Article #32, April 30, 2005
Grow With Strategic Alliances!
A strategic alliance is a professional relationship between two or more people working together for mutual benefit and client benefit. This means the professionals make money and the client gets her needs met.
The key to the alliance working, is the identification of other professionals or companies complementary to, but not competitive with, your business or niche. For example, a chiropractor has clients who are interested in taking care of themselves, so he could establish strategic alliances with an acupuncturist, a life coach and a personal trainer, as these professionals may serve the same ‘target market’ or specific customer base.
Most of the time, strategic alliances are loosely structured and ineffective. “You refer clients to me and I’ll refer clients to you!” What if one member of the alliance never refers clients? Will there be resentment? A structured alliance – on paper – can benefit both parties.
An example of a structured strategic alliance might look like this:
- The chiropractor refers 100% of his clients to the life coach
- The life coach agrees to coach the chiropractor’s staff as a group for 4 sessions
- For every client the life coach gets, she pays the chiropractor 15% of her revenue for each client for 3 months at the conclusion of the 3 months
Since the chiropractor very likely has substantially higher numbers of patients than the coach has clients, this arrangement provides the chiropractor incentive to refer his clients to her. One cannot go into a referral relationship expecting an even exchange of referrals. One must either have a firm agreement, or begin by just referring business to the other person often, then asking for their referrals in return.
Communication is important to the success of the referrals. I suggest having a face-to-face meeting in which you discuss your businesses, so you will both feel comfortable referring to each other. I also recommend having a written agenda so you remember to ask all the questions and gather all the information you need.
During the meeting, you should both outline for the other person what to say when referring business. I have found that it is a challenge for most people to refer their clients to me as coaching can be tough to explain. I ask them if they know what they will say when they refer to me, and offer them ways to explain why their client would want to talk with me.
I also ask potential referral sources to ask the person’s permission to have me contact them. It’s better to maintain control this way, as many people will procrastinate calling and would prefer to be called anyway.
Everyone wins in a well-structured strategic alliance – both professionals make money and the client gets her needs met.
Email me if you are interested in seeing the agenda I use in a Strategic Alliance meeting!