Retailers Are Using Partnership to Drive Resiliency and Growth
As the long-term commerce impacts of COVID-19 continue to unfold, retail companies are re-evaluating their existing channels, strategies, and martech stacks – looking for ways to stay resilient through the pandemic and beyond. Shopping habits have shifted, consumer attitudes have changed, and the economic aftershocks of the crisis are hard to predict.
But one interesting strategy undertaken by COVID-smacked businesses is worth close examination as a path to resiliency in the current and future crises. Even as spending on direct ad buys, email sponsorships, programmatic, and other types of advertising have frozen as a cost-saving measure, some organizations have leaned into a different channel for growth: Partnerships.
Partnerships in this context encompass traditional affiliates but also a full spectrum of other referral relationships that provide a remarkably stable source of revenue, even during times of uncertainty. Influencers and social ambassadors, content publishers, complementary businesses, app-to-app integrations—all of these are examples of the types of relationships becoming commonplace in the emerging partnership economy.
These partners essentially serve as an indirect sales force and marketing arm for businesses to expand their footprint across new markets and audiences. And during this crisis, they have proven to be a highly adaptable and lucrative lifeline.
Surprising Data About Partnerships
Even before the crisis, partnerships at some organizations were a bigger growth driver than paid search, which generates 18 percent of revenue for the average business vs. 28 percent from partnerships at companies with well-run, diverse and automated programs, according to Forrester Consulting. And during lean times, things get even more interesting.
Why Partnerships Stand up When Sales and Marketing Crumble
As the pandemic took its toll on consumption, businesses and marketing teams sought new ways to bring in revenue while cutting costs. At the same time, anxious and house-bound consumers needed extra motivation to spend.
In retail, for example, we witnessed shrinking demand across most categories as consumers stayed home and focused primarily on a small range of consumable, remote-workplace, and educational necessities plus products and services in a few self-care and entertainment categories. But, with massive job losses and unprecedented uncertainty, most are spending as little as possible.
Disrupted global supply chains also left retailers with little inventory to offer and/or no way to fulfill orders that did come in. For products they could fulfill, delivery dates were often so far out that they lost the sales. Cash flow issues were dire. And physical store closures not only slashed revenue, but many stores were also stuck with stagnating inventory housed in stores not designed for fulfillment.
That inventory sat idle, and aging while brands were desperate for cash…
In that environment, the partnership channel bridged a number of crucial gaps:
- Partnerships were used to reroute offline shoppers to online outlets. Partners with geotargeting capabilities helped capture sales from consumers close to shuttered storefronts or promote curbside pickup options.
- Influencers became significantly more effective at recommending products while more consumers engaged with social media during stay-at-home mandates.
- Partners helped to elevate the categories consumers needed most and move products that were outside of a retailer’s typical sweet spot. If inventory was low, partners created waiting lists (with commissions only paid upon shipment).
- Deal-oriented partners were very effective at moving shut-in inventory out of stores. Discount sites that specialize in moving inventory fast offered essential liquidity.
- Content and loyalty partners helped promote online retailers who had faster shipping times than Amazon, whose customers experienced weeks-long delays for their deliveries. Some new retailers were able to take market share as a result of their partnerships.
Because of these characteristics and the innate adaptability of the partnership model, businesses in retail and elsewhere have quite literally survived because of their partnerships. But pivoting and scaling effectively required not only a willingness to lean in with budget, it also required the right technology.
Partnership Reinvention and Automation: A Case Study
Scaling a partnership program quickly during a crisis, customizing contracts and payouts to capture fleeting opportunities, and simply managing a cohort of diverse partner types on a day-to-day basis can easily become overwhelming if processes are manual and spreadsheet-based. For the organizations who have been able to successfully pivot to partnerships, automation has been essential.
For Rastelli’s, a supplier of high-quality meat and fish, the pandemic meant nearly all of its hotel and restaurant business dried up. But the company also had a few partnerships in place with direct-to-consumer services that included their proteins in meal kits, a sector that exploded during stay-at-home orders.
Rastelli’s quickly doubled down on its partnerships, expanding and diversifying to capture more direct-to-consumer business. Working with content publishers, cashback sites, and even former customers, they created a large network of referral partners to reach customers literally hungry for high-quality, safely delivered meats. But, in order to scale and diversify partnerships fast and effectively, they had to rely heavily on partnership automation, which made it possible to:
- Quickly find new partners, communicate with consistent automated messaging, and gather insights for continual optimization;
- Implement dynamic commissioning to reward all partners fairly. This was especially vital to properly reward content partners who often got cut out of commissioning;
- Deploy the multi-pronged, full-funnel strategy with three key elements: relying on B2B, content/reviews, and traditional affiliate partnerships.
The result of this company’s strategic pivot to partnership in the crisis was a stunning 505 percent QoQ revenue growth.
The Payback of Partnership Tech
While the value of mature partnership programs as growth drivers is well-documented by Forrester Consulting and others, maturity requires technology investment. Partnership automation is needed for retailers to scale partner discovery, recruitment, onboarding, engagement, and optimization to a level where they can fully leverage partnerships not only during a crisis but as a long-term, sustainable growth channel.
For resiliency under duress, retailers must invest in partnerships and effective tools for partnership automation. Just as Salesforce brought automation to the sales channel, and Hubspot and Marketo brought automation to the marketing channel, technology is a vital component of partnership management. Partnership automation will remain a core enabler of the resilient retail models of the future.