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Expand Your Referral Business by Building Complementary Business Relationships

Leverage Your Business Relationships to Attract More Customers (and Money!)

Keeping up with the Joneses, never letting the other guy see you sweat—you know the clichés about keeping up with the competition. Every successful business owner understands the importance of staying aware and ahead of others who run the same race. Yes, you need to know what other businesses in your segment are up to, what works for them and what doesn’t. Differentiating your offerings and customer experiences from theirs is critical. But don’t overlook the value of discovering and understanding complementary businesses as well. Building relationships with these businesses can benefit your customers and increase your profits.

A direct competitor sells or produces products and services very similar to other businesses in the same market, like, say, two pizzerias in the same neighborhood. Indirect competitors provide products or services with significant differences that satisfy similar needs for the same population, like a coffee shop and a smoothie stand, or a billiard parlor and a bowling alley.

A complimentary business, on the other hand, offers products or services that relate to your business and appeal to your customers but don’t take the place of what you offer. An athletic apparel store and a gym are complementary, for example. But a complementary business can be in a different segment than yours. An ice cream parlor complements a movie theater since moviegoers often extend their fun by sharing a treat before or after the film. When both places benefit from each other, they have a complementary relationship.

One obvious way that such a relationship benefits you is through word-of-mouth marketing. If customers come to your bakery looking for picnic foods, you can point them to the cheese shop across the street while they buy your bread, or offer samples of their wares to go with your own. If you put out a platter of their camembert, your customers may buy their cheese from you, and you can get a cut of the sale. If you put out their business cards along with their cheese and direct people to the other store, make sure they find samples of your signature sourdough along with your business cards when they cross the street.

Where to Look for Complementary Businesses


Some of the most popular alliances are demographic or geographic relationships. The key here is to ask, “Is there a company with a product or service that overlaps with my target audience and that I can partner with for a win/win scenario?”

Walking around your business area and taking stock of nearby businesses can be a good first step. Asking customers where they shop for complementary products or services helps you gauge interest.  This initial research may give you more ideas for other businesses you could partner with that are nearby but aren’t necessarily in your immediate neighborhood.

There’s a reason there are so many coffee shops near university campuses: They are two complementary businesses that share the same clientele.

Form Strategic Partnerships to Leverage Other Businesses’ Successes

Owners of small and medium businesses (SMBs) often take on too many tasks alone and may get overwhelmed if they don’t have people with experience around to help. Hiring and training employees is a big step toward providing great service and running your business smoothly. Another option is to form strategic partnerships with other SMBs. Your strategic partner can be a business owner to whom you regularly refer clients and who returns the favor. That business may create products or offer services that enhance your offerings.

Let’s say you offer family services and know a top financial advisor. You two might offer a Saturday divorce training event. Or perhaps you manage an injury law firm that works with injured clients who often use a reputable chiropractor. The firm may ask if they can leave a card on the office or post tips that may apply to injured clients on the chiropractor’s newsletter or social media page.

Before you suggest a strategic partnership, consider what’s in it for them as well as for you. Will you mention them in your marketing materials or on your website if they refer customers to you? Can you provide an attractive case or table for the display of your goods in their store? Will you carry some of their offerings in your business? Have examples of the benefits they’ll receive from a partnership with you to share before you bring up the possibility.

If you build a complementary relationship, you and your strategic partner can show together at fairs, farmer’s or craft markets, trade shows, conventions, seminars, or expos. Sharing a booth or table and publicity efforts may get more attention than if you spend the same dollars renting a smaller space for just your own business. Best of all, you’ll expand your appeal by being seen by the other business’s customers as well as your own, thus extending your market reach.

Share Online Resources with Other Offline Businesses

Even if you have an offline business, you can benefit from shared online resources. Consider hosting them on your podcast, sharing a review of their work they can post on their website, collaborating on an informative roundup style article, or co-hosting an event. Business can consider trading guest-written articles in your blogs to get ideas and products before new eyes and leverage other businesses’ customer bases. If you market via an email newsletter, add a link and a mention of a business in your area and ask that business to do the same in their newsletters and social media pages. Exchanging mailing lists with other businesses can introduce you to whole new audience segments.

