partner. However, if someone has sent you a referral, they are a great candidate to becoming a referral partner. A referral partner is someone you have a written agreement with, including any terms associated with being a referral partner. If you have a verbal conversation, you can convert this to a written agreement by simply summarizing your discussion in an email. Or you can put a more formal agreement together that you both sign. If you have a revenue sharing agreement, I usually recommend you have a formal signed agreement. Referral partnerships should always have a financial benefit, but sometimes “invisible currency” is created, such as deepening the relationship with the person you referred, or receiving reciprocity in receiving referrals. Other times there is a fee exchanged for a referral (a.k.a. affiliate fee or a revenue share). Some professionals and /or clients can consider revenue sharing a conflict of interest, so consider this option carefully. If you choose this approach, you might choose to disclose it to the client so you can address any concerns that may emerge.
Referral Partnerships can be one-way or reciprocal – but in either case, in order for the partnership to thrive, there needs to be mutual benefit. Creating a referral fee can be an easy way to make this beneficial. It can also provide an incentive for the referral, as it keeps you top of mind. If you don’t want to do this, however, you must create what feels like an equally energy exchange. If I have a referral partnership with a professional and refer a current client to them, instead of receiving a referral fee, I usually ask them to reduce the price for my client rather than passing the revenue to me. This makes my client very happy as it establishes further value to working with me, my referral partner is thrilled, and I can see my client thrive even more. As a bonus, since most of my partners are professionals that compliment the client work I do, my clients usually get better business results overall thanks to the referral. As their primary coach, there is huge value for my business in referring potential clients to many of my partners.
That is Referral Partners in a nutshell. I am looking forward to hearing your comments, questions and insights! If creating Strategic Alliances is a strategy you need more help with, feel free to sign up for a Business Breakthrough Session with me to explore your Strategic Alliance Strategy!