Top 3 Partnership Terms You Should Know
Partnerships terms can be more confusing than you’d expect, especially if you’re just entering the industry. Firneo can help you understand this field’s lingo.
If you’re new to the partnerships industry, you already know that getting up to speed can be a challenge. Incoming partnerships pros need to maintain existing partnerships, build new alliances, and ensure every last stakeholder is on the same page. And for the most part, these people aren’t given playbooks with the information that could help them get a running start in their new roles.
But if all that wasn’t enough, there’s another hurdle you might not have paid much attention to: learning the partnerships industry’s vocabulary. Every field has its own lingo, but the jargon used in this industry can be surprisingly hard to define. If you’re still trying to wrap your head around the difference between strategic and non-strategic partnerships, here’s Firneo’s guide to the top three partnerships terms you need to know.
1. Partner Ecosystem
When partnerships pros talk about “the ecosystem,” they usually aren’t discussing their company’s conservation efforts. In this context, this phrase almost always refers to partner ecosystems—one of the most critical concepts in the partnerships industry.
Put simply, a partner ecosystem is a network consisting of a single company’s partnerships. It doesn’t matter whether your company’s network includes thousands of partnerships or a single connection—it’s still a partner ecosystem. With a healthy partner ecosystem, your company can:
- Become more attractive to potential investors
- Enhance its “stickiness” (likelihood of getting repeat business)
- Remain at the forefront of innovation
- Find new business opportunities and target markets
- Boost its overall market power
But here’s where things get confusing: “the ecosystem” doesn’t always refer to a single partner ecosystem. This term can also describe the partnerships industry as a whole—i.e., every company with a partnerships program in place.
To make things a bit easier for yourself, just compare ecosystems in the partnerships industry to natural ecosystems. A partner ecosystem is similar to the ecosystem of a specific place. In contrast, “the ecosystem” usually (but not always) describes the global ecosystem.
Now that you know what a partner ecosystem is, let’s look at a few of the types of partnerships that make up these ecosystems.
2. Integration Partnerships
These days, one of the most prominent partnership varieties is the integration partnership. An integration partnership is any partnership designed to make one tech product compatible with another. Since technology plays a crucial role in integration partnerships, they’re often called “technology partnerships” instead, but that’s actually a much more inclusive term. Meanwhile, the organizations participating in integration partnerships are known as “independent software vendors (ISVs)” or “tech partners.”
It’s not hard to see why integration partnerships are so valuable: no matter how hard tech companies work to meet their customers’ needs, there are some things they won’t be able to do on their own. And if they try to become a jack-of-all-trades despite this, they’ll inevitably end up as a master of none. By finding tech partners to work with, these businesses can broaden their functionality while continuing to focus on their actual areas of expertise.
One particularly strong example of a technology partnership is the relationship between Spotify and Amazon. Spotify subscribers with Amazon Echo smart speakers can connect their accounts to these devices and listen to Spotify around their homes. This partnership gives Spotify access to a market it wouldn’t otherwise be able to reach and provides existing users with another reason not to cancel their subscriptions. Meanwhile, Amazon benefits from its connection to one of the world’s most popular music streaming services—even though it already offers a similar service of its own.
3. Strategic Partnerships
Along with the partnerships terms described above, partnerships pros should understand the difference between strategic and non-strategic partnerships. Broadly speaking, a strategic partnership (or strategic alliance) involves two or more equal players working towards a shared goal at the core of each of their business strategies. Strategic partnerships also tend to be larger in scale than non-strategic partnerships, but these alliances are defined by the fact that everyone involved relies on each other.
To get a sense of how strategic partnerships work, in the late 2010s companies like Google, Apple, and Facebook were beginning to develop financing partnerships to help support growth for partners and small businesses in their ecosystems. Amazon decided it needed to get in the game, and partnered with Goldman Sachs to offer up to $1 million in small business loans to its marketplace vendors. It was important for both Amazon and Goldman Sachs, and they both needed each other to make it work. That’s strategic.
In contrast, non-strategic partnerships are usually limited in scope and not critical for at least one partner’s business strategy. For instance, Apple has a lot of partners who are creating apps to sell on the Mac App Store, but Apple is really only sharing some code and some insights for compatibility. If this particular developer walks, it’s not the end of the world. The developer is a junior partner for sure, and most of these partnership programs are off-the-shelf affairs for big companies like Apple.
Learn More than Just the Jargon
The information in this article can help you get started in the partnerships industry, but you’ll obviously need to know more than three partnerships terms to excel in this field. More importantly, learning a bit of partnerships terminology doesn’t mean you’ve mastered the concepts these terms refer to.
With that in mind, it’s wise to take your next step towards becoming a true partnerships pro by signing up for Firneo’s Certified Partnerships Professional program. This program will give you the playbook you’ll rely on for the rest of your partnerships career, and you’ll get this valuable information in just eight weeks. Beat the odds and build partnerships that last by signing up for our next cohort today!
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