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Finding the Right Partner
In the December newsletter we focused on determining which type of partnerships are the most appropriate given the acceptance and positioning in the technology life cycle. In this issue we will look at the strategies and tactics for finding the right partners.
At our recent seminar on "Partnering in a Global Economy", Clive Ketteridge of jBase bravely bared his soul with regard to his initial experiences at finding partners. "Our first experience was in 1991 in Australia. This was an absolute disaster. We were totally misled and our trust exploited. Seven year law suit" Undaunted Clive relayed his second experience." Our second partner was in the USA. It was all hot air and we discovered that the vast team was in effect a one-man band. No sales. Four-year law suit!"
Now Clive was indeed brave enough to recall these early!
forays with partners and while not every one of our clients has had similar experiences he was certainly highlighting the common errors that can be made when recruiting partners, particularly when they are thousands of miles away. Clive was also candid enough to admit that the errors were also of his own making through inexperience and naivety.
Fortunately, Clive maintained his determination to succeed and eventually learnt from his mistakes to create a highly effective Distribution network generating multi-million pound revenues. So what were these lessons?
The need to search?
Finding partners should be a proactive process because it is part of YOUR business strategy. All too often we see partners as being perceived as "opportunistic" and "incremental" revenues. This becomes compounded when these partners approach you and the ego gets severely flattered because of this interest. We often see all business common sense disappear out the window when overseas partners are concerned. So how can these errors be avoided?
The Plan
First of all create a partner plan. As with all plans there are three key elements: Time, Resource and Cash. Get advice at this stage as to whether your plans are realistic. Setting the expectations correctly at this stage is crucial. I remember well the US Public Company who had a revenue plan of $6 million for Europe in year one with one salesperson and two partners. They had assumed that as they were generating $60m in the US that 10% from Europe year one was reasonable!! They had assumed that Europe would be an extension of their hockey stick growth and not the start-up that was the reality.
Profiling a Market
If you start to research a market for partners you are bound to gather information on the likely technology acceptance of your solutions. You should always have sufficient information on any market you enter to be able to answer the following questions:
1. How large is the market?
2. Where will my technology be positioned in the technology life cycle?
3. Who are the local competitors?
4. Will I have to localise to have a saleable product?
5. Is partnering (and with what type of partners) the best entry strategy?
Besides influencing your entry strategies this information will be invaluable when you enter new markets because YOU will be able to demonstrate your seriousness about THEIR market and YOUR technologys positioning within it. Immediately you are driving what YOU want from any relationship.
Recruiting Partners
If you hire your own personnel you invariably go to recruitment companies for many good reasons. Yet when it comes to finding partners we often expect the "Channel Manager" or "Business Development Manager" to call on their network to create a partner channel. While personal contacts are important, markets are rapidly changing. Similarly the network may be totally inappropriate. How many of us have hired from a "big company" such as Oracle, IBM or Siebel to discover the Channel Manager's network inappropriate in an early adopter market?.
Needless to say the same mistakes that Clive made gets repeated, as the "square peg" is forced into the "round hole" because the necessary research will not have been done. After all if you were interviewing for a senior management position you would probably interview seve!
ral candidates, so why not do the same when you establish partners in both local and foreign markets.
Therefore the time spent in researching potential partners will be well spent so that you have a choice and can avoid the horrors that Clive encountered. Another key element is not to enter long term agreements without conducting the basic due diligence. Any checklist should include at least some of the following:
1. Are they the right partner for the market at this moment in time? (OEM, Strategic, Joint Venture, Systems Integrator, Reseller. Distributor)
2. Visit the offices of the Partners
3. Be prepared for further visits, particularly in cultures where business is not concluded at first meetings.
4. Have I met ALL the key personnel?
5. Do they have customer references?
6. What value do you add to THEIR business?
7. What investment can they afford?
8. Will they commit to a written plan?
9. Are their expectations realistic? (Do they understand technology life cycles?)
In the next issue we will look at partnership agreements and their successful negotiation to maximise sales.
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