“I Love This Partnering Idea. How Will We Do It?”
It’s easy to establish partnerships among financial technology providers. It’s much harder to make them successful after the first deal.
In early discussions, both parties love the idea. The partnership is often created for the sake of one deal. However, the partners often don’t design how they will execute in-tandem to serve the client every day. The partnership is not repeatable, scalable, or profitable.
We’ve previously discussed the root causes of partnership struggles, and too often, failure. This blog is the first of three that will define the best practices to deal with those struggles and ensure profitable revenue growth via a successful partnership. Below are the first three best practices.
Lead Partner Proposes the Partnership Operating Model™
Design the “how” before pursuing partners
The partner that originally comes up with the partnering concept (“lead partner”) should work on its own to design a Partnership Operating Model™ that includes these best practices before contacting potential partners. By developing a proposed Partnership Operating Model, the lead partner will retain more of the design that benefits it the most (“they who propose first, win”).
The process to establish a successful partnership will consist of 3 steps:
- A strategic-growth pitch to someone senior on the merits of the partnership. A senior sponsor is critical if the partner is to invest in its success.
- The interested executive will quickly ask the lead partner how the partnership will work; the Partnership Operating Model is that answer, and the lead partner’s preparedness will be impressive.
- The last step will be to negotiate the Partnership Operating Model at the proper level of detail.
Document Buyer Needs
Document what’s in it for a whole market of buyers
From the buyers’ perspective, the parties must clarify the benefit of the partnership to a market full of buyers. If a partnership is to be repeatable and scalable, there must be market need beyond those of the first client.
Example buyer benefits might be less product integration work for the buyer, or fewer vendors to coordinate, etc. These details will influence the Partnership Operating Model design. If there is no buyer benefit, they are less likely to do a deal with the partnership than when the two partners were separate.
The key to understanding buyer benefits of a partnership is to do so at a medium-level of detail which is the level required to design a Partnership Operating Model to meet the buyers’ needs. The right level means:
- More detail than what typically comes from a strategic analysis (e.g., “care-abouts”)
- Less detail that what is required for, e.g., product design and buyer personas
Understanding and documenting buyer needs should be based around the buyers’ basic business model for buying fintech products, namely
Buy >> Activate >> Use >> Pay >> Renew
Learn from Prior Partnerships
Don’t repeat prior sins, reuse prior successes
The lead partner should examine prior partnerships (if any) for learnings that would inform the new Partnership Operating Model. A win/loss analysis of partner prospecting will inform whether the (1) prior partnerships were compelling, (2) right prospects were pursued, and (3) pitch contents were effective.
A success/failure analysis of closed partnerships will inform whether the Root Causes (or other factors) of ineffective partnerships were present. If so, the partnership best practices in this blog can be applied to avoid a repeat.
In our next post we’ll cover more best practices for effective fintech partnerships.