How To Grow Your Business Through Partnerships7:00 AM EST Tue. Jan. 17, 2012
When your partners are doing well, your IT solution provider business can flourish. The trick is figuring out how to select the best partners, and then helping them achieve success. Jeff Abbott, vice president, Global Alliances and Channels, at Infor, discusses his firm's partner strategy.-- Jennifer Bosavage, editor
In business today, everything is about growth—in sales, geographic reach and new products. But how do you achieve growth at a time when the economy remains anemic? One way many businesses are ensuring continued success is by focusing on partnerships.
No matter your company’s size, partnerships can play a key role in boosting revenue. Take, for example, computer monitor maker ViewSonic, of Walnut, Calif. Ninety percent of its revenue comes from its 5,000 channel partners. But how will a partner strategy impact your growth?
In times of slow economic growth, channel partnerships can be very beneficial from a cost and risk perspective. This is especially true if your business is planning to enter a new geographic market, which can prove to be an extremely expensive endeavor. Having partnerships can help on both the cost and risk fronts. Should the expansion not go as planned, your business stands to lose quite a bit of money and tarnish its reputation if proper safeguards aren’t in place.
Local partners often hold the keys to new countries. Through partnerships, you avoid up-front spending on new offices in unfamiliar regions, so the risk of failing is less. Let’s say you’re eager to expand in the Middle East. A partner with a presence there can help guide you through the process, offer easier access to customers and assist you in understanding how to sell your products in that unique market.
At Infor, we have put partnerships in place to help fuel our global expansion and growth initiatives. By creating the Infor Partner Network (www.inforpartnernetwork.com), we’ve established a global community of mutually-beneficial partnerships. This network expands our sales coverage in emerging markets such as China, India, Brazil, Middle East and Russia. In addition, we have robust partners in the traditional markets such as the U.S. and Western Europe. In total, Infor’s channel partners account for 25 percent of our license sales business.
How do you tap the right partner?
Many believe that attracting the right partners is the last great competitive advantage in the market. You must create a channel model that’s both financially attractive and supported operationally by the corporation. Simply opening the doors to accept partner applications won’t work. The best channel partners are savvy and they are being courted by many vendors. Adopt a focused approach:
• Begin with a “heat map”. Compare your historic sales against the known market size (e.g. perhaps you’ve sold $1M in the U.S., but the market size is $3B). Stratify your comparisons down to the country and industry level. Wherever your historic sales are farthest below the known market size by industry—code them as red zones (e.g. most attractive areas for channel partners).
• Create a program. Potential partners want to see three things: What would I be selling? How do I make money? What are you willing to do to help me? Good channel programs include more than just good financial terms. Partners are looking for on-boarding, product training, sales enablement, and so on.
• Support the partner strategy. Partners can’t be an after-thought of the mother ship. The corporation must be behind the partner strategy. Good examples are: Creating channel partner sales zones—those areas in the market where the direct sales force will steer clear and leave to the partners; and establishing partners as part of the product strategy—inviting partners to review product roadmaps, M&A strategy, and overall marketing strategy. Partners often have a useful objective view.
Once your foundation is built, it’s time to start recruiting. Before beginning your search, understand that the process of finding a new business partner may take time, but it is important to ensure you’re making a smart investment. You should plan for the process—from identifying potential partners to finalizing the deal with one—to take about three to four months. During that period, it is likely that it may take as many as eight to nine meetings with the prospective partner to align business goals and approaches, and fine tune details of the new partnership agreement.
Like any project, assembling the best team will help streamline the process and ensure that you end up with a valuable and beneficial partnership when the ink dries. Channel and account managers are critical in gauging the potential of each prospective partnership. Designate your team early and establish a plan to keep all parties apprised throughout the process. A good manager should explore, examine, and probe to provide valuable insights and recommendations about a prospective partner. As such, it is important that those managing the process for your business know what to look for in terms of a partner’s ability to drive revenue and meet your designated criteria. Ensure everyone on the team understands the criteria you’ve established.
Exploring Partner Options
The first step of exploring a potential partnership begins with a simple conversation—it can take place over coffee, on the telephone or via web conference. While in-person meetings are always preferable, if that is not an option, it’s ok. What’s most critical is beginning with a get-acquainted session. It is critical to determine up front if further discussions are warranted.
A successful partnership is all about synergies and relationships, so pay careful attention to chemistry in this initial meeting as it is absolutely crucial in any partnership. If the initial meeting goes well, it’s time to plan the second meeting. If at all possible, the second meeting should be face-to-face and at the offices of the prospective partner. There, you can get a true feel for the company, the resources at its disposal and this will help gauge the likelihood as to how your two teams will mesh. This is also a critical meeting because you’ll likely find out whether your first impression was accurate and learn why they’re interested in partnering with your company. Equally important, it could also enable you to identify candidates that are not a fit for your business. For example, perhaps the prospect just terminated a relationship with another vendor and wants desperately to sign your company as a replacement. Desperation is not a good foundation on which to build a fruitful partnership.
Additional meetings will be necessary from this point to discuss the business plan. In these sessions, you should inquire about the company’s knowledge and expertise in the markets where your business has, or is planning to have, a footprint, as well as their bandwidth and skills in any given market.
Solidifying a Partnership
Once both parties have forged a relationship and have determined that a partnership between them will be mutually beneficial, they must carefully assess, compare and align their business plans. Both vendors and solution providers have an obligation to share strengths and acknowledge weakness. Both parties must be candid and open in discussing how they intend to help one another reach goals and increase revenue. This process requires time, energy and trust. If a partnership sours, it’s often because one party promised something it couldn’t deliver.
Both parties must execute a thorough examination of the prospective partnership and then negotiate the most beneficial contract terms for both parties. Once everyone has settled on the terms of the new partnership agreement, it’s time to finalize it.
Maintaining a Strong Partnership
Once you’ve signed a commercial agreement with a new partner, monitor and continually foster the relationship, particularly the early stages where on-boarding a partner with the knowledge and training necessary to help them succeed is paramount. It is best advised to establish quarterly meetings to ensure everyone is on track and upholding the agreed upon business plan.
It typically takes at least 18 months to establish a smooth-functioning partnership, but you should have a solid grasp of how things are going after a year. Like any new partnership, there will be an adjustment period and growing pains, but if problems persist for three years, it’s time to make changes – either by terminating the partnership or exploring options, such as incentives, additional training and hiring assistance, to get things on track.
Incentives often become key ingredients to a partnership. A good solution provider will offer its partner numerous ways to move up the financial ladder, such as quarterly bonuses for meeting sales quotas or offering an inducement for selling additional products. Training is another standard consideration when assessing partners. A valuable partner is committed to training as results are contingent on how well partners understand each other’s business and products.
While the process is time-consuming, a great partnership can vastly improve both businesses bottom lines. Certainly in uncertain economic times like today’s, any strategy to bolster your business is worth the time and consideration required.