I was discussing partner programs with colleagues the other day. Partner programs tend to need careful thought — much more than many young companies realize. The simplest summary I can offer is that partner programs aren't about marketing — they're about sales, which means they're about compensation plans and metrics aligned with those plans.
Four years ago when Optaros announced what it was doing (consulting services based on open source building blocks) many companies approached us to "be partners". This meant everything from at its most innocent "let's share leads and swap logos" all the way to "Optaros would be a great sales channel for our product." All this requires (a.) a lot of time, and (b.) needs to be tracked against revenue. As a channel, it needs management just like a company's sales team does, so you can figure out who is really performing and so as to get rid of the non-performers. We did sign several light weight partnerships (i.e. logo swap and a joint press release) in the first year because it gave us a press release with a high profile (i.e. newsworthy) partner. We expected nothing else from the partnership — no leads, no co-marketing, no co-sales. Some partners never called with leads despite promises and follow-up from us. They did, however, call to give us a hard time if they heard us using a competitor's project/product to solve a problem for our customers. Obviously our customers were more important to us and our revenue than the partners lack of leads/revenue. [To be clear, Optaros has strong partner management in place and developed a number of excellent partners over time with strong complementing business relationships.]
Aside from the day-to-day management, you also need to ensure there's no channel conflict. You will encounter problems with partners where their business development people may love you, but their sales force may never think of you because:
- You're not helping them meet their quota
- Worse, your product/service competes with the higher margin items they sell to make their quota
- They'll take a lead from you, but have no need to return the favour on their way to closing their quota. (Contrary to popular belief, they will not call you because they like you — they are sales people and there needs to be some bottom line benefit to calling you because otherwise you're taking away valuable time from them making their quota and "salesperson of the month/quarter/year" and the perks attendant on that title. These are highly competitive revenue-focused individuals. Good sales people in a channel conflict won't call because it wastes their time.)
Business development managers that don't sell for a living don't necessarily understand the channel conflict problem. They also might be compensated on something like "partner satisfaction" or "# partners signed", etc., rather than on revenue numbers. Not only that, if the partnership is one sided (they get sales, you don't) they still may not care. Partner programs aren't worth anything if the channel and compensation programs aren't well-aligned to mutual benefit.
Gaining visibility through partners is an interesting idea and a Big Name Partnership MAY help as a marquee sort of "partner" regardless of sales, but THEN you need to ensure you have a solid business development person on their side that will speak GLOWINGLY on your behalf to potential investors or act as a direct customer reference to close a deal. That's when they count. Otherwise, you're lost in a sea of all their partners. [Softway was a Microsoft partner back through the late 1990s before the acquisition. It was a fascinating relationship when it came to getting them to admit that they wanted to see UNIX/Linux applications running natively on Windows NT.]
I'm not saying don't set up a partner program — I'm saying set one up with your eyes wide open and with a realistic eye on the revenue that could otherwise be gained by (for example) hiring another sales person rather than a partner manager. Once you understand exactly how you want to make revenue directly for yourself, you can better determine how to organize a partner program (by region, by vertical, by function) such that your needs and your partners's needs and compensation are properly aligned and your partners trust you to not conflict.
Photo by Robert Scales
Comments