Value Added Services

There are two types of value-added service partnerships (see Figure A.6).

  • Product/product partnership: Each partner provides the other with a product or service to strengthen the overall offering.
  • Product/channel partnership: One partner provides a product or service and leverages the distribution channel of the second partner to market the new offering.

A value-added service partnership is different from a business partner relationship. In the previous example, Intuit's business partners function as a distribution channel. How-

Innovation

Right-Sized Offering

Value-Added Service

No Customization

1

Mass Marketing

Nontargeted Marketing

Targeted Marketing

Physical Aggregator

One-to-One Marketing

Figure A.6 Value-Added Services ever, the availability of QuickBooks software is not a compelling enough reason for a small business owner to choose one accountant over another. By contrast, a value-added service should be compelling enough to act as a differentiator between the partner company and its competition.

Value-added service partnerships are often the domain of those businesses whose traditional offerings are considered commodities. Faced with an undifferentiated product and little price difference between competitors, office supply and courier companies engage in value-added partnerships to differentiate their product offerings from those of their competitors.

Unlike most partners offering a value-added service, Staples and ADP (Automatic Data Processing, Inc.) are using the highly customized physical aggregation strategy. Given the simplicity of the offering, face-to-face contact with customers is one of the partnership's key differentiators (see Figure A.7).

Collaboration: Staples and ADP

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