Forming a Strategic Partnership Program: What They Are and Why You Need One

Spend Matters welcomes this guest contribution from Craig Laufer, vice president of strategic partnerships at Nielsen.

Are you tapped out on the value created by your standard supplier relationship management program? If so, you should really consider creating a strategic partnership program.

A strategic partnership program is an initiative that aims to transform the relationships of your most strategic suppliers into true strategic partners. This goal is accomplished first and foremost by creating and nurturing great relationships with your strategic partners, ultimately leading to improved supplier relationships, increased influence on traditional procurement topics, and creation of business value outside of the typical buyer-seller relationship.   

Interested in starting your own strategic partnership program? Here’s a quick guide to where to begin.

How to Get Started

To kick off a strategic partnership program, an executive sponsor is selected from within every strategic partner and from inside the organization. The executive sponsors should be at the highest level of the organization and should take the overall responsibility for the success of the partnership.

From there, the sponsors and their supporting teams identify, manage and eventually execute on mutually developed strategic partnership initiatives. These initiatives are grouped as strategic buying, joint innovation/co-development, joint marketing, co-go-to-market and strategic selling.  Each of these initiatives strives to create true business value from the partnership outside of the typical buyer-seller relationship.

At Nielsen, we have traditionally excelled at generating cost savings from suppliers through traditional sourcing methodologies, but we did not specifically focus on creating business value. So when a request came down from senior management to increase the strategic nature of our supplier relationships and to increase business value creation and risk mitigation, the need for a strategic partnership program became clear.  

The first idea we had for the program was to limit it to technology suppliers, letting it live within the IT organization. After further consideration and a change in organizational structure, however, we decided the program should encompass all types of suppliers, which meant the procurement and sourcing organization was best suited to drive implementation.

This decision was the turning point in the program and put Nielsen on a path to be at the forefront of strategic supplier relationship management. We created a detailed quantitative and qualitative methodology to select the initial list of strategic partners, taking a cross-functional team through the methodology, and selected 10 strategic suppliers as initial strategic partners.  

Realizing the Benefits

We are now just over 18 months into our strategic partnership program and just starting to see the real benefits. The biggest and quickest benefit we have seen since launching the program is the drastic change in our overall relationships. The mere act of setting up a strategic partnership has lead our strategic suppliers to view their relationship with our organization in a whole new light.  

Recently we had an outage with one of our strategic partners, a telecommunications provider, that threatened to delay delivery of our product. The Nielsen executive sponsor immediately escalated the issue to the partner executive sponsor, and in relatively short order, the right level of resources were assigned and the issue was resolved without any major client impact. In the past, we had always struggled to get the right level of resource involved during similar outages.  

Another big benefit we have seen is that our ability to ask for and get aggressive cost concession requests during commercial negotiations has improved. In many cases, the partner executive sponsor is either the final decision-maker or has influence on the final decision-maker from a costing perspective. Because these executive sponsors understand the strategic nature of our relationship, they have been more willing to offer us greater flexibility.

Long-Term Strategic Partner Initiatives

Managing the strategic partner initiatives has led to some quick wins, but there are also initiatives that are more complex in nature and will take longer accomplish. Examples of initiatives already showing results include:

• Co-Marketing. Nielsen has participated in speaking engagements at numerous partner conferences, and partners have participated in Nielsen engagements and training seminars. These engagements have put both the brands of Nielsen and our partners in positive lights internally and with the public.  
• Joint Innovation. Nielsen was able to significantly influence the product roadmap of one of its strategic partners to incorporate a third party that was critical to Nielsen’s ability to launch an important new product.  
• Co-Development. Nielsen has been able to utilize the partnership with its telecommunications strategic partners to access to its robust R&D departments in the design of next-generation measurement equipment.  

We also continue to work on longer-term strategic initiatives including:

• Strategic Selling. Using our strategic partner relationships, we are identifying opportunities to begin or increase Nielsen revenue with current partners.
• Co-Go To Market. Working with our strategic partners, we are identifying mutual clients and opportunities to create commercial value by offering a unique joint solution.  

As you can see, there is a tremendous amount of value that can be unlocked through the creation of a strategic partnership program. Please keep an eye out for additional future articles on strategic partnerships, in which I will offer further details on how to select and manage a strategic partner, as well as the key ways to ensure your program is a success.