Why strategic relationships will take your company to the next level

Everyone knows the phrase, “It’s not what you know, but who you know.” In the mortgage industry, this is especially true.

In an industry that relies heavily on referrals and word-of-mouth recommendations, it is surprising how often companies overlook the importance of developing strategic partnerships and underutilize existing relationships. Although identifying and establishing connections with potential partners can involve a great deal of work, when done properly, the benefits easily outweigh the effort.

Cultivating strong referral relationships should be a top priority for any company in our industry. It is a highly effective way to increase the visibility of your business and grow your customer base without straining your marketing budget.

What Do You Want to Accomplish?
For those just starting out, forming strategic partnerships may seem a bit daunting. However, the first step is simple: Determine why your organization is looking to form these alliances. Once you figure out what you want to accomplish, you can start researching which potential partners align with your goals. Researching prospects will typically be one of the most time-consuming parts of this process, but it is a crucial step in finding the right partners.

Here are some key factors to consider when seeking out potential partners.

What commonalities exist between your company and potential partners? Seek out companies that offer products or services that cater to a similar industry or niche. This increases your chances of working together because these companies will have a similar customer profile. They can also easily identify what customer needs exist in the space. When you initiate the discussion of forming a strategic partnership, they can tell immediately if this is an opportunity that will benefit their clients.

Another factor to consider is the nature of the business itself. Does this company provide a product or service that complements your business? For example, if you are a lender that specializes in real estate investment loans, partnering with a company that provides proprietary data on foreclosure inventory throughout the country is a no brainer. Finding a partner with a complementary product or service allows you to provide additional value to your customers with minimal effort. You are giving them access to additional resources they might not otherwise have just by working with you. This creates a clear advantage over your competitors.

A final factor to consider is this: Are the companies you perceive as competitors truly your competition? One of the most common mistakes companies make is overlooking a potential referral partner because they assume they are a direct competitor. Much like your company has a specialty, a “competitor” also has their established niche. There are often things that your competitor can’t or won’t do, which creates a unique opportunity for your business.

For example, RCN Capital has established referral relationships with numerous other lenders that, on the surface, seem to offer similar loan programs. However, maybe these lenders can’t lend nationwide and receive loan requests from states they can’t do business in. The lenders will send those requests to RCN. RCN will reciprocate by sending requests for programs we don’t offer, like loans for small-balance commercial properties, to those lenders. These pseudo-competitors often make the best referral partners because their customer profile is nearly identical to your company’s. Plus, you have an additional resource for customers that may be looking for something you aren’t currently offering.

Approaching Potential Partners
Once you’ve completed your research and identified potential partners that align with your goals, it’s time to pitch the idea of a partnership to your prospects. When drafting a proposal, clearly outline the benefits for all parties. It can be easy to focus on what benefits you want the other company to bring to the table, but to form a long-lasting relationship, you must create a win-win scenario for both sides.

Developing a mutually beneficial partnership often starts by initiating an open conversation with your referral prospect. Start by highlighting the synergies that exist between your companies. Discuss the mutual goals a partnership could accomplish. From there, develop a plan of action with clearly defined deliverables.

Remember to consider how much effort will be required from each company to achieve these objectives. Potential partners may not be able to devote as many resources as you may think, so it’s important to be flexible with your ask in these situations. If either you or your prospect are concerned the partnership would tax company resources, come up with a plan that starts with smaller deliverables spread out over a longer period. You can agree to revisit and modify the partnership on a quarterly basis once you know what is and isn’t working. It is common for partnerships to start slow and ramp up over time.

Finally, once you have come to a verbal agreement, put everything in writing to protect both companies. Putting the agreement in writing also gives everyone one more chance to review the terms of the agreement before proceeding. Things that weren’t taken into consideration in your initial discussions might come to light when other members of the company review the agreement. A written agreement not only solidifies the terms of your partnership but also helps provide future clarity for the relationship. The agreement gives both parties something to refer to should there be any question of what needs to be done and when it needs to be accomplished. There is nothing wrong with including language stating the agreement can be amended at any time to allow flexibility and room for the partnership to grow.

Communication Is Key
Once your partnership agreement has been executed, it’s smooth sailing, right? Yes and no. One of the most important things to remember is that communication is key to maintaining a successful partnership. Many referral relationships fail because of lack of communication. Never assume that no news is good news. You took the effort to initiate a partnership, so make the effort to maintain it.

As your referral relationship gains traction, check in with your new partner regularly. This provides an opportunity to discuss progress on any items that are in the works, see what is and isn’t working, and ensures all expectations are being met. These touch points don’t necessarily need to be time-consuming. Something as simple as sending an email allowing your partner to review the progress of a project or a brief call confirming that some of the leads you agreed to send were a good fit is usually all it takes to keep things on track. Once you figure out the sweet spot of communication frequency, stick to it.

Similarly, don’t be afraid to ask for updates from your partner. Strategic partnerships are more likely to end because one party feels like the other isn’t reciprocating the effort. Speak up if you feel things aren’t in line with your agreement. If you have said your piece and offered a solution, there is no reason why things can’t be adjusted and resolved.

Developing strategic partnerships and referral relationships is a crucial part of a successful marketing strategy and is critical to growing your business overall. While there is a great deal of time and effort required to initiate and maintain these relationships, the monetary cost is minimal and often nonexistent. When done right, these partnerships are well worth it and you never know what other doors may open for your business as a result.