Co-branding: what it is, advantages, how to do it

The pandemic triggered significant changes in customer behaviour. This scenario has caused companies to improve their ways of building customer loyalty, as the new consumer is more likely to try new brands.

While this may be an incentive to attract new customers, it means that more work will have to be done to encourage a second or third purchase. It also means that brands can no longer solely rely on their brand loyalty strategies to keep customers returning.

According to IMGR research, 38% of consumers would like to see an improvement in brands' loyalty offerings. If an effective loyalty program requires emotional engagement and consumers, immersed in the digital world, are increasingly attentive to what brands represent, how do you leverage loyalty actions that bring fans to your company?

Perhaps, cross-brand partnering is an answer. Find out why:

Co-branding: collaborations between brands that improve loyalty offers

Cross-brand partnerships offer opportunities for collaboration to increase customer loyalty. And such brands don't need to be exclusively in the same industry, but should have some direct or indirect connection with respect to their target audiences.

Co-branding can be a very powerful way for companies to stimulate their growth and become more well-known, while strategically placing themselves beside other brands that they consider relevant.  

By forming strategic partnerships, brands can leverage the loyalty of both audiences to convince us to try or buy, as well as form new opinions about brands that we may not have considered. 

These partnerships can involve many different types of strategic collaborations, where each brand contributes its own identity. The goal is to combine and leverage reputation, recognition and positive associations between the parties involved .

Brand-to-brand collaborations include everything from creating a product to partnering on an event or campaign. In this process, there may also be the sharing of manufacturing resources, technologies and expertise.

A well-defined and structured co-branding initiative can have a number of benefits for each of the brands. By coming together, they can leverage each other's strengths and expand their businesses by accessing each other's markets and audiences, as well as benefiting from the sharing of data and information that enhances the partnership.

Co-Branding Benefits

Reaching out to new markets

A co-branded product or campaign boosts your brand exposure to your partner's target audience by overlapping audiences. Loyal consumers of one brand will try the new product or service, even if they have never considered the second brand on their own.

Co-branding also has the potential to make an impact that goes beyond existing audiences, generating publicity and allowing brands to reach audiences that are new to all brands involved.

Strengths minimize weaknesses

Well-planned and implemented co-branding can increase each brand's potential to overcome a weakness by leveraging each other's strengths.

For example, if one brand is known for technical know-how but has no sense of fun or creativity, and another brand has a lot of creativity but technological limitations, a collaboration can work to overcome the negative aspects of each and both can grow mutually.

This can be particularly useful for brands that have undergone rebranding, for example. A brand trying to shed a more traditional identity may be willing to partner with a younger, bolder brand to help reinforce the message of change.

Risk and cost reduction

Launching a new product, entering a new market or taking on a new category can be a big risk for a brand. By partnering with a brand that is already established in your new market or desired category, your company can minimize risk and test new strategies without risking too much.

Partnering with another brand's existing and established values and ideals can also be a cost-effective and compelling way to announce changes in your own brand.

Examples of successful co-brandings

There are many examples of great co-branding partnerships that illustrate how successful this strategy can be. Let's talk a bit more about some successful cases:

Nike & Apple

The tech giant Apple and the sports brand Nike have a long-standing co-branding partnership, first working together in the early 2000s with the launch of Apple's iPod and the co-branded Nike + iPod. Now they evolved into Nike +, the partnership that was initially focused on helping people to play music while exercising. 

Today, the campaign focuses on using the latest technology to monitor activity through wearables - modern, functional workout clothes and equipment. Nike+ products feature built-in tracking transmitters, allowing them to automatically sync with Apple products, giving consumers the ability to instantly check metrics such as heart rate, steps taken, walking distance, and calories burned.

GoPro & Red Bull

One of the most renowned co-branding partnerships, GoPro and Red Bull have aligned in a number of ways. After working with Red Bull on co-branded events and promotions, in 2016, GoPro announced that two brands would form a strategic global partnership that includes content production, distribution, cross-promotion and product innovation.

Although portable action cameras and energy drinks are not directly related, the two brands involve action and adventure, fun and daring to take risks. So when it comes to brand partnerships and co-branding, it is not difficult to understand how such brands relate to each other.

Co-branding in Brazil

Looking at the Brazilian market, there are several examples of co-branding that are successful and leverage loyalty programs. The retail chain Americanas and Santander bank, for example, signed a partnership in the first week of August 2021 to offer different benefits to more than 10 million eligible customers in the program.

Registered customers could redeem points accumulated on their Santander credit card or at Esfera (Americanas' advantage club) partner companies for products available at the store. In addition, the customers got a zero fee on some services and discounts on trips through the Esfera Club.

A little earlier, the partnership between UberEats and Brahma became a reference in the launch of the delivery service in Rio de Janeiro. The service allowed users to order a free pack of Brahma Extra beers when registering on the platform.

In São Paulo, Uber carried out a similar initiative in partnership with the ice-cream company Diletto, which distributed free ice cream to users who joined the UberIceCream campaign.

The examples do not end here. Co-branding is more involved in our daily lives than we can imagine, just look closely at the strategies that brands are adopting to achieve successful partnerships.

Should I invest in co-branding?

Co-branding is a useful strategy for companies that are seeking to:

  • increase their brand awareness
  • improve their reputation
  • leverage their sales and market participation. 

And you don't have to be Nike or RedBull to succeed in co-branding. Co-branding partnership must be strategic and logical. Both companies need to have shared values or some similarity in their brand images and identities.

If you are considering a co-branding opportunity for your brand, make sure that you know the values and image of the other brand thoroughly. Identify what makes the two companies compatible and assess any potential risks. 

Understand what benefits this partnership brings to you and the other brand, and make sure that the campaign is aligned with your own strategic goals. 

With the right combination, strategic partnerships can transform your brand.

About Indico

Indico is a Brazilian Martech company with an experience that has reached more than 150 million customers in 9 countries, that develops solutions to combine Loyalty and Innovation creating unique connections and transforming relationships between brands and consumers.

Contact us and get to know the Indico way of revolutionizing the relationship with the customer.