Collaboration beats competition. In today’s fast-paced and interconnected world, collaboration is more crucial than ever before. According to research, successful collaborations lead to higher innovation capacity, accelerate the growth of new businesses and increase market value. Collaborative partnerships can be mutually beneficial in myriad ways when well executed. Both businesses may be able to achieve objectives that they couldn’t achieve alone. However, forging a mutually beneficial and successful business collaboration is not without its challenges.
In just over 10 years since launching, Luxico has partnered with some of the country (and world’s) largest brands like AirBnB, Qantas & Pommery, through to fast-growth startups like Providoor and Cocktail Porter.
Here are seven tips from what I’ve learnt.
Prior to launching Luxico with my partner Tom, I spent seven years running a successful marketing agency. Coming from a marketing background has been beneficial in every business venture and collaboration as I can quickly identify if an opportunity is likely to be a success or not. Recognising which opportunities are most likely to reach new and aligned audiences for our business is critical.
When considering a partnership, look closely at audience demographics and engagement. Be proactive about identifying the businesses that make sense to partner with your brand. Who are your audience following and engaging with? If you only take those opportunities that land in your lap, you’re already losing opportunites. With Luxico, our audience are travellers in Australia with discerning tastes; Those looking for a touch of luxury and an elevated, private experience in travel. I
t made sense then to partner with premium in-home experiences like Cocktail Porter and Providoor, brining fine dining and DIY cocktails to the door of your luxury holiday home away from home. You may have different customer personas, but there’s a good chance that you have overlapping audiences. Think about who your ideal customers are and which other businesses they’re likely to also interact with.
Collaborations can be challenging even when partners share a lot of commonalities. Values are especially important. Values are the guiding principles that govern decision-making and are usually based on three things: what the business stands for, what it believes in, and what it’s trying to achieve. Values can help partners identify if their collaboration is on the right track.
If you and your partner’s values are aligned, you’ve got a good start to a successful collaboration. If there’s a major difference in values, however, this can lead to serious problems in the collaboration. There may also be more subtle challenges that arise from differences in values.
It’s essential to set clear expectations from the start about how the partnership will operate. What roles will each business fulfill? How should decisions be made? What milestones are you committed to achieve? You may not be able to nail down every single detail at the outset of the collaboration, but you should have a general idea of how things will proceed.
If you don’t set clear expectations, you risk running into challenges later. For example, if you have different expectations about how decisions should be made and who should be involved, it could lead to serious problems. If you set expectations from the start, you can avoid these problems. Finding personalities that you know you can work with as well helps! Find those who will leave their ego at the door and are committed to your shared objectives.
A successful collaboration is all about solving a problem, right? You and your partner need to be clear about what problem you’re trying to solve. Is it a business problem or a challenge that you’re trying to overcome? Or are you simply trying to reach a wider audience and convert new customers? What is the problem you’re trying to solve? What would success look like? With the problem on the table, you can start formulating solutions.
You can also start identifying how this partner can help you solve the given problem. Sometimes you can develop a new solution that doesn’t yet exist. Example: Some of our multimillion-dollar estates were struggling to find an insurance solution that offered adequate protection for them in the short-term rental market. Partnering with Chubb Insurance, we were able to co-develop a new insurance product for our home owners that was unparalleled in the market. Think outside the box for solutions.
Collaborations are all about adding value for both partners. You need to demonstrate the value you can bring to the table. And you need to make sure your partnering businesses are adding value to you as well. You might have a clear idea of what you want to get out of the collaboration, but your partner may not have a clear idea of what they’re getting out of it.
If you don’t explain what you’re bringing to the table, you could lose the opportunity. You also need to be aware of what you’re getting out of the collaboration in terms of value. Are you getting what you need? If not, why not? What can you do to get what you need?
Business collaborations are built on trust. You can build trust by clearly demonstrating a deep understanding of their business, their audience and their unique challenges, by doing your research. You can also learn a lot about your partner by asking questions, reading their website or blog posts or attending their events. By understanding your partner’s business, you can make better decisions. You can also become a more valuable partner.
Partnerships are built on a strong foundation. You need to nurture the relationship. Challenges can sometimes cause collabs to go awry. How can you proactively look after the relationship between you and your partnering business? What can you do to prevent problems from arising? It’s important also to maintain a relationship beyond any short-term activation as you never know when the business connection may present opportunities down the track.
Collaboration is a great way to accelerate growth, increase revenue, and create new partnerships. The risks that naturally come with bringing two businesses together, can often be mitigated by doing your due diligence to understand their goals, assessing if they are well aligned with your values, having a strong and valuable offer as well as an ask, and articulating your goals and expectations in detail before signing on a dotted line!
