Thursday, May 29, 2008

Partnering and Channels - How To

This is a difficult but important aspect of growth for all small companies. Partnering is defined as "a person who takes part in an undertaking with another or others, especially in a business with shared risks and profits". The principle challenge as a small company is in attracting the attention of a larger company (as almost everyone is in fact larger than you) and then convincing them that the economics of a relationship with you are of a significant enough benefit to get them to engage. I like to think of this in a similiar vein to a sales cycle with a major customer and would encourage you to understand that just like there is a cost of sale associated with every new customer, there is similiarly a cost of sale for every new Partner that needs to be planned and budgeted as part of your growth initiative. As a small company your "investment" in the relationship will probably be very significant up front....plan for it and manage it.
The reward and end game of establishing a Partner (especially on the channel side) is access to sell your software/product/technology into a geography or customer base or vertical that you currently don't have access to through direct sales OR that would take significant time and money to develop. As a small company you really must be prepared to give before you get in starting up new Partners and Channels. I won't go into a lot of detail here but one approach that works has the following seven stages: 1. Target Strategic Channel Candidates - It is important to be focused. It is going to cost resources, both human and financial, so strategicly target both the number of partners you are able to support and the two or three that are most strategic based on your predetermined criteria. For most startups and small companies taking on more than one of these at a time is very difficult based on the number of people required to support and drive success. 2. Sign Them Up - sounds easy and is only three words so can't be that complicated right?! This is the Partner sales cycle I discussed earlier and depending on circumstance, size of their business, strategic fit, etc can take anywhere from 3 months to 2 years. Make sure that you clearly establish with them what success will mean to you and what it will mean to them and get alignment. It is critical as the partnership goes live that expectations around support from you (economic or otherwise), and execution/targets for them are agreed to and understood. 3. Train Them - it is critical that you get your partner up to speed with your software, how to implement, how to articulate and sell the value prop, etc. Depending on the amount of services required with your software/product this can be fairly short or fairly long. My warning here is DO NOT UNDERESTIMATE this step. The success of the partnership will hinge on their success so make sure they really "get it". 4. GIVE Them Work - this is mostly tied to channel partners who will be required to provide implementation services. An accelerator in getting them up to speed is to bring them in and get them delivering with your people on an implementation project. You can even split the revenue in some predetermined manner to invest in the partnership. 5. Support Them - sounds fairly straight forward and it is but it is critical to have regular check point with them, understand what is working for them and not working and they are "learning to walk". This may require sending sales reps (and/or services people) out with their people to work on the job. Weekly calls, web conferences, a partner hotline, whatever works for them. 6. Make Them Successful - it will take some hand holding and some time but the absolute most important thing you can do if get early wins. Validate for them why they did this and that they need to do more of this with you. Do everything possible to make them happy (within a reasonable risk apportionment). 7. Set Them Loose and Manage the Channel - Now your child has grown up and is ready to fly the coop. Let them go but manage the relationship in a similiar fashion to what you do with direct sales. Have a regularly scheduled weekly call with the Executive sponsor from your Partner. Do a pipeline review. Always ask where they are stuck and how you can help. Your channel partner is now a valued stakeholder in your business and you need to communicate with them and keep them vested and engaged. Manage to your predetermined targets and drive the channel. Again, it is a big investment for us little guys but the economic rewards in the long term can be significant. When entering any relationship (whether its a Twitter follower or a Partnership) I believe you should be prepared to give more than you receive, especially at the beginning. Good luck securing your home run channel!


  1. Thanks Jamie and thanks for stopping by, much appreciated.