Commercial partnerships: the business equivalent of a match made in heaven?

"A deal often happens when two companies sit down over a beer and say, ‘How can we help each other out here?’” says James Hibbert, co-founder of bespoke tailoring company Dress2kill, stating in the simplest terms what a commercial partnership is all about.

Commercial Partnerships

Hibbert knows a thing or two about partnering with other companies, as his business has been involved in numerous successful tie-ups since it began in 1999. In Hibbert’s deals and partnerships the details vary, but at the heart there is always a clear mutual benefit.

Associated gains

Sales and marketing costs money so savvy entrepreneurs are always looking for shortcuts to making the final sale. Sometimes it makes sense to forego a small percentage of a sale in return for a steady supply of leads. Businesses should be on the lookout for the whereabouts of their target audience, who they are buying from and any potential to get in on the action.

Dress2kill has often piggybacked on the high profile and market presence of bigger companies. Currently, Hibbert is growing his business aided by a deal in the London Evening Standard. The newspaper gets a percentage of each suit sold via the promotion but, as Hibbert’s three stores are all in London and his main buyers are businessmen, the deal is well targeted.

One of Dress2kill’s boldest moves came early in his company’s development when he contacted Sir Richard Branson, offering him a free suit in exchange for some business advice. The Virgin founder duly obliged and soon the pair struck a deal which meant Dress2Kill tailors were to be found in the departure lounges of Virgin Atlantic.

“There was no big benefit to him to do a deal with what was then a very small company,” says Hibbert. “But Branson is no fool, he’s a deal maker and he wasn’t going to turn down a free suit. He might have been thinking, ‘I might want to buy this company one day.’” Now Branson’s business gets a cut from every suit sold in his lounges. However, the benefit to Hibbert’s business is probably much greater, as not only does he get business, but also the association with a successful brand. “One of the big problems you have as a smaller business is getting trust from customers,” Hibbert says. “Building credibility is key. So if people see you associated with Virgin or the London Evening Standard then that’s a big tick in the box.”

Strategic partnerships

Entrepreneurs often look on in envy at the massive amounts of customer information held by blue-chip companies, high-street retailers and well established companies. But businesses can access these potent databases by striking the right deal. Anthony Tattum, MD of Big Cat Group, did just this and made a smart deal to bring in new work to his marketing agency. “In 2008, we began a strategic partnership with AMP Entertainment, which is a company run by ex-Reebok, NBA and Feld Entertainment executives,” says Tattum. “It had contacts from all over the world in the entertainment industry and ran a business brokering relationships between promoters, venues and show producers.”

However, while AMP had contacts, it lacked people on the ground to deliver the big events and was missing out on lucrative business as a result. Big Cat, on the other hand, had the people and the expertise. So, in exchange for a larger slice of the pie, AMP made Tattum’s business its ‘delivery mechanism’ in the UK and across much of Europe.

“Together, we brought shows such as Bodies Revealed and CSI: The Experience to Birmingham, and Tutankhamun to Manchester. It has also taken us into Europe for shows in Valencia, Paris and Barcelona. Getting these kinds of leads is what Big Cat needs as a group. The lifeblood of a creative agency is new business,” says Tattum.

Making an offer

Often, partnerships will be between companies working in similar sectors or markets. However, big brands often like to diversify their offerings and open up new revenue streams, and provide their customers with a special offer. This provides businesses with opportunities to boost their own sales by providing that offer.

Wine seller Laithwaites made an agreement with the National Trust giving it the opportunity to sell wine to the organisation’s 4 million members. “They are exactly the right profile to be our customers,” says Laithwaites CEO Simon McMurtrie. As a result of the deal, visitors to the National Trust’s website are offered a special wine discount and free corkscrew. In return for the sales and new customer information, the National Trust gains 3 per cent of each deal, as well as an improved offering for its members.

Joining forces

You might shudder at the thought of doing a deal with a competitor, but it can be a way of reducing marketing costs. Recently, three cinema chains, Apollo, Showcase and Empire Cinemas, agreed a joint venture to publish Escape magazine. Originally, the magazine had been Empire’s title alone, however, it decided to bring out a bigger and bolder version by working with its rivals. The magazine goes to 50 cinemas in the UK with each chain receiving 100,000 copies and each getting its own pages. Gail Franks, managing director of Summersault Communications, who produce the publication, said it was a new type of venture for the companies: “We worked closely with the three cinema chains to balance requirements and ensure the magazine was something visitors to all the outlets across the UK could enjoy.”

Collective vision

Commercial partnerships are simple in theory, but businesses need to go through the details carefully to ensure the deal is right for them. It’s important to crunch the numbers and be sure you can fulfil your side of the bargain before agreeing a deal. Trust is paramount. “The alignment of culture and vision, and complementary skills and experience are very important,” says Tattum. You should look for partners with a similar outlook and really get to know the people you are dealing with. Once you have satisfied these criteria, then the win-win deal becomes a reality.