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Unleashing the Partnership Marketing Opportunity
Create better products and more effective marketing campaigns at lower cost.
For the rest of the October 2005 issue of CRM magazine please click here
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A partnership marketing company is slumbering within many businesses. Waking it can create new revenue streams and increase value for existing customers. Many companies possess richer customer data than ever before. In particular, electronic mediums like the Web, search engines, contact centers, and payment systems are flush with behavioral data.

The ability to capture increasingly detailed information about customers' needs and behaviors, coupled with intelligence to act on this insight, can allow companies to create better products and more effective marketing campaigns at lower cost. The investments in these programs are generally small in relation to the value created as they leverage existing assets. When properly executed partnership programs create added value for customers, which results in increased purchases and loyalty.

Such was the case for an online marketing company that offered customers a kit for selling their homes, as well as listings with online realty services. After a careful analysis (combined with other market research) and segmentation of its customer base, the company realized would be more valuable as a marketing channel for other companies and that it could increase revenue by bundling its services with complementary products sold through retail outlets.

The online marketing company then focused on real estate--related products and services, using three partnership marketing tactics to provide value-added services to its customers and create new, higher-margin revenue streams at the same time.

Brokering customer insights: Having realized that financial services firms, builders, realtors, and others were paying third-party data providers significant sums for lists of customers interested in purchasing and selling a home, the online marketing company began cross-promoting ancillary services to its customers. The action monetized data assets.

Lead sharing: Many of its customers were interested in financial services and home improvement, so the online marketing company formed alliances to offer these services through partners. For example, buyers who called to inquire about online listings were offered mortgage or realtor services, and when a customer contacted the partner the company received a fee. In turn, the online marketing company's partners were receiving highly qualified leads for a fraction of the price of purchasing third-party lists and launching targeted campaigns.

Jointly marketing products/services: Management successfully partnered with real estate brokers and a large mortgage bank, and realized its greatest opportunity for revenue growth lay in securing mass-market distribution through mass-market retail outlets. However, it had difficulty gaining traction, due in part to the scale differences between the two companies and the established barriers to entry from distributor consolidations. The company created a partnership with a manufacturer of "For Sale by Owner" signs, which in turn had a relationship with the retailer. By offering a way to sell signs bundled with an online marketing kit, the online marketing company helped the sign maker and the retailers boost margins. Combined, the new efforts boosted the company's revenue 60 percent in two years.

Companies can use their knowledge about their customers to make alliances with related business, adding value in bundled offerings and allowing companies to unleash the partnership marketing company that lies dormant within, awaiting the savvy CMO or CEO to realize that internal value.

Sean Collins is an engagement manager at McKinsey & Co. Jeffrey Schumacher is an associate principal at McKinsey & Co. Contact them at sean_collins@mckinsey.com and jeff_schumacher@mckinsey.com.

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