6
Creating valuable strategic alliances

THE CREATIVE CHALLENGE:
Aligning yourself with like-minded organizations so everyone benefits

Creating sales growth involves expansion. That may mean developing new products, creating new sales promotions, adding sales staff, or finding new ways to spread the word about your company and your products. One way to expand your business is by creating strategic alliances, or partnerships, with others— 102teaming up with other people, companies, and organizations in unique, often ingenious ways. When done well, such alliances create win-win situations for all the entities involved.

This chapter takes a look at some innovative ways that companies have partnered with others to increase their sales and promote public awareness of their businesses. Keep in mind that the alliances may have started out for one purpose and evolved in ways that offered benefits the companies weren’t expecting. Some of these partnerships are grounded in socially responsible missions that weren’t originally viewed as sales events or promotions but turned out to have long-term benefits for the companies.

When a business clearly makes socially responsible values part of its operations and carries that approach over into alliances it creates, increased revenue is often a result. This holistic approach builds brand loyalty and integrity, public awareness, and ultimately, profitability.

Creating alliances that help you generate revenue or put your products into effective distribution channels involves thought, action, and direction, as illustrated in this chapter’s Partnership Strategies.

PARTNERSHIP STRATEGY NUMBER ONE:
Create partnerships that hold value for you as well as those with whom you are in alliance.

You may need to do some research to find alliances that are ideal for your business. The first place to look is within your community or within your supplier base. Once you have determined the type of alliance that can best serve you, find a partner that offers a natural fit. Consider what you want to achieve, what your partner wants to achieve, and how meeting these multiple goals will result in more revenue (or more beneficial distribution) for 103your business as it benefits your partner. Then make a list of everything you can do together.

Sometimes you will just happen upon an ideal partner. Be open to suggestions presented by someone who would like to work with you on a promotion, ad, or sales campaign. This alliance may give you a new spin on how you promote your product or allow you to present your product to a brand new customer base—customers you hadn’t considered before but who might be receptive to learning more about your product.

In his book Integrity: The Courage to Meet the Demands of Reality, clinical psychologist Henry Cloud suggests that successful leaders possess three qualities. First, they know their field, their industry, or their discipline. Next, they are alliance builders, creating alliances that are mutually beneficial. And finally, they have the character to make these alliances work. He goes on to say that “alliances are about creating leverage to take what you do to a multiple.”²

Taking your business to a multiple is a simple yet powerful concept. All too often small business owners feel alone in a sea of competition. If you can multiply the number of people you reach with your message about your product’s benefits or the mission of your company by forming an innovative alliance, you leverage your time, your promotion dollars, and your brand awareness—all of which can increase sales or provide more effective distribution.

For many values-driven businesses, integrity is the cornerstone that helps anchor all of their socially responsible actions. And as these companies have prospered, worked through challenges, and expanded in diverse ways, collaborative relationships, in the form of partnerships, have often propelled them to greater sales and profitability.

Partnerships can also result in highly effective promotions when companies with common sales goals team up. Here is an 104example from Tom’s of Maine that demonstrates how it has aligned its values with like-minded organizations to support projects that benefit customers and the public at large.

Common Good Partnerships

Promoting its core values is internal to everything Tom’s of Maine does as a company. One way it demonstrates this commitment is through common-good partnerships—alliances between a nonprofit organization, a retailer, local consumers, and Tom’s of Maine. The company currently has three of these partnerships, each with its own program: Apple a Day, which promotes childhood health, specifically education about obesity; Dental Health for All, which promotes awareness, education, and action to support the forty million Americans—many of whom are children—who have no access to dental care; and River Awareness, which promotes cleaner rivers and watersheds that are the source of 50 percent of the nation’s drinking water.

Tom’s of Maine picks themes that are socially or environmentally consistent with the company’s values and then finds partners and builds relationships. In the case of its nonprofit partners, it often pays the salaries for positions within the organization or provides up-front funding to help the organization promote its cause. In addition, Tom’s of Maine always offers a way for local consumers to participate. “Most consumers aren’t aware of these issues, and then, when they do become aware of them, they don’t know what to do,” says Tom O’Brien, chief operating officer. “A common-good partnership allows the local consumer, the community, to act on these values as well.”³

The company brings in retailers who share its values and are concerned about the same issues. Once all the players are on board, they build a program at the retail level around a common-good event. “That’s a very different way to promote your brand 105than just a dollar off,” adds O’Brien.⁴ For example, the Dental Health for All partnership involves educational events held at stores all over the country to help people learn how the health of their mouth may be linked to the health of their entire body.⁵

