The Secret to Success With Partners
Searching for the secret to a successful relationship with your channel partners? Of course, there are many factors that go into building a winning channel program. But often, success or failure ultimately comes down to one factor: alignment.
It’s Essential to Eliminate Expectation Gaps
Partners are a crucial route to market to help suppliers extend their scale, coverage, and reach. By providing unique services and complete solutions, they act as an extension of the supplier. Partnering works best when there are clear guideposts and expectations. This way, partners know what’s expected of them, as well as what they can expect from their suppliers.
But, partner and vendor relationships suffer when there are expectation gaps. We’ve seen three big gaps first hand.
The biggest case of misalignment we’ve seen is when a supplier is counting on an order that a partner doesn’t place in the expected timeframe. This could be due to a partner’s inadequate credit line, lack of sales or service capacity, or misaligned KPIs.
Another big gap we’ve seen is when vendors expect partners to be fully vested in generating demand but the partner doesn’t have the skills, budget, or same sense of urgency and/or importance around marketing.
The third issue arises when a partner is strictly interested in services and support revenue, yet the vendor is looking for their partners to also invest resources into also reselling their product.
All of these gaps can be closed with clear and consistent communication and regular checkpoints.
Expectation Gap #1: Deal Closing
Mike is a partner business manager for a large software firm. As last year was winding down, he was over quota and vying for the last open spot for his company’s President’s Club.
Mike was sure he was going to make Club. He had been working with his partner, AT Solutions on a $1M deal for a large customer. They did everything right to secure the deal, from software demonstrations to detailed implementation plans. The customer gave not only gave them a verbal commitment, but also sent their purchase order to the partner.
Mike’s sales manager hosted a pipeline review call every day for the last week of the quarter. And every day, although Mike continued to forecast this million-dollar order, AT Solutions still hadn’t placed the order. Mike called the partner daily and they assured him that they had the customer’s PO in hand.
When the year closed, AT Solutions never placed the order. Mike was beyond confused and more than frustrated. He called their president in anger, “You know I missed going to Club because you never placed the order. What happened?”
AT Solutions’ president answered with three reasons. “First of all we didn’t have enough credit to place the order. Second, we didn’t have enough bench strength. Our installation and service team is completely tied up with another customer. They free up next week so that’s when we’ll place the order. Third, we already made our KPIs for the year, and we wanted to hold this order so we could start the new year with a strong start”
Mike was apoplectic and asked them why they never told him any of this. AT Solutions answered simply, “because you never asked.”
What should Mike do to prevent this from happening again?
Mike should establish a cadence meeting with AT Solutions. Regularly scheduled checkpoints create a sense of shared ownership and clear accountability. They help to eliminate the risk of surprises and provide a forum to rapidly respond to issues that arise. In this meeting, they can discuss each deal in the pipeline and create a detailed plan on how to close each deal or move it to the next phase:
Do they need a pre-sales engineer to meet with a customer’s technical team?
Would it be helpful for one of their executives to meet with their customers’ executive teams?
Will they need additional credit? Does the customer need financing?
Will they need to redline contracts, and if so, are the legal teams pre-briefed on the potential timing?
The frequency of these meeting may change throughout the year, but the key is to establish a disciplined review process so Mike and AT Solutions can be fully aligned.
Expectation Gap #2: Demand Generation
Laura is a partner business manager who is responsible for a multimillion dollar partner we’ll call CS Software. CS Software sells enough software to generate a meaningful amount of MDF funds to do major marketing campaigns.
Laura sat down with the President at CS Software to discuss their MDF budget. Laura knew there would be several decisions to make since marketing budgets are never big enough to do everything. She wanted to encourage him to begin shifting from “traditional” marketing (events, direct mail, etc) to social and digital marketing. She also wanted to get his commitment to focus on generating demand.
At the meeting, he told her he didn’t believe in marketing campaigns. “I can spend $10,000 doing a digital campaign, or I can spend that same amount of money to pay for a suite at a football game where I’ll invite your direct reps to come and mingle with my sales team. Once they get to know us they’ll be comfortable sharing their pipeline with us and recommending that their customer put their deals through on our paper.”
They continued, “This is way less work and way more effective than a marketing campaign, plus I can put all of the services and support revenue to our bottom line.”
Laura explained that MDF should be used for generating demand to bring in net new customers, not to redirect business that her company’s direct team had already won. But CS Software’s president was having none of that. “It’s our MDF and this is how we’re spending it.”
