| How Technology Companies
"Partner for Profit" In the current economic climate, many technology companies are examining what strategies and tactics might be used to remain competitive, enhance their revenues and, in some cases, survive. This is especially true for smaller software and technology services companies. One approach to enhancing a company’s success is enhancing sales through indirect channel relationships. The creation of partnerships or "strategic alliances" between companies is not a new concept. The reality is, however, that the overwhelming majority of the alliances never produce one dollar of revenue for either partner. In fact, these "relationships" can often be a detriment as they can create useless distractions, costly wastes of time and disputes over account control. So why have an indirect channel strategy at all? The problem is not with the concept; it is with the execution. The potential benefits of a successful indirect channel strategy are clear. Increased exposure to new customers and increased revenues without having to dramatically enhance the number of direct sales personnel. For the other partner, the opportunity to be more of a "full service provider" to its customers, minimizing threats from its competition. Unfortunately, the success of this approach is not as simple as signing an agreement, patting each other on the back and waiting for the money to come rolling in. It takes planning, "real" commitment and a detailed structure that will help ensure success. There are a number of relationships that can be formed. A relationship that focuses on lead generation is easiest to establish and maintain, but even this relationship needs a structure that ensure motivation by both parties to participate. Other types of indirect channel relationships include joint marketing where the two technology companies actually call on prospects together and joint development where both partners participate in the actual delivery of the products and services. Clearly, the more interaction there is between the "partners", the more critical the need for a clearly defined alignment between the companies. This alignment must be examined from the strategic as well as tactical perspective. For example, do the two technology companies have the same goals? It sounds ridiculous, but many partnerships between technology companies fail for this very reason. Just as importantly, the partners must establish clearly defined processes for the relationship. The middle of the sales cycle is not the time to try to figure out "who is going to do what". Another important issue that must be examined is the position of each of the potential partners is in terms of their business maturity and structure. The partner alignment plan between two large, mature product and services companies will look very different from the plan between a medium sized technology consulting firm and a small software company. The risk and return from a company’s indirect channels strategy must be examined a part of the company’s overall strategic plan. This strategy cannot be treated as a separate and distinct activity from the rest of the company’s business model. Depending on the nature of the relationship, it will take resources, time and dollars away from the company if the partnering plan is not an integral part of the company’s business strategy. The success of the indirect channels strategy is dependant on the processes and details of how the two technology companies will work together and succeed together. Questions such as "how will leads be generated and managed?" , "how are leads successfully qualified?" and "who qualifies the leads"? are critical to success. Failure to establish clear processes at this level can result in wasted time, wasted money and bad feelings between sales reps, ensuring the failure of your partnership. Another critical factor in the success or failure of the partnership in how sales representatives will be compensated. Many scenarios exist where sales representatives are not compensated at the same level for opportunities established through the indirect channel partner as through their direct efforts. . It is the sales representative on the street that will ultimately make this strategy succeed. Where this is the case with respect to lack of effective compensation planning, the partnership will fail. The indirect channels strategy and resulting partner alignment plan between two technology companies needs to be a "win-win" proposition for both parties. It takes "real" executive buy in, combined with a structured partner alignment plan focused on the details that will dictate success or failure.
Dr. Eric Threatt is president of Consultant Development Group, advisors and trainers to technology companies. He can be contacted at www.consultingquality.com. |