The Challenge with Most Partner Programs

Many partnerships are opportunistic and do not drive the anticipated revenue growth.

Even worse are partnerships that never get launched beyond the contract or when you determine that you chose the wrong partner to represent your company or solutions.

Finally, there are partnerships that get launched and you agree to a substantial revenue share in exchange for the partner conducting the sales cycle, but you end up doing all the work anyway.

These are just three of the persistent partner program challenges that most companies face. There is a need and urgency for a completely superior approach.

Introducing The Proactive Partner Program

What most executives want is the ability to select the right partners and receive significant revenue growth from these partnerships without the fixed cost associated with building a direct sales team.

When I was the CEO at Intacct, a leader for cloud financial applications, I created over 300 partnerships that drove 50% of the revenue contribution. In fact, our success with the channel became a significant differentiator and valuation lever for any acquirer.

In this blog I will share with you how to create and scale your partner program so that you achieve the same results I did at Intacct. Here are the areas I will cover:

1. Determine your Partner Program Objectives
2. Present the #1 Partner Model that will drive the most Revenue
3. Create and Apply a Partner Scorecard to focus on the Best Partners
4. Map Your Potential Partner Ecosystem and Recruit the Best Partners
5. Apply Secrets to Optimize your Partner Business Model

1. Determine Your Partner Program Objectives

When you create or revisit your partner program, you determine what goals you want to achieve. Here are several options and you will choose one of more as part of this initiative.

1. Expanded Coverage – partners will help you reach buyers that you cannot reach on your own today. This is especially true when you want to distribute globally but do not have the local presence in each territory or region.
2. Market Penetration – partners that are market leaders or vertically focused can help you penetrate markets where industry expertise and relationships are required. By identifying market leaders or market makers, you can leverage a strong presence that has taken decades to build.
3. Cost Avoidance – many organizations look to shift the cost of sales from themselves to partners. Growing your sales organization organically can be expensive and time consuming.

2. Choose the Right Partner Model

Most organizations choose a referral model that is easy to set up and is opportunistic. When the partner refers a prospective buyer to your company, you pay a referral fee typically 5-10% of the transaction value once the business is closed. While this partner model is easy to establish the downside is that it does not drive consistent revenue contribution.

The #1 partner model that will drive the most revenue for your company is the embedded or private label model. Your partner integrates your solution or service into their footprint and offers it as their branded service or solution.

The advantages to this model are many. Your solution or service is positioned and sold in every partner sale. There is no need for your partner to represent you and your relationship with them to each buyer; this simplifies the selling process. You gain visibility into a predictable revenue growth model because as your partner sales grow, your sales grow. Unlike referral or reseller partner models, you also cannot be extracted or excluded from the final transaction.

The main disadvantage to this model is that it is difficult to execute. All of the marketing, sales and support functions are handled by your partner, so you need to select the right partners that have the competence to market, sell and deliver your service or solution.

3. Create and Apply a Partner Scorecard to focus on the Best Partners

How do you identify the right partners that will drive revenue growth for your company? If you have an existing channel partner program, how do you decide where to invest your time based on expected return? If you are building your channel partner program, how do you select the right partners that will drive sales and revenue growth for your company? These are important questions as you build and scale your channel partner program to drive revenue growth for your company. Getting the results that you want starts with selecting, recruiting and engaging and enabling the right channel partners.

Unfortunately for most companies 20% of their channel partners create over 80% of their indirect sales revenue. Many channel partnerships are either opportunistic or never get launched beyond the written agreement.

Every partnership that does not provide ROI for your company takes up your time and money. You also have opportunity cost when you invest in the wrong partners because it takes time and resources away from investing in the right partners. What you need is a better way to select the right channel partners at the beginning that have the best potential to help you drive revenue growth.

With this challenge in mind, I developed the partner scorecard so that every company can proactively identify the best partners to work with in any given market. The partner scorecard rates every potential partner against a set of criteria that best predict success for the partnership. It becomes your predictive indicator for mutual success.

If your company has the capacity to work with 10 partners a year, you want to proactively choose the top 10 partners based on the development of your partner scorecard. If you choose partners opportunistically, such as a potential partner approaches your company and wants to resell your solutions in EMEA. At first glance, this may seem like an idea opportunity because you do not have direct sales coverage in EMEA. However, if you signed the agreement and one year later little or no revenue has been derived from the partnership, you are already invested in a relationship that does not produce an ROI.

