Matching Up: How to Strike Strategic Partnerships

Kristen Hampshire |

From Day One, Joshua Holmes had big dreams for his small business.

“My background was never in building small websites—it was in much larger enterprise solutions for hospitals and e-commerce,” Holmes relates. Problem was, there just aren’t a whole lot of big hitters  in Medina, where his 12-person company is based.

At first, he did pretty much all types of Web-related work, but he kept his eye on the big leagues, and his business finally built up a rapport and symbiotic partnership with Miami, Florida-based software firm, dotCMS, that was looking for a developer like Ethode to implement its program.

Holmes learned about dotCMS because he was looking for a platform built in Java (which is faster and more sophisticated than Word Press, from a developer standpoint). He came across dotCMS, which had the features he wanted. When he got to know the firm—which was rolling out its product to marketers who needed help with implementation—both parties discovered a synergy.

Holmes didn’t know dotCMS, and it’s not like the relationship bloomed overnight. But Holmes took a chance, vetted the firm and dedicated time to learning their product and using it himself.  The more they got to know each other, they realized they had a lot in common. “We came from similar backgrounds,” he says.

Today, when dotCMS sells its product to a customer, Ethode almost always installs it. And when a customer is considering dotCMS, Ethode often helps close the deal because its third-party opinion makes an impact.

“Our business doesn’t come from constantly trying to find the next customer,” Holmes says of partnerships like dotCMS and how this opens the sales door. “They depend on us to install a product to make their customers happy, and most of their customers can’t do it themselves.”

So you’re ready to go big-game hunting? Great! Before you start that hunt, though, read what our experts have to say about their own experiences and how it can jumpstart your efforts.? That means getting this business involves more than just aking for it. Allow our experts to explain.

What are you trying to do?

If you’re thinking about a partnership with a big business, the first thing you need to do is: Stop! Christian Silveira, director of sales and mass market operations at OnDemand Energy Solutions, which, like Ethode, has also taken the big-business plunge.

You first have to figure out if it makes sense for your business. “What is your scope? It’s not necessarily a good business practice for every company, depending on the verticals or services they provide,” he points out.

Differentiating commodities

OK, So, you’ve decided it makes sense for you. Great! So, now what? (Hint: It has to do with standing out from the crowd!)

Energy is a commodity, but OnDemand’s services are far from it. Acting as a consultant is how the firm differentiates itself from competitors. A conversation about the price of power shifts to business strategy—and that’s when large clients listen.

“The conversation changes from savings to risk mitigation and that is typically exciting for our big clients,” says Christian Silveira, director of sales and mass market operations at OnDemand Energy Solutions, which, like Ethode, has also taken the big-business plunge.

“We talk about how they want to manage their energy risk and go in with a layered approach to buying a volatile commodity. This message resonates with them.”

Winning face time

For Holmes, the key to securing large clients has been physically meeting decision makers and contacts who can point him to key personnel in large organizations.

Of course, that’s easier said than done. But Holmes has found typical lead generation tactics many Web businesses use are not as effective—such as pay-per-click, search engine optimization and traditional advertising.

“In this day and age, everyone thinks it’s all about electronic ads, but at the end of the day there are a lot of people who say great things but wind up doing a terrible job,” he says. “So, there is fear around hiring IT companies. People are always skeptical of you.”

Networking in the community and actually meeting prospects makes all the difference. “You have to find them and shake their hands—and once they realize what you know, they recognize you are unique,” Holmes says.

Show your value

This seems like a simple question to ask, but what can you really do for a big client? If you’ll help grow their revenues, how? If you’ll mitigate risk for them in some capacity, how? If you’ll expand their footprint or product offerings—how? Be prepared to explain how you can help, and back that up with examples.

“An anology I like to give when talking with large clients is, ‘Do you file your corporate tax returns yourself?’” Silveira says. Of course, they say no. “Did you hire the cheapest CPA, or the best that provides the most value?”

Getting prospects to think about value and recognize their buying an expertise can be a game-changer. “The main thing we push here is question-based consulting,” Silveira adds. In other words, he doesn’t want to sit in a boardroom and spend an hour delivering a pitch. He wants prospects to toss him hard-ball questions so he can prove OnDemand’s expertise.

Investing in growth

By reinvesting profits into the business, Holmes has grown his firm to the scale where he can service large corporate customers. He knew from the beginning this “enterprise” demographic was his target audience, so he aligned his business strategy accordingly.

That includes plants to build the first data center in Medina County in 2017, and possibly opening another U.S. location out of state.

Scaling up

If you’re going to service the big players, you better be prepared with the resources and manpower (if required) to fulfill your obligations. Big business can mean big workload. For Ethode, that meant scaling up with independent contractors at first so Holmes could service customers’ needs as a constant point of contact (and salesperson).

Once he grew the business, by year three, Holmes brought on full-time employees. By the end of 2016, he expects to employ 20 people, growing the staff by up to eight employees. “The Catch-22 of contractors is you don’t own them,” Holmes quips. “You can’t dictate their full-time schedules, otherwise they are not considered contractors by law.” 

Dropping names

Holmes leveraged his background building corporate enterprise software systems when talking with large prospects about his small business. “I name dropped a little,” he says, relating that he worked on a “massive” project for Skyy Vodka and subsidiaries. “The customer is buying you. They want to know that you know what you are doing, so I said, ‘This is my background. This is what I’ve done.’”

“I’m a small guy and I fish in a big pond,” Holmes says. “But if you have some background working with big business, that can alleviate their fears.”

Big business wins

Following the tips above can pay off in a big way, as Holmes and Silveira can attest.

Through its partnership with dotCMS and others, Ethode works all over the country. This means Holmes gains exposure to a range of clients in his “sweet spot.” Ethode has implemented projects for companies such as Roto-Rooter, The Cheesecake Factory, Johnsonville, St. Jude Children’s Research Hospital—and locally, The University of Akron and Oberlin College.

“I knew I wanted to immediately grow the company,” Holmes says of the business that got its start in 2010. “It made sense for me to reach out to those two industries (healthcare and e-commerce) and network with people I knew already.”

It’s been a worthwhile venture also for OnDemand, where large customers comprise approximately 20% of the customer base. And 80% of the energy load under contract comes from that base. “It’s the old 80/20 rule,” Silveira says.

Overall, OnDemand manages electricty supply requirements for more than 5,000 clients with more than 27,000 meters, a total energy load under contract exceeding 15 billion kilowatt hours. That’s big.

A “legacy book” of ongoing relationships prior to launching OnDemand has been key to getting in the door with big companies. Like Ethode, OnDemand took a good look at “who do you know” and honed in on those clients. Previously, the firm was part a wholly owned subsidiary of Duquesne Light in Pittsburgh, Pennsylvania.

OnDemand’s client base runs the gamut, and most are small businesses. But the firm can really stretch its consulting muscles when working with large firms that hire OnDemand as an extension of their energy management teams. They look at OnDemand as the CPA or attorney—a professional they need on hand to navigate energy procurement contract language. 

Next Steps

Which business partnership is right for you?

The National Federation of Independent Business has identified four things to consider before launching yourself into a business partnership. They are:

  • Brand alignment: Does your potential partner share your company’s same values? Are the cultures similar?
  • Location: Will being separated by many miles or time zones strain the partnership?
  • Complementary products: Service companies, for instance, should consider joining forces with a company that offers a product you commonly use. (Think a water softener manufacturer linking up with a company that installs water softeners.)
  • Target audience: Ensure the business has the same customer profile as yours.

Want more? Visit www.cose.org/myb for additional resources related to this article.