How to Build a Service-Based Business Through Partners

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Zeroing in on Profitable Partners

There is an old saying in marketing and sales: People do business with people they know, like, and trust. That’s fine for tangible products where customers can “kick the tires” before buying, but what can a service-based business do to gain the trust of someone who really has no idea how the product will turn out?

Two ways to overcome the trust issue are with guarantees and testimonials.

But even then, you are asking prospective customers to trust unknown endorsers, and you, that you will stay true to your word. A far better way to break down the trust barrier is through business partnerships. Look around, and you will find many examples of service-based partnerships in everyday life:

  • Airlines partner with hotels and car rental agencies;
  • Real estate agents routinely refer home buyers to inspectors;
  • Doctors and hospitals refer their patients to other doctors for specialty or follow-up care;
  • Landscapers and tree trimmers work together on projects;
    and so forth.

Service-based partnerships work because the buyer trusts the business making the referral. As a result, customers are more inclined to trust the new business, too. Business partnerships get your name in front of a bigger audience of buyers. They help expand your reach into new markets or geographic regions. They can open up the door to bigger, better projects, and the return on investment can be phenomenal when partners act as advertisers.

In general, partnerships can be divided into four categories. As you progress up the partnership pyramid, the level of commitment increases in-line with the likelihood of success and benefits gained. Let’s briefly examine these four partnerships in detail.


Associations are relationships that you develop through daily contacts. Minimally, associations serve as connection points that give your business greater exposure through the people that you know. The Chamber of Commerce and trade associations are two ways to connect with other businesses. Since many groups publish their membership lists, they also help get your business name on the Internet.

Social networking sites like LinkedIn, Xing, and BizSugar also give you Internet exposure, and you can demonstrate your expertise through conversations with other members. Or, you can join Business Matchmaking and meet actual buyers in regional, speed-dating-like events.

In all cases, there is little investment, trust, or commitment to get involved. It is likely that you will get more leads through your associations, but don’t count on personal endorsements. For this, you need to develop higher-level partnerships with individual businesses.

Subcontracting Partnerships

Next in the pyramid, subcontracting partnerships can be a great source of steady work. In this type of relationship, the contractor takes the lead and is responsible for earning the customer’s trust. Subcontractors in turn, must earn the contractor’s trust.

When the partnership works well, the subcontractor benefits from the contractor’s marketing efforts and good reputation. Likewise, the contractor benefits from more projects, customers, and money.

The contractor, however, may want to protect their reputation by requiring that the subcontractor work through them. If that’s the case, there will be few opportunities to establish relationships with customers.

Relying exclusively on subcontracted partnerships can be risky, too. When business is slow, contracting partners may opt to do the work themselves rather than outsource, and if their jobs dry up, yours do, too.

Referral Networks

Referral-based partnerships eliminate some of the baggage mentioned above. In this type of arrangement, businesses refer partners when one of their customers is in the market for a partner’s services. Partners operate independently, which gives both businesses the opportunity to establish their own reputations.

Customers initially trust the new business because they trust the referral partner. The referred business subsequently earns the new customer’s trust and builds their reputation by the work they perform.

Still with most referral networks, there is minimal incentive to refer partners, and the relationship can become lopsided if one partner does most of the referring.

Strategic Alliances

At the top of the pyramid, strategic alliances can be the hardest to achieve, but hold the greatest promise in terms of real business growth. Ideal partnerships complement and leverage each other’s core strengths. For the partnership to work, both must share a common vision. What should be accomplished, what is valued or of interest, and what is required or expected from the partnership should be clear to both parties.

Customers win because the partnership creates a better product, better customer experience, or increased value. Partners win because together they can take their combined services into new markets, acquire bigger projects and customers, or leapfrog over competitors.

Recognized as “one of the smartest strategies for competing in the government market,” Teaming USA is a relatively new resource that helps small businesses forge strategic partnerships to win government contracts. You don’t need an organization like Teaming USA to form strategic alliances, but all successful partnerships require a strategy.

Secrets to Success

In terms of partners, there is no one formula for success. You can have any number of partners and types of partnerships depending on your goals. However, the strongest partnerships have three necessary ingredients:

1. The partnership is mutually beneficial for both parties;
2. Partners complement each other, that is, each partner brings unique value and skills to the partnership; and
3. Both partners work in the same industry or serve the same customers.

Strategize First

Before you embark on a partnership search, first prioritize your goals. For example, are you purely interested in more jobs, want more leads, or want a partnership that will help you establish your own reputation? Next, list out what things (skills, values, benefits) you will bring to the partnership.

Third, create a profile for your ideal partner. One way to do this is by figuring out where your services fit in the ecosystem. Think about what’s going on in the customers’ lives at the time when they need your services, and what customers typically do immediately before and after they hire you.

If for example you own a dog kennel, chances are the first thing your customers do after they pick up their dog is give it a bath. By partnering with a groomer, you and your partner can make extra money doing something your customers would otherwise have to do themselves.

Look Beyond the Obvious

To uncover richer partnership opportunities, think outside of the box. Using my own writing services as an example, my obvious partners are marketing and public relation agencies. They can be a great source of work. However, since most marketers are willing and able to create their own content, my value to them is limited.

Alternatively, I could partner with e-mail marketing vendors that serve customers by distributing e-mails and managing their contact lists. Normally these businesses do not assist with content creation, which creates a gap that a marketing writer like me can fill.

The partnership is a win-win because the e-mail vendors now have a way to attract customers that do not want to do it themselves, and I win because the partnership gives me access to more customers.

Work to Gain Trust

Once you know what you want, what you bring, and what your ideal partner looks like, it’s time to start your search. Network with people you already know through your associations. If nobody fits your ideal partner profile, figure out where ideal partners would hang out and get involved.

When talking with prospective partners, don’t just talk about you. Highlight the benefits you’ll both gain by partnering, volunteer your services as a way to prove yourself, and suggest a few small projects to test the partnership.

Incent if Necessary

If you stand to gain more from a proposed partnership, or just want to “grease the wheels,” don’t be afraid to offer incentives. Two simple ways to encourage partners are to give them money for their referrals, and to create special discounts that they can pass on to their customers.

Business partnerships have been around for centuries, and with good reason: Partnerships are some of the best ways businesses of any size can grow customers and revenue. Sites like Teaming USA, business schools, and books are wonderful resources to tap for advice. Ultimately though, success hinges on two things: your ability to find great partners, and to be a great partner.

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