Teaming up with others can bring a real boost to your bottom line, but only if you’re willing to do it right. Here’s what you need to know to have a successful partner program
The other day I had lunch with a friend who works in channel sales at a mid-sized software firm. While we sat and ate our sub sandwiches he told me about the trouble he was having getting support for his resellers from the company’s marketing department. It seems the VP of marketing wasn’t a big fan of the program and generally felt the costs were too high to be worth the effort.
She had a point, my friend admitted. Compared to the direct sales team, sales through partners had higher support costs and lower revenue margins. Nonetheless, he argued, the resellers were selling the company’s software into markets and geographies the direct team couldn’t and so was worth the extra effort.
Having been a marketing exec for a number of tech companies with partner programs of one flavor or another, I know where his VP was coming from. Partner program development is often a part of the marketing budget, but it’s really hard to judge how well that program is performing until well after the fact (if at all). If you’re going to be called to account for items in your budget, then you want them to be things you control, not outsiders with their own ideas and methods.
I also know that in all but the most extreme examples, a partner program is a net positive to the business. What causes them to go poorly is neglect and/or mismanagement.
Not all businesses need a partner program, of course. But when it comes to those that develop or manufacture technology, or deliver products or services that depend on technology, it’s been my experience the benefits far outweigh the costs. The specific nature of the partner program — reseller/distributor, referral, integrator, strategic, etc. — might change based on industry or business model, but the mutual benefits don’t. Regardless of the size of the enterprises involved, partners create more opportunities and more business for each other than they would on their own.
Over my career I’ve been involved in building over a dozen partner programs of various types. Some have done very well (like $1 billion well), and a few (a very few) have done poorly. Those that did well, followed five basic principles. If you’re thinking of a partner program, or you’re wondering if the partner program you already have is working, make sure you’re doing the following:
1) If you’re going to do it, go all in
I don’t mean “go all in at the exclusion of everything else,” but do make sure everyone — marketing, sales, customer service, management, everyone — is 100% behind the program. The kind of partners you want aren’t stupid. Half-hearted efforts will make them doubt your dedication to the business relationship and they will respond accordingly. At the same time, full effort, energy and enthusiasm to recruit, develop and nurture great partner relationships will be met with equal enthusiasm and effort.
2) Be choosy about your partners
This should be self-evident. You’re entering into a business relationship so you want to be picky about the other in that relationship. Sadly, it’s often not the case. I’ve lost count of the companies who tout partner programs with dozens–even hundreds–of members only to find the program is little more than a list of anyone willing to complete a form and provide a logo for the website.
Fact: 500 partners in name only (PINOs) will never outperform five active ones. Do your homework and partner only with those who are reputable, trustworthy and well-aligned with your business.
3) Treat your partners like real partners
Don’t just sit and wait for them to bring you opportunities, show that you’re in a mutually beneficial business relationship and you’re bringing them opportunities as well. Get to know their people and business. Offer ideas for co-marketing and joint-sales. Send them leads — even if you could handle them in-house. And if you run across an opportunity that’s not a good fit for you, but it might be for your partners, do the partner a solid and make the introductions. Partners that feel like real partners are going to bring you more business and bring it more often.
4) Trim dead weight and reward performers
For a good partner program to flourish, it needs good maintenance. You invest a lot of time, money and effort into making partnerships productive so it’s disappointing when you wind up with a partner that consistently under performs or just isn’t a good fit. Rather than letting them continue on in the program and hope they get better, trim them out.
Non-productive partners — especially those with territories or specific verticals — will cost you in lost opportunity. Eliminating them from the program will let you bring in another partner who won’t lose those opportunities. And if you’ve got partners who are performers, make sure to reward them. Whether it’s something modest like a plaque for the wall, or more significant like a bonus or higher sales margin, letting them know that you value them builds trust and boosts business.
5) Don’t be afraid to change the program
I rarely hear anything more jaw dropping than someone in a tech-based business saying they can’t change their partner program because (insert reason here). The fact is, tech changes so quickly that a business model that made sense for years may be completely upended in a period of months.
I know one software developer that had a good business for a decade with a nichey product that brought $8,000 per user, per year, sold entirely through its partner channel. In 2018 a new competitor released a $5/yr phone app and completely destroyed the developer’s comfortable business model. Fearing they’d anger their channel and lose partners by altering the program to adjust to the new market reality, they kept the program the same and tried to ride it out. By early 2019 partners were abandoning them in droves anyway because the old pricing model couldn’t compete with a $5 phone app. By mid-year the company itself was in dire straits.
Moral to the story: If the market changes, be ready to change your programs in response. The program either adapts or the program will die (and maybe your business along with it).
Yes, partner programs cost time and money, and no one wants to throw their budget away on things that don’t work. But a well-run partner program isn’t any more expensive than a whole bunch of other marketing activities, and the returns are potentially far greater. Strong partnerships open new markets, create new and innovative solutions, help smaller companies work with the strength of a big one, and of course, create mutually beneficial relationships in which everyone prospers. Try those five rules above and you’ll see for yourself.