And do these partnerships pay off when it comes to increasing business for Tom’s of Maine? According to O’Brien, the answer is a resounding yes! O’Brien says that a regular ad would generate anywhere from a 50 percent to a 100 percent increase in the company’s business during the time the ad is running. “A common-good partnership, on average,” he says, “will generate a 370 percent increase in our business during the time it’s running—so more than a threefold increase in the bottom-line business for us.” More important, O’Brien believes, is the ongoing loyalty these promotions generate. He feels partnerships like these help the company walk the talk. “Your deeds are what define you in terms of what kind of company you are. And what we’ve done is every place we spend money in the company, we’ve challenged ourselves to say, ‘Is this dollar we spend consistent with our values?’”⁶

PARTNERSHIP STRATEGY NUMBER TWO:
Align yourself with companies that share your socially responsible goals and want to attract the same type of customer.

If you and your partner are both interested in reaching the same type of customer, you may have an opportunity to double your punch in the world of advertising and media attention. That’s because you can mention each other in press releases and other publicity efforts and share advertising costs. You can also hold press events at each other’s places of business or special promotions designed to attract customers to your stores. If you both 106attend events where you exhibit your products and do one-on-one selling, you may be able to feature your products at both your booths.

Sandra Marquardt, founder of On the Mark Public Relations in Silver Spring, Maryland, believes companies can benefit from forming a collective publicity campaign that focuses on a theme central to the business of each. This approach can be especially valuable for young companies or a burgeoning industry (e.g., organic cotton). Recently Sandra put together a campaign for twelve organic coffee importers, roasters, and retailers. “It’s been interesting,” she explains, “because the different companies all put in the same amount of money. Then they all get equal promotion, but they also are promoting the overall theme.” This alliance enables all of the companies to pay an amount that normally wouldn’t get them very far but on a collective basis creates a yearlong or a quarter-long outreach effort. The result for Sandra’s clients was several large placements in major publications.⁷

In the press releases, she describes each company, what it does, and what its role is in the supply chain. Each press release has a different focus. For example, if the goal is to increase holiday sales in December, Sandra will focus on that as well as present trend information—where are sales now and what was the percent increase in sales over the last year? “Whatever kind of information I have on trends to show this is a moving train,” she adds. Another critical element is providing information about where the participating companies’ products can be purchased. If the release is tailored for an event, such as an industry conference, Sandra will ask the participants where their products can be found in the city where the event is held. Then when she talks to reporters, she can tell them where to find her clients’ products. Sandra believes such collaborative promotions can increase sales for everyone, from importers to retailers.⁸

If you are going to team up with other companies to promote your products, it’s critical that your products themselves are similar. “The focuses of the different companies cannot be too disparate, Sandra adds. “For example, it’s easiest, say with organic wool, if everybody’s got the same kinds of organic wool products.” This factor becomes important when approaching editors so you can target one specific group (e.g., clothing versus interior design). Overall, Sandra has found this collective approach to public relations to be a valuable asset to her clients. “They get tremendous prominence in all the media materials, and then you’re obviously making consumers more familiar with the good work that you’re doing.” And good publicity is definitely a plus when it comes to increased sales.⁹

For an example of a completely different kind of alliance, we turn to Honest Tea and a joint venture it formed with Ford Motor Company. This innovative strategy promoted both companies’ brands and more socially responsible living—all over the country.

The Great Tea Escape

In 2004, the “Great Tea Escape” promoted the Honest Tea brand and Ford’s new alternative SUV, the 2005 Ford Escape Hybrid. Two of the vehicles, colorfully wrapped with Honest Tea bottle images and information about the SUV, toured the East and West Coasts to draw attention to the importance of organic foods and hybrid vehicles and their contribution to sustainability. The vehicles appeared at film festivals, concerts, Green Festivals (environmental expos), and natural food stores all over the country, and visitors were offered samples of the tea and information about the SUV. Promotions were also held with select retail partners, culminating in a sweepstakes drawing that awarded one lucky customer a Great Tea Escape vehicle.¹⁰

According to Seth Goldman, his company takes to heart the Chinese proverb “If we don’t change the direction we are headed, we will end up where we are going.” For him, partnering his relatively small company with a giant in the automotive industry gave Honest Tea a chance to travel a new path. “Both organic foods and hybrid vehicles represent a rare chance to take our society in a more sustainable direction by offering healthier choices for our customers and for the environment,” he said during the promotion’s launch. “Whether you’re a company or a nonprofit, it is always easier to stay in the direction you are headed. It takes courage and vision to open yourself to new directions—to see things as they never were and ask, ‘Why not?’”¹¹

Considering the company has gone from $250,000 in sales in 1998 to a projected $14 million in 2006, it appears that Honest Tea has certainly learned how to set sail in profitable new directions.¹²

PARTNERSHIP STRATEGY NUMBER THREE:
Create partnerships with businesses or individuals that can teach you something and vice versa.

