Why it’s time for CMOs to embrace disruptive external partnerships
- 27 January, 2021 13:27
One of the clear trends to emerge during 2020 was brands striking external partnerships. And if Deloitte’s recent Marketing Trends 2021 report is to go by, such partnership aspirations remain firmly in the spotlight this year as a way to drive growth, meet changing customer needs, lift cultural credentials and drive innovation.
Whether it was out of operational necessity – think PetBarn and Uber partnering up to ensure customers could get prompt access to pet food – or because of rapidly changing customer behaviour – think The Iconic and Binge tie-up around ‘inactivewear’ for consumers spending more time in front of the TV – there were plenty of partnerships to be seen in the midst of the COVID-19 pandemic.
What’s more, in its 2021 Marketing Trends report, Deloitte found 80 per cent of its c-suite survey respondents who introduced new partnerships during the crisis see these continuing to be critical post-pandemic.
But just what kind of external partnership are worth pursuing? And are Australian brand leaders doing enough to harness partnership power in a strategic way?
Here, in the first of a series of CMO features exploring brand partnerships in the A/NZ market, we investigate the opportunities presented by disruptive forms of partnership, the macro and consumer trends driving the need for such partnership, and what it takes to make them happen.
Appetite for partnership
Ask any marketing leader if they’re interested in external partnerships, and you’re bound to get an affirmative answer. For the team at Deloitte Digital, however, partnership as a strategy is often underutilised. One of the limitations is how CMOs define and explore brand partnerships.
While marketers are commonly involved in partnerships around content, licencing, affiliate marketing, produce placement, channel and distribution partnerships, what they’re not so good at are the disruptive partnerships that can drive strategic business impact and growth, says Deloitte Digital’s national lead for new proposition and venture design, Tim Davis.
“Where we feel the focus is starting to move is the all-together harder but much more interesting area where there’s much greater potential for impact: Joint products and services, joint ventures, and truly connecting experiences across brands,” he tells CMO.
“We see pockets of that, but we also work with clients where when we say partnerships, their minds almost immediately switch to things like Qantas points or putting one brand next to another brand’s logo, without changing anything particularly meaningful in the way customers will consume their solutions.
“Yes, this disruptive partnership is a trend and yes, we believe it’s going to grow and is here to stay as there are some things that have changed in the world. But it’s still a term that needs defining for most of the clients we talk to.”
Deloitte ties this kind of partnership to a wider trend it’s calling ‘fusion’, or blurring of the lines between traditionally distinct industry categories and ecosystems brought about by technology disruptions such as cloud and digitisation, plus the gig economy. According to Deloitte, this trend requires businesses to move beyond their silos and broaden ecosystems, rethink capabilities, brand, partnerships and their entire existence if they’re to find sustainable growth.
Key to such effort is scoping customer insights beyond their industry of origin, reconsidering partnerships and cross-industry competitors relevant to their business, and participating beyond traditional industries in ecosystems.
So what’s stopping CMOs from doing that? One internal element Davis sees inhibiting pursuit of more disruptive partnership goes to the heart of how marketing chiefs perceive their role and remit. Do you see yourself as a marketing and communications leader, or a driver of organisational growth?
“It comes back to this question: What’s the reason to do it? Is it to fuel your brand and keep things ticking over and keeping your brand interesting, or is the reason to do it because you see it as a strategic driver of growth for the business?” Davis asks.
“Are partnerships a lever you can pull to do things you couldn’t otherwise do with your business model, and serve your customers in other ways you couldn’t otherwise have served them? If you see it this way, the idea of just putting your logo beside someone else’s logo feels like child’s play.”
That’s not to say more traditional forms of brand partnerships aren’t critical. There are plenty of good reasons why you would look to extend and pursue – improving reach, tapping a new set of consumers, aligning to a brand to lift your social and environment credentials, and building engagement with existing customers, to name a few.
“But if you are a CMO who says I want to stake my claim on being a growth engine of this business and be a strategic growth driver changing the way we connect to customers and go to market, then external partnerships should be very interesting to you,” Davis says.
