... and it's not beer (although that sometime helps).
If, like me, you’ve been working with sales channels for a while, you’ll have seen your fair share of partner programmes. Some work and some don’t. Some succeed beyond all expectations; some are more trouble than they’re worth. But what’s the difference? What makes an effective partner programme? How do you create and operate a successful programme?
In this article, I discuss the key elements of partner programmes but, more importantly, the purpose and fundamental objective of partner programmes. With a clear understanding of the intent, it’s much easier to design and implement the elements to make the programme work.
Fundamentally, a partner programme exists to execute your business strategy, help meet your company goals and contribute to shareholder value. But in order for this to happen, you need buy-in from your channel partners and the end customers. Therefore, you need to devise a win-win-win strategy, and this comes in three stages:
1. Create a win-win-win.
The most essential element for successful channel partnering is creating a win-win-win scenario for the software vendor, the channel partner and the end customer. If one or more of the parties doesn’t win, they have no reason to participate.
Here’s an example methodology for creating the win-win-win from the software vendor’s perspective. My blog post “How do we win-win-win?” discusses this topic in greater detail.
2. Maintain a win-win-win.
Creating a successful environment is one thing but ensuring an ongoing relationship is a further step. The methodology above provides for continuous monitoring and improvement as situations, opportunities and relationships evolve. Here are some key factors to consider:
Communication. As business, markets and products evolve, each party must communicate to understand each other's position and how the elements work together for the win-win-win to work effectively.
Trust. Each party must trust that they will continue to benefit from the partnership. Even if there is a win-win-win today, if one party believes there is a risk to that, their commitment will be affected.
Proof. Gathering proof points as the relationship progresses is vital. Successes are quickly forgotten in the pursuit of future opportunities and revenue. Document and communicate proof that the win-win-win exists and delivers meaningful results.
Confidence. Trust provides the confidence to invest and grow the relationship to deliver win-win-win results into the future. Proven, demonstrated results justify and enhance the confidence to continue the partnership.
Review. Understanding, and continuing to understand, our channel partners, our customers and the value of each is vital to maintaining the win-win-win. What worked yesterday doesn’t necessarily work tomorrow. That’s why reviewing each step of the journey is vital.
3. Grow the win-win-win.
Businesses must grow and evolve to survive. It’s not sufficient for one of the parties in the relationship to grow alone. Developing the relationship by aligning interests more closely will enhance the win-win-win. Then balancing growth so that all parties are able to contribute and benefit from business growth.
Armed with a strong win-win-win proposition, you now have an enticing proposition to attract new channel partners and replicate your success. My blog post “How do we win-win-win bigger?” discusses this topic in greater detail.
But what about all the traditional elements of partner programmes?
The win-win-win is the key to a successful partner programme. Everything else is subsidiary to creating, maintaining and growing the win-win-win.
All other traditional elements of channel partner programmes (such as education, pricing, discounts, incentives, promotions, relationships, management, support, marketing, collateral, content, communications etc. etc.) are simply the means to an end. If they don’t contribute to creating, maintaining or growing the win-win-win, they’re not relevant or not working.
Let’s discuss that a little further (with some examples thrown in) so you can see what I mean:
Education. Many years ago, when I first moved into channel sales from a technical role, I thought that my main task was to educate the channel partners. After all, I already knew a lot about the products from my technical experience and the partners already knew how to sell. But it didn’t go at all well.
I may have helped my channel partners learn more about the product capabilities, but they knew nothing (because I had no idea myself) about the value these offerings could deliver both for their own companies and for their end customers.
My channel partners did not understand how end customers would win by adopting my offerings; so how could they communicate that effectively? My channel partners did not understand how they themselves would win from promoting my offerings, so why would they? As the vendor, I did not understand my channel partners' contribution, so how could I help them add their value?
I’m not saying that an understanding of product features and benefits is not necessary. It is, but not in isolation. Education of channel partners must include education on the win-win-win for each party and each party’s role in creating, maintaining and growing it.
Channel partner education therefore needs to address questions such as the following:
- How do we create a win-win-win together?
- What should each party contribute to ensure that all succeed?
- What is necessary to maintain the win-win-win?
- How can the parties work together to grow the win-win-win?
