Partner Program Design
In my years of aligning corporate strategy to partner strategy and partner strategy to partner program design, I’ve found it’s critical for companies to assess their program regularly to make sure that everything stays aligned. Left untended, partner programs can take on a life of their own and drift into incongruence, irrelevance and financial exposure.
At their core, partner programs exist to help vendors and their channel partners accomplish four major goals:
- Sell more
- Deliver Better
- Innovate Faster and
- Improve Margins.
Determining how to achieve these four goals is at the heart of sound channel management. Every effective and efficient partner program begins with a baseline-setting exercise that, in the words of a cherished client, is all about the “care-abouts”.
- Firstly, what partner results are important to you?
- Secondly, what business benefits are important to your partners?
- Finally, what are the relative importance weights?
After documenting these, the next step involves mapping out the parameters of the “business deal” — the “gives” and “gets.” What specific business behaviors do you want to “get” from your partners (program requirements) and what are you willing and able to “give” in return (program benefits)? How would your channel partners answer these questions? The results of these two exercises create the focus you need to articulate a clear, relevant partner program with appropriate levels of funding and resource allocation.
Partner Program Tier Structure
One of the most challenging decisions for vendors is how to design the program tier structure. What started out as a way to manage channel conflict has evolved into a very sophisticated – and complex – method of managing mutual investment. There are two common mistakes vendors make when designing program tiers.
Two Common Mistakes
- Continuing to prioritize and reward behaviors that partners have already internalized. For example, moving to solution selling or incorporating services into their business models.
- And Designing the tier structure for everyone. Studies have shown that program ROI is greatest when the tier structure is designed for partners who are “growable.” These partners – usually the majority in the ecosystem – have some common characteristics:
(a) They have some level of technical and business expertise.
(b) They have multi-level commitment – top management down – to making the relationship a success.
(c) They need and will benefit from the program and vendor relationship.
This group is distinguishable from “self-sufficient” partners who don’t really need the vendor’s support and guidance to get where they want to go. It also excludes that group of partners who don’t have the ability and/or willingness to work the partner program.
Common Tiering Conventions for “Growable” Partners
- Revenue/Year-over-Year Growth – this original tiering convention has its problems as partner business models proliferate
- Effort vs. Results – placing emphasis on doing “the right things” – such as generating leads, making a number of “meaningful” customer contacts per day, etc. – in the belief that the quantifiable results will follow
- Skills Attainment – becoming a certified solution expert in verticals and applications that are critical to the vendor’s market penetration strategy
- Business Evolution – making required investments in order to change or expand the partner’s current business model – for example, changing from box mover to solution provider; from a product sale to a managed service sale.
However, as vendors expand into new markets, it may be necessary to recognize that the new channel partners you want, and need, may have a self-sufficient profile. In some tech markets, these are the “critical few” who dominate an industry, application or geography. Therefore, they are more powerful than any one vendor. Partner tiering in this environment needs to recognize this shift in power and the core value these partners bring – market access.
So what are you able and willing to pay for Market Access?
In some go-to-market systems, channel partners can be so powerful that they write the program as well as the T&Cs for vendors to follow. Big Box retailers fit this profile, and have transformed vendor supply chain management with their demands for logistical excellence. In this type of environment, it is important to provide Channel Account Managers (CAMs) with a tool kit that includes:
- A menu of available benefits with associated costs,
- A loaded price (discount plus benefits) “below which we will not go” and
- Training in negotiating concessions.
There is no “one right answer” to partner program design. And “best practices” are only “best” in the right context.
As partner programs evolve, channel managers need the best tools available – tools that will help not only with partner program design, but also with some of the heavy lifting involved in getting partners into the right tiers or levels. Channel Mechanics offer a partner leveling program that is based on configurable rules (revenue, certifications, etc.). It allows vendors to place partners in the correct tier and keeps partners informed in real time about how they are performing against the requirements of that tier. With the use of channel Automation, the channel management function becomes more effective and, what’s more, channel managers can spend more of their time on growing key relationships.