Partnerships are a whirlwind. But they can also be a long process. As discussed in my previous article, at Hokodo, we analyse our goals, identify strategic gaps, and continue embedding ourselves in the ever-moving B2B ecosystem. Closing a deal with a partner is only the beginning.
In this article, I’ll share my five top tips for keeping partnerships thriving and fruitful, even if momentum starts to dwindle.
1. Lock in partners early
One of our best-performing strategies has been to lock-in partners early. When we see a firm with real potential to help us achieve our goals, we move quickly to start building a relationship with them. This makes it easier to cement a partnership further down the line, while also preventing our competitors from muscling in.
Some concepts - like embedded finance - can take time for partners to recognise at first. But once things get going, the mindset changes can be rapid. Today, 75% of banks are ready to become “invisible”. Half believe their main business model will be embedded into “as-a-service” platforms. And, encouragingly, 65% would rather partner with fintechs like us, than create home-grown solutions. It’s a vast shift from the incumbent mindset of a few years ago.
With solid relationships already in place, we ensure that Hokodo is top of mind when it comes time to choose a partner.
2. Keep communicating
Once you’ve established a partnership, it’s important to keep it up. Just like any other relationship, there must be sustained effort on both sides. Research by McKinsey finds, “Successful partnerships don’t just happen. Strong partners set a clear foundation for business relationships and nurture them”.
Communication matters. And it’s worth fighting for. 38% of business partnerships fail because of a lack of communication.
We’ve found that a range of communication techniques works best. We socialise with partners at networking events and invite them to industry panels and conferences. We give our partners opportunities to speak on our podcast or at our company offsites. We follow and interact with them on LinkedIn.
One of the most helpful communication methods is to set and track metrics. This can help keep accountability, while giving you a tool to celebrate milestones together. 32% of successful partnerships adopt key metrics and performance indicators.
It’s also critical to invest in internal communication so everyone in your company understands the rationale behind the partnership and can benefit from it. Some partnerships are mainly revenue-driven so you’ll need to empower the sales team with impactful enablement materials. Other partnerships can add complementary capabilities to your business model, so it will be key to connect with the relevant teams internally so they can properly leverage the partners’ capabilities. With a partnership you are writing a story with many characters who will help you win.
3. Share a vision
Celebrating milestones will only work however, if you have a shared vision. As you find and secure partners, it’s crucial that your goals align. Otherwise, you’ll be jostling against each other.
As one McKinsey report notes. “By skipping this step, companies increase the stress and tension placed on the partnership and reduce the odds of its success”. Significantly, 47% of fruitful business partnerships have aligned business goals.
This means that sometimes you may have to turn down potential partnerships. At Hokodo, we experienced this firsthand. When a world-leading payments service provider contacted us, we were excited to begin with. But it didn’t take long to realise we didn’t share the same vision, and so we had to let it go.
No matter how painful it may seem in the moment, never lose sight of your goals. You will be grateful later when you find the right partner and sail past your strategy milestones smoothly.
4. Be patient
Partnerships take months or even years to generate returns. For ambitious start-ups, the speed and culture difference of incumbents can come as a shock.
2021 research from McKinsey found that while fintechs release product features every four to six weeks, it takes banks an average of four to six months. The corporate mindset is usually more meticulous too. There are compliance checks, feedback loops, and legacy policies in play. On average, banks are around 40% less productive than digital native financial services. For fast-moving fintechs, the general pace of change can be frustrating.
But it’s important to keep that relationship alive and fresh, even after months have passed. There are many things that fintechs can learn from incumbent players. And so, we always focus on understanding the culture of our partner and accepting early on that some mutual adaptations will be needed.
5. Be open for opportunities
However, for those that persevere, rewards await. Forrester discovered that firms with mature partnerships bring in double the revenue of their peers - an extra $162 million on average.
For our B2B BNPL world, the potential revenue is ground-breaking. By 2026, Bain predicts that the B2B payments market will hit $33.3 trillion globally.
According to the report, “We anticipate rapid growth through 2026, with a fivefold increase in embedded B2B lending, bringing the loan volume to between $50 billion and $75 billion, or around 15% of the total, which will also rise slightly to around $430 billion”.
But revenue could become greater still, with the influence of hyper-automation, digital scalability, and artificial intelligence, according to research by Gartner. By 2025, 60% of B2B sales will move from being intuition-based to being data-based. Sales will no longer be slowed down by humans, and we believe profitability will soar even higher.
Part of our strategy is to always keep the net open for new opportunities if they align to our goals. This means entrenching ourselves deeper into the ecosystem and sometimes connecting our partners to other players. In turn, our partners have introduced us to their networks, opening yet more collaborations. More than half of our partnerships came from recommendations from others, and in turn we are playing a key role in creating connections.
Focus on what matters
There’s no one-size-fits-all approach to partnerships. But we’ve found that locking-in partnerships early, communicating, sharing a vision, being patient and open to new opportunities has led to the best results. At Hokodo, we’ve been proudly forging our own partnerships with brands that speak to our values and share our goals.
As you move forward with your partnership, we’d encourage you to share your successes too. We are all part of a community to build a better B2B world.
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