Cross Industry Alliance

I have a friend who opened a clothing store in the community, selling independently designed women’s fashion. Initially, her business was thriving, but with the rise of e-commerce, it became increasingly challenging. Despite trying various methods such as discounts, offering gifts, strengthening customer relations, and even communicating through WhatsApp, none of these had a significant effect. The number of customers visiting her store continued to decline. What should she do?

To address this ‘what to do’ dilemma, we first need to understand the core issue. Practices like discounts, gifting, and enhancing customer relations only improve the conversion rate of in-store customers, referred to as ‘conversion rate’ in e-commerce. However, her fundamental problem was the shift in user shopping habits due to the internet, resulting in decreased foot traffic.

So, how can this be resolved? My friend could try the method of ‘cross-industry alliances.’

What does ‘cross-industry alliance’ mean? Let me give you an example.

There is a startup that opened multiple women’s clothing stores within the community. They experienced rapid growth in their business, but they faced a limitation in terms of attracting more customers.

They needed to find new customer streams.

Their target customers, women consumers in the community, besides clothing stores, also visit hair salons, convenience stores, and beauty parlors. Hence, they decided to collaborate with these diverse businesses to attract more foot traffic. For instance, they partnered with a beauty parlor, creating a new business model.

The beauty parlor staff have a strong trust relationship with their clients and ample time for interaction. Through their recommendations, customers could complete detailed body feature recognition on an app and apply for a free trial of a box of clothes specially curated for them.

A few days later, when customers revisited the beauty parlor, they would receive a box containing several pieces of clothing for trial. They could try them on one by one, experience the surprises brought by professional styling, and appreciate the results in the mirror. Many customers couldn’t resist the desire to make purchases. This model not only received great acceptance from the beauty parlor but also generated substantial revenue for the company.

This is the essence of a cross-industry alliance, attracting partners from industries that don’t directly compete and creating additional value for each other’s customers while sharing the corresponding benefits.

Cross-industry alliances typically take three forms: channel alliances, marketing alliances, and product alliances.

For instance, the aforementioned startup belongs to channel alliances. Its primary objective is to leverage partners’ channels to acquire traffic while reciprocating benefits.

In many computer brand advertisements, you’ll hear Intel’s ‘Intel Inside’ slogan, which is an example of a marketing alliance. It promotes brand endorsement and elevates brand value through joint branding.

Another example is the ‘Wintel’ alliance between Intel and Microsoft, which falls under a product alliance. Microsoft’s latest Windows system fully utilizes stronger software functionality, complementing Intel’s latest CPU’s powerful hardware performance, significantly enhancing the user experience, and stimulating continuous software and hardware upgrades.

Can these ‘cross-industry alliances’ solve other ‘what to do’ problems in the business world?

Suppose I’m an airline company seeking to attract more passengers to choose my flights. How can I do that? Perhaps forming an alliance with a hotel group for point exchanges might be a solution. For instance, hotel loyal customers can use points to exchange for flight tickets, while airline loyal customers can use points to exchange for hotel stays. This represents a form of channel alliances.

Suppose I manage sales of daily life products like towels, pajamas, etc., aiming to provide customers with a better product experience. In that case, collaborating with hotels, the best experiential venues, might be the answer. For example, an e-commerce platform collaborating with hotels to provide and sell high-quality daily life products. If customers like them after experiencing, they can make an immediate purchase. This is an example of channel alliances.

Suppose my company urgently needs to recruit talent, but there’s a scarcity of suitable candidates. What can be done? Perhaps collaborating with companies like Uber to launch an ‘on-call interviewer’ activity. Candidates successfully calling the service would have senior executives from the company personally arriving via Uber’s interview vehicle to conduct interviews with them. This is a form of marketing alliances.

If I run a company selling gaming cards and want to reach more ‘gamer’ customers, how can I do that? Perhaps collaborating with a snack food company, printing game promotions on the packaging of snacks preferred by gamers, and integrating these snacks into games could be a way. These two groups align well, allowing mutual integration in product design. This represents a form of product alliances.