Managing the Channel
This is the fourth and final part of the series on 'Partnering in the Global Economy'. This article will deal with 'Managing the Channel'
A prevalent theme throughout the 'UK Partnering & Investment Forum' was that the enterprise buyer looks for short-term return on investment. The halycon days of unbridled technology spend are history.
So what impact does this return to the 'old economy' virtues of demonstrating business value have on sales through third parties?
Dason Bodily of DataDistilleries Ltd. gave an excellent presentation at a recent conference that highlighted the criteria for successful partnerships. He drew upon the following points:
- You must treat them as your best customer
- Their success is directly linked to your product (or service)
- They take ownership of the solution
Understanding the Business Model
One of the most common areas of potential conflict can be a variance in respective business models. A classic example occurs where cultural and business values are entrenched. If you are working for a UK or US company, the 30-day receivable cycle is readily accepted (albeit not always observed).
In Italy and other Southern European countries, 90-120 days would be commonplace. Now while this may have an impact on cash flow the quicker that this is accepted as normal, the easier it will be to deal with. Therefore, an understanding and appreciation of the local business rules is essential, regardless of whether or not you agree with them.
Getting the Business Plan
A prerequisite must be to obtain a written document that articulates how the partner will make money. This will be the Business, or Marketing Plan. The Business Plan must transcend any language barrier as well as forcing any partner to think about their commitment.
The plan should include:
- Market Analysis -(Who are the competitors?, Size, Positioning)
- Definition of the 'value-added' capability
- Resources needed
- 3 Year Profit & Loss
Monitoring The Early Days
The Marketing or Business Plan should be monitored during the 'honeymoon' period. Have the mailshots gone out? Were new personnel recruited? What feedback are you receiving from prospects?
Having asked such questions, you are then able to review your partner's actions against the reality of the current situation. It is in the early days that you can create confidence whilst also being able to spot, and hopefully act upon, difficult situations.
Managing The Sales Pipeline
Fundamentally, being able to manage the partner as if they were your own sales staff would be ideal. However, this is their business, so sensitivity to this focus is vital. Regular deal reviews should take place from an early stage so that you track not just the pipeline, but the agreed actions. The added-value of your interference (help) needs to be explicit, so that leads from the web are passed over, technical assistance is given etc.
Network
Try and make sure you know all of your partner's key personal, not just their sales and technical staff. Network within their organisation in order to be able to understand the intricacies of how they operate. Again, however, there is a fine line here as some companies will not willingly allow you to undertake the tasks they should do. As with your own company, do not be afraid to delegate whilst remembering not to get involved in business decisions such as the recruitment of personnel.
Termination
If the relationship is not working, do not be afraid to terminate early. If there is a lack of willingness to invest, or an obvious lack of enthusiasm (and you know this from an early stage) then terminate the relationship. Do not convince yourself that things will eventually get better. The probability is that they will not.
Costs
Everyone I know who has managed partners have all agreed that they have always underestimated the time, effort and cost of managing the partners. This is compounded by distance, especially when intensive travelling is involved. For local partners I would factor anything between $10-$20K per partner per year. For overseas partners the figure could be from $20-$40K. Despite this cost, the returns can be significant.
Despite the Internet, business is about the development of personal relationships. For many cultures, this is still an extremely powerful tool. Never underestimate the power of the human touch, genuine care and attention to detail. To be able to accept another's culture and different business practice without prejudice is a difficult skill to master, but successful partner managers have it.
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