Creating Partnerships to Increase Your Online Presence

Doing business on the Web these days seems to have more similarity to battling your way upstream than surfing. With millions of Web sites all competing against each other, how can your business attract enough attention to stay afloat?

Maybe it’s time to stop trying to swim alone.

For many businesses, creating an online partnership can provide opportunities without increasing overhead. There are a variety of ways to create online partnerships, and the ones that work best for your business are those that give you access to customers and value-based relationships that you might not have gotten on your own. But not all partnerships are created equal, nor is any one partnership arrangement perfect for everyone.

Can a Partnership Benefit Your Web site?

Partnerships allow for a number of promising scenarios. One of the simplest is the referral or affiliate partnership, in which Company A allows Company B to add a link to its own site on Company A’s site. If someone browses Company A’s site, sees the link to Company B, goes there and purchases something, Company A gets a "referral fee." Company A benefits by getting revenue from an indirect source; Company B benefits by gaining a customer to whom it might not have had prior access. Many of the bigger Web retailers, including Amazon.com, use referrals or affiliate programs extensively.

But other, more complex, kinds of partnerships exist as well. Suppose you’re the manufacturer of high-end children’s clothing, which you want to sell on the Internet. Customer response says they’d buy more from your site if you offered baby equipment and a gift registry, but those aren’t your specialties, and you’re afraid that diverting resources to those efforts will cause your clothing business to decline. Partnership could be the solution.

Factors in Considering a Partnership

Because there are so many ways to partner, it’s important to consider the options and potential advantages or disadvantages of each option for your site. "People often jump into a partnership without thinking about how complex managing that part of the business can be," says Teleknowledge.com veteran Chris Huff. "Especially in cases where the partnership is a primary source of revenue, the management of the partnership is very complex, yet often companies aren’t thinking about that. If you’re not managing the partnership properly, it’s like the phone company sending hand-calculated phone bills."

Be comfortable with your answers to these questions, before you sign onto a partnership agreement.

• What kind of partnership? Referral programs sound easy, and for small companies trying to get their foot in the door, it can be a good start. But for larger or highly specialized companies, paying a referral fee for business they would probably have gotten on their own would be a questionable practice.
• What are you willing to do? Co-hosting and co-branding can be highly profitable ventures for complementary companies, but are you willing to relinquish some control and profitability? Co-branding won’t work if you’re concerned about losing autonomy. Can you live with the thought of providing services to a competitor in a "silent" partnership?
• Can your systems handle the partnership arrangement? Your Web site needs to be prepared to handle increased traffic, but that’s not the only concern. The back office work is as important as the site itself, especially if there are several partners and partnership arrangements. "One of the biggest problems we see is companies not knowing if they’re getting paid properly, or not paying others properly," says Huff. "You have to meet your business partner’s needs, or they’ll leave for the competition." What your partnership will require from your systems is dependent on a number of factors:

1. Size of the site
2. Traffic to the site
3. Size of the hosting company
4. Size of the partnering companies
5. Number of partners
6. Types of partnerships involved

• What can you gain from the partnership? Do you want increased traffic to your site? Increased sales? The opportunity to expand with a co-host? Blindly entering into a partnership without being clear about your company’s particular needs may cause problems down the road.
• How detailed is the contract between the partners? Be sure you know where you will be placed on a partner's site. You also should detail what kinds of payment will be made and when, along with any accounting records you want.
• How well do you know the partner? You don’t have to have attended elementary school together, but given the fly-by-night nature of some Internet companies, a little background research is necessary.
• Are you a good match? If your company is large and the potential partner is small, it may be time to be blunt: what’s in it for you? Make sure that a need is being met on both sides, even if the need on your side is simply to help someone else get a foot in the door. That’s okay, as long as both parties understand what the motivation is.
• Do you understand available payment systems? Some partnerships offer cash in one direction or the other; some offer a credit system, whereby costs are offset by advertising revenue; and some even go so far as to offer a barter system (as in, "If you let us co-host your site, we’ll provide the technology."), with no cash exchanging hands. (Be sure to check with your accountant for tax implications.)
  

Moving Forward

There are almost endless possibilities in partnering, from referrals to co-hosting to silent partnerships, from direct payments to credit situations to barter systems. Taking advantage of the opportunities can really help your business stand out, as long as you don’t lose sight of the fact that partnering is indeed a business proposition. It may appear easier to implement in the virtual ocean than on dry land, but that doesn’t mean it deserves any less attention to detail.