You can use the partner scorecard to proactively develop your partner program and select the best partners for your company. Once you develop the partner scorecard, you can map the entire ecosystem of potential partners, score them and engage the top partners that meet your criteria.

If you have an existing partner program in place, you can use the partner scorecard to score all of your existing and potential partners to determine where you want to invest your time. Now you can weed out existing partners that will not deliver revenue and growth for your company.

Now at this time, you may be thinking, this sounds great but how do I develop and apply for a partner scorecard? How do I understand how to apply it so that I select the right partners that will drive revenue growth for our company?

Let’s review a practical example. Recently I worked with a client that provides financial applications and is looking to extend their sales distribution to include partners. We worked to identify the top 10 partner characteristics that will predict success for their partnerships. Here is the partner scorecard we created, and your scorecard would be created based on the significant criteria that fits your company and target partner model.

4. Map Your Potential Partner Ecosystem and Recruit the Best Partners

Once you have developed your Partner Scorecard, we can identify all of the potential partners and map your ecosystem. With each partner, you can now score them using your scorecard.

For existing partners this is especially useful to determine who you should continue to work with; based on their score, should you accelerate the partnership, enable the partnership, or de-couple for the relationship because it is not a good fit. For new potential partners the scorecard is your ability to filter for great partners; this is where you want to spend your time.

5. Apply Secrets to Optimize Your Partner Business Model

When I created, scaled and optimized hundreds of partnerships, I have learned many secrets or best practices that will make your partner model work well. Let’s explore several of these

1. Architect a Proactive Program
   Success for your partner program starts with the relationship that you architect or create with your partner. Most companies start with a loose or referral program that does not deliver predictable or consistent results.
   A better approach is to build a reseller or embedded sales program with your partner. This helps eliminate friction with their sales team and with their prospective customers.
2. Sell Through or Embedded
   At Intacct, all of our CPA partners private labeled our accounting solution as their own.
   At Intacct all of our market makers in each industry such as healthcare finance, property management, construction, and technology included our set of financial applications as their own to broaden their “whole solution”.
3. Gain Executive Sponsorship
   Every key initiative or partnership needs executive sponsorship and oversite from you and your partner if you expect the program to succeed. If you are working with a small company, that relationship may lie with the CEO. If you are working with a larger company, that relationship may lie with the VP of Business Development or Sales. What you don’t want is to be another channel partner that is lost in the array of other partnerships.
   Executive sponsors should meet quarterly to determine what is working and what is not working in the partnership, such as the execution model and the results delivered. This gives both parties the opportunity to make changes that will positively impact performance.
4. Prime the Pump
   If you want your partnership to succeed, you need to prime the pump with quality leads. There is not substitute for quality opportunities where the model can be practiced and turned into sales success and revenue results. This energizes the partner sales team and feeds growth and expansion.
   The first place to start is the partner’s customer list. Who are the current customers that can benefit from your additional solution or service? This is the easier area to sell into and gives you the ability to build valuable references you will need to support other sales cycles.
   The send place to start is to create a joint demand generation program to create an abundance of leads for the partner sales team. Some companies are great at creating demand, but most are not. You don’t want the partnership to die on the vine because there are no opportunities for their sales team to work on.
5. Ensure DNA Transfer
   Your direct sales team knows how to execute your sales process. When you sign up and train a partner, they do not have the same experience. I believe that you should embed your sales and delivery team in the first five transactions from your partner. This helps ensure that your valuable DNA about how to sell and deliver your service is transferred to their sales and customer success organizations.
   It is also important to initiate a deal registration process for every partner led opportunity. This helps you eliminate potential conflict between your sales team and your partner’s sales team. It also signals accounts and opportunities where you can offer assistance.
6. Start Right and Scale Up
   If a partner wants to resell your service or solution, start them off as a reseller and have them earn the next step as a reseller. If a partner wants to offer your service or solution as an embedded offering start them off as a reseller and have them earn the next step as an OEM or embedded partner. As partners take on more responsibility and execute the sales cycle without your direct support they should earn a larger revenue split. This approach ensures that you do not “give away the store” when you negotiate the partner agreement until your partner can prove that they can take off more of the executed sales and delivery responsibilities.

This transformational Proactive Partner Program awakens and ignites the full potential for you and your partner ecosystem. Imagine how much more fulfilling it will be when you know that half of your revenue is delivered through partner channel like I did at the CEO at Intacct. Make an appointment with me now so we can discuss your questions and how I can help you migrate to a Proactive Partner Program.