Tough Talk on Selling in a Down Economy - Part IV

By Mike Agron

This is the fourth and final article in my series about six critical success factors for developing successful, workable partnerships. In the first article, I discussed the importance of recognizing that not all partnerships are created equal. It's critical to invest time and resources only into those partnerships that are of high value to your mutual customers and each partner. In the second article, I focused on the first three critical success factors: partner capabilities, market and competitive segmentation, and defined use cases. The third article examined the importance of the fourth critical success factor: value propositions. In this final article, I'll discuss the last two critical success factors: relationship objectives, and shared revenue objectives. I will also address some ideas for using the six critical success factors for developing go-to-market partnering plans that will help you meet your revenue, market and partnership goals.
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The Final Two Key Success Factors
Experience has taught me that the human factors of trust, understanding and a sense of getting a fair deal are often as important as, if not more important than, the technology side of the partnership. Furthermore, when both sides are making money, the relationship is usually working.

Therefore, it's fitting that the last two critical success factors are: 1) having shared revenue objectives; and 2) having shared relationship objectives. If you and your partner champion have done your homework on the four other success factors, these last two will provide a framework for creating a partnership that will ultimately reside in the upper right-hand quadrant in the above diagram, the "High Value-High Impact" partnership.

To be consistent with the series theme of tough talk for selling in a down economy, let's start with the importance of establishing revenue objectives first. Without revenue, there won't be a chance to develop the relationship beyond a "press release" partnership.

Revenue Objectives - Where the Rubber Hits the Road
Revenue objectives need to be based on a clear understanding of all the factors mentioned in this entire series. You and your partner need to agree on and develop a revenue plan identifying the sales objective targets for each partner by industry vertical, geography and offering/product. Each partner needs to determine where and how sales and marketing resources will be targeted. Will they include the installed base, or new customer acquisition? What offerings will be sold into these segments? Understanding how each partner's field teams will be compensated must be factored into this analysis, as well.

Another important step is to create a matrix for each of the above scenarios that identifies how and what the expected revenue splits will be for each partner. Make sure each side feels good about this. For example, the service component, rather than technology, might be very attractive to one partner, while the other is looking at revenue from technology rather than the service component. It might be a combination of each; regardless, all these scenarios have to be negotiated up front.

You also need to ensure that you and your partner have compatible license, SLA (Service Level Agreement) and contracting models. I was once in a situation where the company I worked for had a very strict revenue model based on recurring revenue, while our partner sold on a more traditional perpetual model. Had that issue not been resolved, there would not have been a way to monetize the offerings.

No doubt about it, this is a very time-consuming process, and it requires quite a bit of "care and feeding" of your partnership plan. But if done right, it will work well, assuming your value propositions justify forming a partnership.

Relationship Objectives - Ensuring High Value and Impact
The pricing and licensing have to be unified and seamlessly transparent to the customer. Another important detail not to be overlooked is whose "paper" the deal will go down on (that is, who the customer actually signs the agreement with). Will one partner make the contract with the customer while the other partner operates as a subcontractor? Or will both partners sign a separate contract with the customer? This agreement has to be very easy for each field sales organization to use in pricing and negotiating a deal. Salespeople who work under quarterly sales goals, especially the good ones, don't have time to waste on activities that will not help them achieve their goals. They will gravitate toward selling something that will help them make their numbers first.

Each partner needs to put in place a strong partnership manager. He or she will be the point of contact for the relationship manager in the partner organization and the point of contact for executives in both his own organization and the partner's organization. Having executive support from the C level, plus sales vice presidents and their field organizations ensures that the relationship manager on each side will have the tools and support for a partnership to thrive. During a tough negotiation, these executive champions will be the glue that holds things together.

High Impact partnerships need to ensure that each side is trained not only on the value propositions and pricing, but also on the "rules of field sales engagement" to avoid any misunderstandings. The mechanics for such details as deal registration and commission splits need to be clearly identified up front. You also need a clear escalation path for dealing with and managing the inevitable "channel conflict" issues. This is a reason why the sales vice presidents of both partnerships should each become your "best friend." They will help mediate and resolve channel conflict issues, especially if a partnership deal is helping them make or exceed their numbers.

Finally, while the sales will speak for themselves, be vigilant about communicating wins, and all good news, to all of the partnership stakeholders across all departments. A powerful strategy to help keep the partnership interest above the "noise and clutter" is to work with your partner to "publish" a monthly report card. Show plans and progress to those plans, including highlights of joint activities (joint webinars, events and speaking engagements, to name a few). Most importantly, list all wins and what's in the pipeline. This will show that the partnership has some legs. It is always useful to include a mini case study, which should describe how the partnership enabled you to differentiate yourself from the competition and win a deal.

Communicating the partnership value proposition to the key stakeholders of each partner is absolutely necessary for getting traction. I used to use webinars that were jointly produced to roll out important partnerships and I would include a key executive from each partner. I made sure we focused on how the value proposition would make money for everyone.

Before I summarize and discuss some ideas for putting these success factors into a plan, remember that anytime you can "break bread" with your partners and their counterparts, do it. Something positive always comes from having a meal or a drink with your partner. I always found a new insight on an opportunity that wouldn't have come up if we didn't sit down and get to know one another.

As the old saying goes, plan your work and work your plan. You and your partner need a written plan that acts as a framework to track and summarize all six critical success factors - from understanding the partners capabilities, market and competitive segmentation issues, use cases, value propositions and finally the revenue and relationship objectives. If you have the time, and are so inclined, drill down further and make your plan even more granular. Finally, make sure that the plan is SMART, or Specific, Measurable, Achievable, Realistic and Time-bound for a realistic, deliverable schedule.

As mentioned in the first article of this series, partnering is a sure-fire way to help you rise above the noise and clutter by bringing more value to your current customers, while allowing you and your partner to go after new customers and markets. I'm proud to have been associated with some very successful partnerships with Oracle, MapInfo, MicroStrategy and Unisys, as well as with some excellent regional Systems Integrator VARs such as KOREM, Primus and Schlosser Geographics, where we drove new revenue streams and opened up new markets.

I've also had my fair share of working on some failed partnerships. Lopsided partnerships, where one side is winning and the other isn't, are doomed from the start. The common thread for both success and failure can all be tied back to the discipline behind each of the six critical success factors.

Finally, it's important to understand that partnerships, like all relationships, change over time. In the fast-paced technology world, nothing lasts forever, so it's not as much a question of "if" the partnership will change or end, it's "when." If it's no longer meeting its goals, it might be time to move on. But in the meantime, you and your partner should work side-by-side to make each other successful for as long as possible.

Best of luck in your partnership pursuits. I'd really enjoy hearing from you if you found the ideas in this series helpful, or if you have some other techniques to share with our readers. Finally, if you want more information on this topic, I'll be giving a workshop on these topics at the Location Intelligence Conference on Oct. 5 in Westminster, CO.
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Published Thursday, September 17th, 2009

Written by Mike Agron



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