Types of Partnering Relationship to Serve Company Strategies
This post is part of a series to help B2B high technology organizations improve sales and marketing channel partnering. In part one, I discussed the key issue high-tech companies face when developing their partnering programs. In this part 2, I will talk about the different types of partnering relationship to serve company strategies. If you missed Part I, I suggest you read that first (go here).
Taking the lead from how human relationships take shape in differing circumstances and for contrasting reasons, you can define four main types of worthwhile company-to-company collaboration. I would argue that any alliance that does not fit these criteria is unlikely to succeed over the short or long-term. Here is the list of possible combinations:
- Casual relationships focused on sharing information or collaborating in sporadic marketing activities
- Opportunistic relationships focused on winning business on a deal-by-deal basis
- Committed relationships focused on achieving market share in diverse target markets
- Close relationships focused on achieving dominance in specific target markets
In this hierarchy, the first basic option (number 1) may have no more 'accountability' than the periodic exchange of information and ideas, possibly (but not necessarily) leading to a 'more advanced' relationship, as indicated by 2, 3, and 4. I see no reason why companies cannot develop a simple and clear protocol of activities for each of these relationship 'modes,' which explains the three variations outlined in the beginning of Part I (read here).
In fact, when determining the need for a partner to help accelerate market adoption and/or delivery of solutions, it is important to distinguish clearly between partner-level contributions and the simpler value-add of a 'component supplier', (i.e, the supplier of a commodity product or service that can be acquired simply by making a purchase order, rather than expecting any special contribution such as joint-selling, customization, or consulting). The checklist below lays out the kind of potential contribution expected of a bonafide partner (it is not necessary to qualify on all points, as long as each partner brings at least one critical contribution to the table):
- Thought leadership to identify the target market opportunity and design the solution
- Action leadership to (co-)manage the coalition and (co-)drive the initiative
- Access to target customers, such as executives or managers in the target market
- Multiple contributions of products/services to the overall solution
- Funding or resources for solution development, marketing, sales and/or implementation
With specific respect to go-to-market strategy, if one assumes that most enterprise software companies' main product categories today are somewhere close to, or actually in between early market and mainstream market penetration, then partnering strategy should prioritize third parties that can aid rapid market penetration into target market segments (rather than coverage across geographies, for example). During this stage, each partner should somehow add value in a consultative way - i.e., their value-add should always include a focus on providing effective solutions to critical problems. This is in contrast to collaborating to produce standard product/service 'solutions' or bundles for many different markets, a potentially viable strategy in the rapid adoption and slowing adoption. If companies ignore these dynamics, they are almost certain to experience disappointment in the results of their partnering and channel efforts, because each side will be working toward different goals and metrics, with differing expectations.
Order of Priority of Key Engagement Activities with Each Partner
One of the common features of partnering today, and one of the main inhibitors to success, is the order in which certain activities take center stage and the omission of others that should be considered critical to the success of any joint go-to-market efforts. To clarify what I mean, below is a list of what not to do, followed by a list of what to do, in order to give each alliance a chance to succeed (for both groups, let's assume that both sides have reached the point that they want to partner, and are attempting to do what's necessary to get the show on the road):
How to Screw Up a Promising Partnering Relationship:
- Treat the new relationship as a 'strategic alliance' right out of the gate
- Negotiate a detailed contract
- Produce a jubilant press release about the compelling synergy between the two-three partners
- Agree on the product/service bundle that is going to be marketed
- Make general commitments about resources that will be committed
- Enlist the sales force in each company to start selling the new bundle
- Get disappointed when not much happens as a result of so much noise
- Complain to the partner about their lack of commitment (or slink into the shadows because you haven't followed through with your own promises)
How to Give the New Relationship a Chance to Succeed
- Treat the new relationship as a 'serious experiment' limited to a few people on each side
- Agree on one target customer deal to close jointly
- Assess the results of the 'alpha' deal as it closes and gets implemented
- Agree to partner more programmatically, and develop a joint marketing program or target market initiative (depending just how promising the collaboration has shown itself in the first deal)
- Establish a brief one-page letter of understanding (accompanied by respective NDAs, of course)
- Develop an action plan or, better, a target market strategy
- Define specific action items, resource commitments, and target milestones
- Announce the formalization of the program or initiative in a press release for limited circulation
- Select a few people on each side to work together on the early activities and deals
- Allow a field of attraction to develop, whereby more field sales/support teams join in as the program proves its success
- Review progress as you go, and make course-corrections regarding the joint strategy, as well as milestones and resources
As you can see from the number of action items in the second group, productive partnering is harder work than 'press-release partnering'; but it also saves a tremendous amount of wasted resource (which few companies can afford these days), and it preserves the power and potential value of partnering successfully.
Taxonomy of Potential Go-to-Market Partners
To have a decent chance of executing well on resource allocation to partners and also avoiding significant waste of resources and energy on frustrated partnerships, it is vital to establish clear distinctions and rules of engagement for different 'partners' such as these:
Opportunistic collaborations aimed at winning specific deals, usually operated at the regional level, or in the field, without any need to be blessed at the corporate level.
Tactical go-to-market programs aimed at increasing revenues or market share (these are relatively arms-length relationships with potentially more than one of the same type of partner for each program):
- Product partners (independent software vendors, systems vendors): Provide complementary products to complete a solution or bundle
- Service partners (system integrators, value-added resellers): Provide complementary services to complete a solution or bundle
- Co-selling partners (any of the above): Augment field sales teams, helping the lead partner to close deals
- Channel partners (any of the above): Sell solutions to customer sets that the lead partner does not or cannot focus on (SME vs. Global 2000, different geographies, etc.)
- OEM partners (any of the above): Integrate products/services as a component in solutions or bundles that they take to market
Strategic target market initiative(s) aimed at achieving market dominance (these require intimate relationships with few selected partners, only one of each type per initiative/target market):
- Product partners (ISVs, systems vendors): Provide complementary products to complete a very specific Whole Product solution
- Service partners (SIs, VARs): Provide complementary services to complete a very specific Whole Product solution
- Co-selling partners (any of the above): Provide critical domain or technical expertise, or access to target market, to complete the field sales team and thus help the initiative-driving company to close deals
- Channel partners (any of the above): Sell solutions to customer sets that the lead product partner does not or cannot focus on (SME vs. Global 2000, different geographies, etc.)
- OEM partners (any of the above): Integrate products/services as a component in strategic initiatives that they drive into specific target markets
Each of these go-to-market modes and partner types naturally implies different rules of engagement, which we should discuss at the earliest opportunity as a means of establishing feasible guidelines for resource allocation. In turn, the great reward for thinking this through will be that disappointments will be minimal, while successes are maximized.
This wraps-up this two-part series. If you missed the Part I, I recommend you read that as well (Go To Part I here).
I would love to hear your thoughts, so comment below and share this post!