Pricing & Discounts. In my first channel sales role, I worked at a software distributor and discussion with channel partners revolved largely around discounts. That is, how much discount would I provide from “list price”. There was no discussion about retained margins or profitability.
It was all about dividing a fixed pot of money. The more discount I gave, the happier the channel partner and the more likely I was to win the sale. No thought was given to the implications for services or anything else that might help us both succeed (such as marketing or technical support).
Pretty soon, end customers became aware of the discounting and started pushing for more discount themselves. Consequently, my channel partners were no longer able to provide services either and end customers received a worse service. So, everyone ended up losing. It was my own fault, because I didn’t understand the need for a win-win-win.
Low price does not magically translate to high value. Nowadays, the focus is on delivering value. Pricing is just one of the factors that enables everyone to derive value:
- Vendors must make sufficient return that they are able to provide the services (technical, commercial, logistical) that will enable their channel partners to promote their offerings.
- Channel partners must make sufficient return on their value-added contribution otherwise they would not be able to provide the services that are necessary for customers to benefit from the offerings.
- End customers must make sufficient return from using the offerings to justify their deployment and operation.
In other words, pricing should be set so that everyone is able to win.
Incentives. I am thinking here of other payments and financial inducements by the software vendor to channel partners. These are often used by vendors to influence channel partners' behaviour that is not possible through discount schemes.
For example, to reward early opportunity registration. Here, the intention is to encourage channel partners to identify, develop and win new opportunities. And to compensate for the additional cost/risk of new business activities.
Obviously, such incentives contribute to the win-win-win if the reality matches the intention. However, in my experience, the incentive for early opportunity registration becomes precisely that: an encouragement to register opportunities. The behaviours that are actually of value (opportunity identification, development and sale) are not explicitly rewarded.
This often results in speculative registration of opportunities by channel partners that are not able or willing to do the work of qualifying, developing and closing the sale. And no reward for the partners who are maybe slightly slower with their deal registration admin but who are willing and able to do the work.
The answer, of course, is to find the win-win-win. To do this, incentives should be more closely related to the positive behaviours that you are looking to encourage. If you’re looking for opportunity identification, then be explicit about what constitutes an identified opportunity: what must it look like? What qualification must have been done? What sales stage must the opportunity be at? What value has been added? What value will be added? And so on.
In other words, to qualify for the incentive, show me the win-win-win.
Relationships. In my first channels role, I had great relationships with plenty of channel partners. But I didn’t sell very much. That was because I didn’t understand the connection between a great relationship and delivering value. It is human nature to cultivate relationships but it’s what you do with the relationship that counts. They’re essential to maximising business outcomes.
Great relationships facilitate better understanding, communication, invention, innovation, exploration, negotiation and so many other areas. In other words, great relationships help you create, maintain and grow the win-win-win. But these things don’t happen automatically from a great relationship.
Just like a football match doesn’t automatically happen when you have a football pitch. For real value, you have to assemble the players, decide the rules, agree strategy and tactics and actually play the game.
It’s the same in business; you need to engage the relevant people from each company, agree the rules of engagement, agree strategy and tactics and actually get to work.
Management. Every company has management and, in my experience, more often than not, they spend most of their time engaging with their own colleagues. Of course, this is important, and it helps your company win. But if you’re looking for a win-win-win with channel partners and end customers, you won’t find it within your own company.
Management at all levels should engage at least with their counterparts, and ideally more broadly, with the companies they’re working with. In the same way that a football player, no matter how good, cannot win a match without working with their team mates.
In business, I’ve found it useful to draw up a relationship map of the relevant personnel from each company. This is used to facilitate discussion about who should have a relationship with whom, what the current level of that relationship is and what the level of relationship should be. Using colour coding, it’s then easy to see where new relationships are needed and where development of existing relationships is necessary. It can also show when there is too much dependency on individuals or departments. A strong company to company relationship requires both quantity and quality individual relationships.
This applies not just to company management but to individuals and departments too, but it is management responsibility to oversee and structure the overall relationships. That enables real teamwork to create, maintain and grow the win-win-win.
The bottom line.
I could (and probably will at a later date) carry on with examples of traditional partner programme features, how they can easily get detached from the intended purpose and how they can be reconnected to the task in hand. Which, of course, is the win-win-win.
Ash Madden is Founder and Director of Madden Associates Limited, the Specialist Channel Sales & Partnering Consultancy