Equally, the opportunity to think differently about external partnerships in 2021 is one where the CMO can take a true leadership role.
“There needs to be a purposeful directive from the top. We’re seeing the words partnership, collaboration, ecosystem and taking a proactive role in shaping the context in which your business exists and the context with customers on the list for the vast majority of CEOs we talk to. But there is a breakdown between that and what their organisations are then able to do – there is a void there. That’s an interesting opportunity for the CMO,” Davis says.
“CMOs have the ability to be the connector and also if they step up and make the claim for being the driver of top-line growth, then they can pull the pieces together to enable successful partnerships.”
Partnership drivers and human need
While it’s tempting to tie a lot of brand innovations and partnerships of the last year to the COVID-19 pandemic and unprecedented circumstances experienced in 2020, there are other forces at work. For Davis, a sizeable contributing factor ties back to defining and pursuing growth. He points out at the CEO and c-suite level, questions of where growth is going to come from are increasingly being asked.
“All the avenues of growth feel like they’re starting to run dry, and we need to start looking outside the four walls of our businesses and we are compelled to think about the ecosystems where our companies exist and look for new ways to create value,” he says.
A longer-term macro-trend also opening up discussions around disruptive partnership is the open data movement and ability to become more connected across offerings organisations take to market.
“If you look at open banking and from a regulatory perspective, we are a couple of years behind the UK in Australia, and the UK is still doing a lot of trial and error as it works out what open banking is truly going to mean,” Davis continues. “Australia is also on that journey. But the possibility for connected solutions and for companies to try and solve the whole customer problem, rather than the thin slice they used to solve, is growing rapidly.
“There are new possibilities. That doesn’t mean it’s easy – it’s definitely not easy – but it’s opening up opportunity.”
A third driver of external partnership is the pivot away from products and services to delivering customer-led experiences, Deloitte Digital partner, David Phillips, says. This is certainly an area where COVID’s impact can be seen in the types of partnerships pursued by organisations locally in 2020.
“We know there is a big macro trend away from companies making and having assets that build or sell things, to companies servicing and creating experiences. With COVID though, what we realised is that if a customer can’t get into our store or place of business to buy things, then what do we need to do? As a result, every organisation has somehow had to think again about either emerging universal needs or to go back to basic human needs,” Phillips says.
“Pushing back to needs meant organisations had to rethink the capability they required to service those needs. And if they couldn’t get there quickly, then they needed to partner. So while there were lots of things happening and in motion before COVID hit, the pandemic forced the shift to thinking back on needs and structural shifts to cater to that.”
What further helped bring partnerships to fruition in 2020 was the wider perception CMOs had permission to try new stuff, think differently and explore new things as a result of COVID. Phillip’s hope is the memory of being forced out of our comfort zones and being able to do smart, impactful stuff during the COVID-19 crisis “continues long after we stop talking about COVID”.
“The feeling was some of the tried and tested methods in the growth marketing, innovation and design space were not cutting it. There was growing frustration generally about the results being delivered. But particularly within the context of 2020, this stuff wasn’t going to cut it and we needed bigger, bolder plays,” Phillips comments.
“The hit rate of investing in innovation, developing new and bold offerings for customers is traditionally not that high. And it gets lower when you think about doing it with organisations you’re not used to working with and you’re not used to combining capabilities and collaborating that way.
“The spoils could be great, but it’s hard and the chances of failure are relatively high. But in 2020, we all had to do something, suddenly those options became interesting.”
Another impetus for brands to partner externally traditionally has been the desire to do good and elevate purpose. Davis notes organisations often find it much easier to collaborate around a social initiative or doing good in some way. Tie this into increasing consumer demand for brands to stand for something, and you’ve got another reason partnership should flourish in 2021 and beyond.
Examples in this vein include the Loop recycling packaging platform agreement with Woolworths in Australia in association with packaging provider, TerraCycle, which in turn secured a number of FMCG brands to gain scale and make the initiative viable.
“There is a clear story from a doing good perspective, but it’s also very smart commercially,” Phillips notes.