What can Laura do at her next meeting with the president of CS Software?
Again, it goes back to alignment. In this case, there are several potential alignment gaps that Laura needs to get to the bottom of by asking some questions.
Is it important for them to be considered a top partner of Laura’s company? If so, they’ll want to be seen as marketing leaders, not laggards. They’ll want to demonstrate that they are generating demand, not just waiting for deals to be handed to them.
Related to this is making the decision if they are willing to add funds or match funds to stretch their MDF budget. Vendors appreciate when partners invest some of their own money. It shows accountability since they have skin in the game, and it usually leads to better outcomes. Partners who go this extra mile are also often rewarded by their suppliers with more resources such as business development funds, exclusivity if even for a short time, or pilot programs.
Does CS Software really want to sell or do they want to focus on service and support? If they are not interested in actively selling software, they can move off of the sales contract and onto to the service and support contract.
Do they see any benefit of increasing their customer base? Whether actively building more enterprise customers or entering into the mid-market space, more customers typically means a higher valuation.
Do they want to be more future-ready with social and digital expertise, or are they content not evolving into 21st century techniques? If they’re willing, Laura could set them up with a pilot a digital campaign that included LinkedIn social selling, a case study, electronic direct mail, and a microsite all geared around healthcare, which was their deep expertise.
Do they want to take their partnership to the next level? If so, Laura was willing to sit down with them to plan out an annual marketing calendar. Starting with the revenue goals, they can collectively work backward to determine the types of campaigns and the metrics for each that are needed to hit their targets. Each quarter, this review would be the framework to discuss campaign performance and results, and to make adjustments for the next quarter.
Of course if the answers to these questions are all “no”, then Laura knows exactly where she stands with this partner, and can re-prioritize the time allocation for her partners accordingly.
Expectation Gap #3: Resell and Support vs. Support only
Steven was seeing a flat performance at his software partner, UV Partners. After an early growth spurt, their revenue was leveling off. He sat down with their owner to review the deals in the past quarter.
The president confirmed what Steven already had suspected. She wasn’t really pushing the software, but was more interested in getting support contracts since that is where her company made their margins. She was ambivalent about which party would book the software, either the vendor or her organization, as long as she didn’t have to put in any effort or cost of sales in reselling the software, and as long as she got the support contract. This meant she expected the supplier to provide all of the sales resources their pre-sales team, their demos, their implementation plans, etc.
What conversation can Steven have with her?
Steven can empathize that service and support business drives attractive margins. At the same time, he can reiterate that his company looks who is actively reselling when selecting the partners to get any service and support opportunities tied to direct sales. His company, like most vendors, is most interested in partners who’ll take the responsibility to uncover reselling opportunities and then add services to them. This motion results in a partner truly being an extension of a vendor’s organization.
He can put the software sales conversation in a broader context of an overall partner economic discussion. For example, every $1 of software typically generates an additional $5 of services and support margin. This way, UV Partners can understand the broader impact of the software sale.
Steven could also work with the team at UV Partners to build out repeatable solutions that can’t be disaggregated in a few target vertical industries. By reselling the software as an embedded component of a holistic solution, the customer can’t pull each component apart and shop each around for a better price. This also allowed them to manage their costs (by customizing once, and using many), and positioned them as a leader in those industries. All of their actions convinced the customer that they were in good hands, that they would get a solution that worked for them that was backed not only by the partner, but also by the software vendor.
Putting it All Together
The best partners want to work with their vendors, understand their goals and KPIs, and exceed their expectations. The top vendors want to help their partners exceed their goals whether valuation, growth, margin, expansion, or anything else. A healthy relationship occurs when both parties push each other and challenge each other to be their best. When goals and expectations are aligned, the partnership is poised to take off.
The only way to achieve this level of partnership is to communicate transparently and regularly. Regular discussions provide the framework to examine the partnership from every angle and hold people accountable. They give an objective way to review if both the partner and vendor did what they said they would. They create a structure to review results. They provide an opportunity to reset goals and expectations.
They force alignment between the partner and their vendor, and can lead to a shared commitment, a true partnership, and a stronger relationship. The biggest benefit may be a subtle one: Through regularly scheduled discussions, you change the relationship dynamic from an “us vs. them” to one that reflects joint ownership, investment, and commitment.