Direct Sales vs. Partner Sales: A Partner Primer
We work with many companies who are successfully growing. They’re gaining customers, increasing revenues, and hitting their targets. Yet at some point they also realize they are hitting a wall unless they make some changes. They know they need to hire more staff, but adding to their direct sales team may not be the best investment.
This is the time to consider bringing on partners as you evolve your Go To Market (GTM) strategy to help your company grow, scale, and reach more customers.
The Benefits of Bringing on Partners vs. Sticking with Direct Only
In general, a partner helps a vendor, supplier, or manufacturer (hereafter lumped together as vendor) extend their presence.
A vendor could hire another direct rep (or many), or could hire a partner rep and begin to build a partner team. In the latter case, the vendor is in effect outsourcing sales to others. Where one direct rep can cover a given territory, a partner rep can cover a set of partners, each with multiple sales people and cover a much larger area.
Partners provide many benefits to vendors, from broad geographic coverage to deep industry knowledge, from integration capabilities to custom service and support, and from local intimacy to trusted advisor.
Benefit #1: Partners Have Greater Geographic Coverage and Industry Expertise
Vendors and manufacturers are always looking for the best partners to help them expand their market coverage, both in terms of geography and industries covered. If you want to do this with your direct team only, it would require an infinite number of hires.
When you choose to bring on partners, on the other hand, you’re exponentially growing your sales team’s coverage. How? Each partner business manager has a team of partners they support, and each partner has its own team of sellers.
So, bringing on a direct rep will add one person to your team, whereas adding a single partner rep could add hundreds or even thousands of sellers. Your direct hire may have one area or product of expertise, whereas partners will be able to cover many more.
Bringing on partners will help you cover a huge range of geographies, products, and industries, allowing your direct team to put all their focus on your biggest accounts with the greatest revenue potential.
Vendors often ask us which is best to recruit – Value Added Resellers (VARs) with vertical industry expertise or VARs with broad geographic reach. Both of these partner types can play important roles in your partner ecosystem, so this answer is completely dependent upon your needs and your resources. In many cases, the answer is probably “both.”
There are VARs peaked in every vertical industry you can name, and they often have held jobs in that industry. One that comes to mind is Illumiti, an SAP VAR that was just recognized with an award for their solutions that serve customers in construction (including building materials and mill products), metals and mining, and energy, among others.
Illumiti’s CEO, Nir Orbach, told Small Business Trends that this tight focus “gives us the ability to build our credentials and offer business expertise and domain knowledge so that when we talk to people in those industries we’ll be able to offer as much value as possible.”
Benefit #2: Partners Can Provide Full Integration, Service, and Support for customers
A direct rep will sell his or her company’s products and solutions only, while a partner (usually) represents multiple suppliers. So, a partner can often integrate a broader solution for customers. This is a win-win - your product or service gets sold, and your customer gets a customized, complete solution.
VARs will surround the vendor’s core product or service with other components that round out a solution for their customers. These services are what makes a solution work in each customer’s environment. Sometimes these services are off the shelf, and some situations require custom engagements.
This aspect of the solution cannot be overlooked. It can be a case where “cheap ends up being expensive.” For example, if a customer’s IT staff has to do their own integration, this group is not able to work on other daily support issues. This is not necessarily a bad thing, but there are costs to installation, integration, and support; so a customer needs to either bear those costs through their staff or using that of their partner’s.
One of the questions the customer can ask is: is this our core service? If not, they might want to consider having the VAR provide that service.
Benefit #3: Partners can More Easily Achieve Local Intimacy and Serve as Trusted Advisors
Customers want help now, even if that means at 11:00 PM on a Sunday night when something goes wrong, no matter how small their business is.
Vendors and manufacturers rarely have direct sales reps available for small businesses or the mid-market during these off hours since their focus is generally on enterprise customers. Partners, on the other hand, are there to support their customers 24/7, able to provide solutions immediately.
Many customers look to their partners for guidance and recommendations. The VAR will begin a relationship with their customers by getting to know them, asking:
What problems are they trying to solve?
What systems and processes are currently in place?
Is a cloud, on-premise, or hybrid solution best?
What is the budget?
What are implications of not making a change?
Based on these discussions, the VAR will recommend hardware, software, accessories, integration services, and a support contract. They are responsible for recommending the best solution for a customer, putting the solution together, and making sure the solution will deliver the promised results.
This all serves to mitigate risk for the customer as they are getting a unique solution from an industry expert that know them and their needs
After a sale, the VAR will still be present at an account, since their reputation and livelihood are dependent upon the customer’s satisfaction with the solution that was just delivered. They will make themselves available to the customer to solve issues and identify areas for improvement. The partner’s future success is wholly dependent on delighting their customers and exceeding their expectations.
Another level of risk mitigation is achieved since the customer can personally call the CEO of the partner or meet with them in the community or at business events. This intimacy is a major asset and value to both the customer and the vendor.
Building a Strong Partner Framework
When a vendor determines the time is right to expand into partner sales, they need to start by understanding the value add that they need their partners to deliver to their customers. They also need to identify where they have gaps or “white space” in their coverage. These gaps can be geographic, in certain vertical industries, in business models (e.g., cloud), or with certain solution components.
The next step is to identify the profile of the partners that can best close these gaps. There are a few major requirements the vendor has to develop before beginning the recruiting phase.
A partner contract and a partner program document will provide the potential partners with a framework that clarifies what the “gives and gets” are. Revenue targets, support requirements, program benefits, and other essential contractual and programmatic details are spelled out in these documents, leaving no room for guessing.
An onboarding process and enablement program should outline the steps a partner needs to take to get to know the vendors programs, systems, tools, resources, and solutions. A well-executed onboarding plan saves all parties time and energy.
A joint business plan will outline investments and expectations from both parties. Building a well-defined plan with milestone activities and dates up front is essential to a long term healthy relationship.
Not addressing these basic elements (signing anyone, no on-boarding process, no training, unclear how the partner makes money, vague program elements, lack of resources, etc.) will only leave both parties are frustrated and disappointed.
Taking the time to thoughtfully address each of them will result in a solid partner framework. The vendor can now start recruiting in earnest to attract partners to their ecosystem, and to increase their market coverage, revenues, and relevance and value to their customers.
This article was originally published in March 2018 and has been updated.