Another example is the Adidas and Parley partnership to upcycle marine plastic into trainers. “That’s been a roaring success for Adidas and there’s a reason why they were getting around the table with someone outside of Adidas,” Davis says.
“So clean or ‘guilt-free’ growth is definitely driving this. Customers are increasingly expecting this from the brands they love and trust to uphold a certain standard. There is some warm and fuzzy stuff in there but also shrewd business thinking.”
Up next: The key ingredients to forming disruptive partnerships and advice for CMOs
Ingredients for successful partnership
And yet disruptive partnerships are rare. Phillips agrees maturity is vital to driving a fresh take on partnership – maturity in terms of understanding what your brand could do, in understanding marketing encompasses everything that touches your customers, and recognising the different ways ecosystems and partnerships can work together.
“We don’t have a lot of that in Australia to be frank. It’s not just digital, technology or data capability, it’s the maturity of an organisation to think they can work with someone else that goes beyond the culture of you sell our brand, we sell yours and block everybody out,” Phillips says.
“That goes beyond the old mentality of intercept and isolate your customers, which is something a lot of us were trained in as marketers in 15 years ago. Fusion and strategic partnership represents a big shift many wouldn’t be thinking about.”
There are of course hygiene factors to external partnership that can throw a spanner in the works. While aligning with another organisation might make sense strategically, having the trust in place between two organisations in order to facilitate collaboration, and a need for greater levels of things like data sharing, push requirements around partnership up much higher.
“Unless you have access to the legal, finance teams and CEO, you may not be able to pursue these partnerships properly. Knowing your constraints as well as your strategy is important,” Phillips says.
Davis agrees what often prevents external partnership are “the basic hurdles of how do we protect ourselves commercially and legally, how are we going to share our data? How are we going to collaborate? Who’s office? What are the ways of working? How do we start to trust each other?”.
“That stuff is frustratingly hard and feels harder than it should be,” he says. “I had an example of two retail companies across Europe several years ago I was working with, who brought people to the table at a senior level to explore opportunities to partner. They spent 6-8 weeks mucking around with their legal teams to create the foundations to let them even have the conversation. The thing eventually fizzled out and died.”
The more recent trend of pursuing partnerships with startups has possibly hindered the wider partnership trend and approach, Davis agrees.
“There were bizarre situations of startups being shepherded into buildings of corporate Australia without real reason why. It felt like the objective was just to ‘be’ around startups,” he says. “It’s not easy as a large organisation to collaborate with a startup – they don’t work the way you work. And the results have not followed through. My fear is that has discouraged external collaboration where actually all it has taught us is it’s hard to collaborate externally.”
Davis’ therefore encourages brands to find partners that can help you have an impact with scale. “It’s as much effort to sell a big deal as to sell a small deal, so if you’re going to invest in the effort to partner with someone, aim for the bigger bang,” he says.
Finding the right opportunity
As to identifying the right partnership opportunity, the top piece of advice is to start with the customer problem you’re trying to solve and a clear view of your business objectives, then look for a partner to solve it.
“Equally, however, if there is an organisation you have enough commonality with, dealings with historically and enough trust, then in this space and environment I’d say get together and talk about what matters to both of you and see if there is something opportunistically you can do,” Davis recommends. “Your chances of success might be higher because you might just clear some of those hurdles with greater ease.
“If you start from a place where you’re asking how this can be a strategic driver of growth for me, that’ll lead you down the right path.”
Phillips knows most CMOs don’t have lot of time to pursue strategic objectives given their modern remit and demands on marketing. He also knows CMOs need to think about this from a brand perspective.
“Some purist brand marketers will be nervous about this – when you start bringing brands and businesses together, you wash your attributes and associations and clarity can drop. You need to be quite strategic about partnerships here,” he says.
“And think outside your adjacencies; look at your customers and what your aim is. All marketers fall into the trap thinking our brands are really important in our customers’ lives. You have to recognise you often don’t, it’s such a privilege to be part of their lives. If you can kind any other ways to solve problems through collaboration, then look at them.”
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