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Now, in a downturn, is the time to prepare for the future: in other words to be ready to ramp up as the economy picks up.
In the short-term tightly squeezed budgets, lay-offs and consolidation are often a necessary part of keeping a business profitable and alive. However, in the long term, the mechanisms to take a business on to greater things have to be in place before the expected up turn. A well-run business should be in a position to respond as soon as the economy starts to recover.
One of the main casualties of the current software industry recession has been the indirect sales channel, especially in foreign markets. Companies have simply stopped expanding both domestically and internationally. The most cost effective way to increase the market spread has traditionally been to find partners. While, at the moment, your business may not have the bandwidth to run any kind of channel, nevertheless it would be prudent to take the first steps now to find those partners and put a channel in place.
The problem is how does a company go about finding a partner? There are in fact many ways of finding a partner and some are more effective than others. In this month’s newsletter we will be examining how a company can go about creating a channel programme built for success in the future.
Restructure
One of the easiest things any company can do is to restructure its current channel strategy. For instance, customer management and analytics vendor Applix have recently decided to reorganise their sales model from 50/50 direct/indirect to 70/30 in favour of indirect sales; in other words they have realised that their indirect sales channel is more profitable than its own sales force. Perhaps it’s time for you to break down where your own sales revenues are being generated. It is often the case that a third party can see things that your own management cannot – is it time to invest in some expert consultancy? If your local distributor is providing more business than your own sales team then some changes need to take place...
Publicity
One of the quickest and simplest options is to introduce a new ‘partner programme’. Some thought needs to go into what kind of channel partners you are looking for and it is quite common to find a number of different levels of partner or associate. A relatively cheap announcement can be made via a press release, which can then be pushed towards Reseller/IT journals – in tandem with a quick website renovation. Of course this is a very non-invasive strategy and is unlikely to have much of an impact. A more proactive campaign would be necessary to get your message out to the right people.
Outsourcing
You may therefore decide that you don’t have the necessary skills or resources to invest in implementing a channel partner search, and so you seek outside help. In foreign markets, national embassies and consulates could be the first port of call. In most cases you will be able to gain some kind of introductory contact list. This could come at little or no cost but is unlikely to provide you with the ideal partner. The next step is to find out about trade associations. These are far more popular and taken more seriously in mainland Europe than the UK, but nevertheless, Intellect (formerly the CSSA) represents the interests of the British IT/IS market and, as such, can be an extremely useful source of information and introductions.
Moving out of the public sector, you might decide to opt for the assistance of an independent consultancy, who specialize in setting up relationships with software companies and prospective partners – a sort of match-making scheme for business. It is proven that the productivity of an outsourced company can be three times that of the client, due to the fact that the client attends to its core business whilst the outsourcing company concentrates on its own strengths. Although at times this approach might appear over-complicated and costly, the end results are likely to be more profitable and suitable in the long term.
Networking
Perhaps the most often used but least acknowledged strategy available to any business is through networking. Probably the lowest cost option available, a company can use personal contacts, friends, colleagues and acquaintances to find new partners. Whilst this can be a highly productive option there are many pitfalls. Necessarily, you are depending on the advice of others, you have no idea what you are missing or overlooking (which you would discover through thorough research) and, maybe the most difficult to accept – personal relationships may get in the way of business considerations.
Visiting Exhibitions
One must bear in mind, however, that exhibition stands are basically glorified sales desks. More often than not they will be staffed by salesmen and you must be prepared for this when you approach them. After the show or exhibition it is crucial that you follow-up on any companies or people you meet. Remember that your business card will be one of hundreds or even thousands that have been collected, so it is important to make sure that your get in touch with any contacts soon after the event. Overall, the key thing to remember is that exhibitions are only as productive as the work that is put in both before and after.
Targeting the Market Leader
In most markets, it is relatively easy to identify the channel leader or that company which is the dominant market player. Then it becomes a matter of trying to develop a relationship with this company in the hope that much of their prestige will ‘rub off’.
It is very flattering when a large company like SAP, Microsoft or Oracle for example, takes an interest in your company. However, beware, all too often your product is one of many similar solutions. It might suit a very small percentage of their customers, if any at all, but it is more likely to be forgotten.
Many software vendors, a few years ago, delighted in publicising their relationships with any of the (now not so) big 5 consultancies. The reality is that whilst this might have looked good there was no real tangible return, and in many cases these consultancies simply swallowed up time and resources.
Being included in the product catalogue of a large company, for example, for which you have paid, is a very hit or miss affair. If your product has real potential, very large corporations are more likely to take your product over with no return for you, and are probably not interested in forming a true partnership. They too will take the most cost effective route. However, given the right management a ‘trophy partner’ can have a real impact on your business, but this likely to be in the longer term, and in a more strategic way.
Conclusion
It is clear then that there are many ways to go about finding a partner, and your strategy, to a certain extent, will be decided by what type of partnership you seek. In all cases, however, finding the right partner is much more difficult. To find the right partners you first need to know your market and then to make decisions as to what your customers actually want – and therefore which partner will provide it. Secondly, you have to be attractive to a potential partner. Many companies seem to have a partner strategy in place, but not many have a clear idea of how to implement it, how realistic it is, whether it has a relevance to the business needs of their customers, or indeed whether it will achieve the buy-in of any partners at all.
All in all finding that elusive ideal partner is no easy task. Only a lucky few will find a gem of a company. Lucky because this is undoubtedly the best type of partner – one that knows your product and thoroughly understands the technology, one that is focussed on your solution, knows the market, understands the positioning and is capitalised well enough to give your solution the best chance in the market.
Few, because so few companies invest the time, effort and finance in trying to find such a partner.
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