If the businesses you work with are near your own, you might assume your market areas and customer bases are similar. However, even a difference of a few blocks can greatly impact a business’s profitability, and another business might draw a surprisingly different crowd than your business does, especially if you’re in different market segments. When researching complementary businesses you maybe consider working with. You may find surprising differences in income, home areas, travel patterns, and much more. These insights may lead you to reach out to new market segments or help you choose which of your products or services you might advertise or market in conjunction with the other business.

Vet All Companies You Form Relationships With

The key to a complementary relationship is offering other businesses something that provides value to their customers as well as to yours. Their offerings should enhance your own. Endorsing their products or services shows that you’re a booster of local business and that you believe in sharing the wealth and helping customers.

Naturally, speaking up for other businesses means you need to vet them first. Your endorsement puts your reputation on the line, so don’t recommend a poor plumber, an inaccurate accountant, or a restaurant that serves mediocre meals. A smart business owner takes opposition research seriously and checks out the competition; that owner should take complementary research seriously, too. Try the services you recommend, dine at the restaurants, or use the products you push before you agree to co-market or recommend them. If you can’t do that, at least check references and online reviews first.

Let’s say you own an orthodontic office and an SEO agency asks you to post their flyer and add her name to your online list of recommendations. It’s reasonable (and smart) to ask her for references and photos of her work. You want to avoid having your customers complain that you aimed them toward a poor service provider or an unethical business.

Giving to Get—Ways to Trade Benefits with Other Businesses

Consider providing discounts or combination offers to customers of other businesses. If a customer brings in a same-day concert or movie ticket to your late-night restaurant or club, you might offer $5 off their meal. Meanwhile, the theater whose tickets you honor as coupons might run a free ad for your business in the back of their program. Make sure the ad mentions the coupon deal to encourage audience members to think about visiting your business after the show.

Real estate agents and brokers are often asked for service, repair, and contractor recommendations. If you own a property-related business, such as a property appraisal business, get to know reputable agents in your area, and ask whether you can provide business cards and flyers for their clients. Make sure to get on their lists of recommended businesses and provide your email and web addresses. Getting a mention in a realtor’s newsletter or email update to their clients can bring a lot of lucrative work to mortgage brokers, home inspectors, handyman services, house cleaners, or appliance repair people. In return, you can offer them a newsletter or website mentions, or let them know you’ll be happy to give their clients free estimates for your services. Many real estate agencies hold public service events. You might offer to help with one each year in exchange for their mentions of your services to their clients.

Acquiring a Complimentary Business—Does It Make Sense for You?

Sometimes it makes sense for a thriving business to acquire a complementary business. This allows the buyer to expand the product line or service menu, gain a new set of customers, pick up additional trained employees, and gain purchasing power and financial leverage. If you consider this option, look first at the businesses your customers already frequent. Such businesses have a natural crossover appeal among current and potential customers.

A complimentary business should be a logical extension of your current business, and both businesses should benefit from the acquisition. However, part of what you want to acquire is the continuing success of an already existing business, so moving it away from its established site risks alienating current customers if the businesses are not already nearby. Look for businesses with a similar feel and message to your own. If the other business has a style and focuses like yours, you’ll be less likely to dilute your current brand or alienate customers.

Strategic Alliances with Competitors Can Work, Too

Sometimes the best complementary relationship can be with an actual competitor. Multiple competitors can benefit from being part of the same event. At a big sporting event or community market gathering, a parking lot filled with 20 food trucks creates an outdoor dining experience that draws thousands of diners to the area, and there are enough customers for all. A fundraising fun-run may have product tables set up by five different gyms, but if they’re spread out along the route and all offer welcome information and water bottles, each one will get a lot of positive community exposure for very little expenditure.

Seasonal local fundraisers, markets, and fairs, as well as individual events like Small Business Saturday, lure more traffic and garner greater attention when more businesses get involved. Such pop-up events provide opportunities to reach new market segments and to see what competitors and complementary businesses are offering. Make sure to have someone staff your space for a while so that you can visit other exhibitors. See what’s new, what’s drawing interest, what to avoid, and which businesses you might be able to make alliances within the future.