We will start our story a bit from afar and introduce two separate food products, bread and butter. Separately, each product is sought-after and appears in almost every grocery basket.
But if we combine these two products, we already get a visual image of breakfast toast with butter and jam. This image does not imply the products themselves but evokes new associations, and these two products have become a must-have breakfast item for millions of families, even though they would probably sell less well separately. This is a simple and primitive example on which you can consider the benefits of affiliate programs and collaborations in big business.
What Are Affiliate Programs and Collaborations?
In short, it is a mutually beneficial cooperation. We can take another case, for example, the collaboration of a college paper writing service and a student in which each party gets its own benefit. The student frees up his time and gets qualified help writing essays. The service, in turn, will get money for the order, positive feedback, and, in the long term, can expand its business. Even the biggest business giants of all industries work on a similar principle. Cooperation programs in business may include:
- Joint marketing campaigns.
- Cross-selling of products and services.
- The exchange of customer bases.
An immediate example of such cooperation in America is Amazon and American Express. The cooperation involved Amazon’s customers receiving bonus points for using the bank’s cards.
Another example of a high-profile collaboration is Google and the clothing brand Levi’s. They jointly developed a jacket with touch inserts called Jacquard. The coat has special touch inserts that allow you to interact with your devices. Even though the product has yet to be widely sold, the companies have significantly increased the level of publicity about themselves by such a marketing move, thus conducting an additional advertising campaign for their other products.
Advantages of Affiliate Programs
Expansion of the audience
One of the main motives for implementing partnership programs is to expand the audience of both companies involved in the project. Customers who used the services of one of the parties during the partnership program get access to the services of another company and then can order its services separately. For example, the collaboration between Uber and Spotify has been very successful. Spotify customers can choose the music they want to listen to while traveling. Thus, the number of users of both platforms increased due to this additional feature. According to research, companies during collaboration can expand their customer bases by 20-30% in the first year of collaboration alone.
Increased revenue
The primary goal of any business is to generate revenue, and promising collaborations are a great way to increase sales of its services. One successful example here is the Visa payment system and Amazon. They created their joint bank card. Customers received bonuses for paying for Amazon’s services with this card, and both companies received revenue at the end of the day.
Building trust and reputation
One of the most successful collaborations that increased the popularity and credibility of two global giants at once and gave the world a new name in fast food was the collaboration between McDonald’s and Disney. Happy Meal sets were a resounding success, and hardly a child does not know what they are. From a business point of view, it was a gold mine. Companies not only increased revenue but also increased recognition and trust. Studies show that customers are 70% more trusting of companies collaborating with other recognizable and trustworthy brands.
Benefits of Collaborations
Collaborative innovation
Companies often look for brands to partner with that can be both bright and beneficial collaborations to establish long-term cooperation. One example in today’s business is the collaboration between gadget developers and clothing brands. One of the most famous examples is the collaboration between Nike and Apple. Together, the companies created a line of smartwatches specifically for runners. According to a study conducted by Boston Consulting Group, companies involved in collaborations increase their innovation activity by 30%.
Sharing resources and expertise
Collaborations are most equitable and productive when both companies can contribute equally to the project. An example is the partnership between IBM and Maersk to develop a blockchain-based container tracking platform that has significantly improved logistics processes and increased supply chain transparency.
Joint marketing promotion
When a company’s products share a joint customer base, collaboration is beneficial in promoting both companies’ products. For example, the energy drink brand and extreme sports sponsor Red Bull Company collaborated with the makers of Go Pro cameras. As a result, both companies have increased their brand awareness and created clear associations with customers that the company’s products are best paired with extreme activities.
Challenges to Sustainable Collaboration
Although we have described several undeniable benefits of collaborations, the reality is that it is difficult to sustain a mutually beneficial and positive collaboration. Statistics show that 60% of corporate alliances fail due to cultural and managerial factors. Here, too, we have an example of a major failure. The alliance between Daimler and Chrysler, which was called an “alliance of equals,” has not stood the test of time. The cooperation between the American and German companies began in 1998 but almost immediately encountered difficulties because the management of the companies had a radically different approach to management. As a result, every year, the situation worsened, and finally, in 2007, after a series of financial failures, the union of automobile companies was dissolved.
Conclusion
Partnership programs and collaborations provide many business benefits, including expanding audiences, increasing revenues, enhancing trust and reputation, stimulating innovation, and sharing resources, but they also pose serious challenges to initiators and implementers. For successful partnerships and collaborations, it is important to follow certain best practices. First, it is vital to set clear and realistic goals. Second, it is crucial to maintain open and honest communication between partners. Third, action plans should be developed, agreed upon, and regularly monitored.
Read more:
Benefits of Affiliate Programs and Collaborations for Business