We’ve already demonstrated that education can be a powerful tool. If you partner with a company and show its representatives how your way of making a product or serving individuals can enhance their business, you build broader acceptance of your product, especially if it’s innovative and new to the marketplace. And if your partnering organization can teach you a way to refine or improve something about your business (whether it’s the manufacturing process, distribution, or a way to work with suppliers), you’re the one who benefits.

Creating an alliance with a partner who may be unfamiliar with your business offers you the opportunity to educate others about your industry or mission. It’s no secret that as momentum 109builds for an idea, more people will take interest. A trend is a good example—people catch on, like it, and accept it, and pretty soon a whole new way of doing something is created.

Our opening story highlighted Drew and Myra Goodman and how they grew their business from a 2½-acre raspberry operation to a farm that now cultivates nearly 26,000 acres. This growth didn’t happen overnight, and it certainly didn’t happen without a great deal of education about organic farming by the Goodmans and their willingness to work cooperatively with conventional farmers in their region.

Creating Healthy Soil for an Entire Community

Drew and Myra Goodman were alone in a sea of large conventional farms that had been using chemicals and toxic substances for generations. The Goodmans’ determination to farm organically kept their venture growing, which created a demand for more land to farm.

After partnering with Stan Pura of Mission Ranches, the Goodmans went on to form other alliances, such as their partnership with the Tanimura and Antle farm. “What’s been neat to see,” says Samantha Cabaluna, senior marketing manager for Earthbound Farm, “is that even though the conventional farmers are still growing a lot of [crops] conventionally, they’re growing a lot organically as well. But many of them have really learned from the organic farming side of things and have incorporated the soil management practices of organic farming into their conventional ranches.”¹³

Sharing knowledge—the Goodmans’ knowledge and passion for organic farming and the conventional farmers’ expertise in large farming techniques—has helped propel the interest and growth in organic foods and enabled all of these farmers to reap rewards. In addition, the entire community has learned to appreciate the value of restoring the soil to organic standards (required 110to label food grown on the land as organic). And this may be one of the most valuable lessons in a world fraught with preservatives, toxins, and health problems linked to such chemicals.

As Samantha says of one local man who has been farming for generations. “He says, ‘You think you know a lot about farming when you’re this big conventional farmer, and then you start farming organically. The lands can transition, you can grow organic product after three years of transition, but the soil is just barely starting to heal itself at that point.’ And he says it takes around the seven- or eight-year mark where you can really look at the soil and say, ‘Now that’s healthy soil.’”¹⁴

PARTNERSHIP STRATEGY NUMBER FOUR:
Invest in a joint venture with a technologically experienced partner.

Every business has costs. It takes money to create a product, to package it, to get it to customers, to promote it—the list could go on and on. Sometimes, investing in a new way of doing something offers real benefits if you want to differentiate your product. This may mean investing in equipment that allows you to produce more product faster or investing in higher-quality ingredients to give your end product superiority in the industry. Perhaps it’s overhauling how you get your products to your customers and spending money to improve delivery times.

As you will see in our next example, it may also mean creating a new way of producing your product that better matches your socially responsible mission and at the same time gives you a higher-quality product.

Revamping the Process

T.S. Designs, Inc., based in Burlington, North Carolina, was faced with a problem with respect to competing in the marketplace 111and fulfilling its goal of making a sustainable product that is healthy for the environment and for those who make the product. Its solution was to invest in a new technology that has completely transformed the business and how messages and illustrations are printed on T-shirts.

Founded in 1975 by Tom Sineath, T.S. Designs was built by young men with grit, energy, and determination. Tom and Eric Henry turned the textile screenprinting company into a profitable venture with 100 employees and annual revenues of close to $4 million. Their value-added proposition historically had been to produce very high-quality and innovative screenprinting services for major retail brands. They counted among their clients Nike, Polo, Reebok, and Tommy Hilfiger, and the company served as a subcontractor for major textile producers such as Vanity Fair Corporation, Sara Lee Corporation, and the William Carter Company.

In 1994, NAFTA (North American Free Trade Agreement) caused a shift in T.S. Designs’ profitability when its major clients began to move apparel sourcing out of the United States to save money.¹⁵ By 1998, the company was struggling because it was getting devastated by price. “It was either match the unbelievable cheap offshore prices or not do the business,” says Eric, T.S. Designs’ president. So the two entrepreneurs started to think about how they could change their business. Concerned about the environment and committed to the triple bottom line of people, planet, and profits, they came up with a way to gain a competitive edge while making a difference environmentally. Because conventional screenprinting used plastisol ink, which at that time usually contained polyvinyl chloride (PVC)—a product that can cause serious environmental and health problems because of the dioxin it generates—the partners decided to develop a technology they could control that had greater value.

Investing their own money, resources, and time, they teamed up with Burlington Chemical in North Carolina to develop and patent their Rehance technology.¹⁶ About $250,000 later, the two companies had created a process that enabled T.S. Designs to print finished, undyed apparel product and then garment-dye it to a specified color. This process eliminates the need to invest in color inventory and allows for quick responses to unique color requests. Because the Rehance technology involves using water-based inks, garment-dyeing the finished product results in nearly zero shrinkage. Thanks to Rehance, T.S. Designs could offer a higher quality product with an improved life cycle and ecological footprint.¹⁷

Although the business owners had solved one part of their problem, offshore pricing was still pulling business away, and Eric and Tom had to drastically reduce the size of their operation. However, today the company is climbing toward profitability once again by remaining true to a sustainability model. The company’s T-shirts are organic cotton, and Eric is adamant about doing everything he can to put more North Carolina textile workers back to work. “Two hundred fifty thousand people just in North Carolina lost their jobs in textiles due to globalization,” he points out.¹⁸

Today T.S. Designs creates products for companies like Clif Bar, Ben & Jerry’s Ice Cream, Greenpeace, and Timberland— companies that respect T.S. Designs’ commitment to sustain-ability and are willing to pay a higher price because of it.¹⁹

PARTNERSHIP STRATEGY NUMBER FIVE:
Partner with a company that has a product that can enhance your customers’ lives.

Teaming up with a partner to enhance some aspect of your customers’ lives while spreading the word about your business, its 113products, and your overall mission can result in increased sales and a larger—perhaps even new—customer base.

Consider the kinds of interests your customers may share and how you and your partner can develop a promotion that will best suit those interests. For example, if your customers are extremely interested in ways to improve the health of the environment, you will want to gear your promotion in that direction. If someone comes to you with a product that does not fit your customers’ needs and interests, the promotion is likely to fail and may even create animosity toward your business.

In this next example, you’ll see how two companies with similar target customers have joined forces to promote both businesses in an entertaining manner.

Heightening the Experience

Hidden Beach Recordings and Warm Spirit have entered into a unique partnership that is enabling both companies to promote their brands to new customers. The alliance also offers Warm Spirit consultants a chance to earn extra income and special rewards and have a new tool for enhancing their business presentations.

Nadine and Hidden Beach CEO Steve McKeever met when both participated in a panel discussion in Chicago about wealth creation and the need for African Americans to work cooperatively and collaboratively together. Each was aware of the other and their companies and realized they shared the same mission: to do well by doing good. Their collaboration began simply: Hidden Beach compiled a special two-CD set of songs featuring the recording company’s artists. This limited-edition CD set was made available only to Warm Spirit consultants, who could purchase it for a special price.

Plans are in the works to create other special-edition CDs that Warm Spirit consultants may use as promotional items and 114tie-ins to Warm Spirit product offerings. For example, a Mother’s Day CD entitled Woman First was offered with a Warm Spirit Mother’s Day product promotion Nadine created. The two CEOs have also created a CD especially designed to enhance the consultants’ product and business opportunity presentations.

In addition, Nadine hopes to offer sales incentives that would give the company’s consultants a chance to earn free tickets to concerts featuring Hidden Beach artists or possibly even meet the artists. The Hidden Beach–Warm Spirit partnership is designed to improve the general lifestyle of the consultants and heighten their experience as businesspeople in the Warm Spirit community. It also exposes Warm Spirit to the artists and those connected to Hidden Beach’s operation. Hidden Beach, in return, gains exposure through Warm Spirit’s growing consultant force.