One of the common issues that clouds partnerships is the cost of training.  Surely if this is a partnership the training should be free? I would agree sales training should be included as a free of charge element in the partnership but technical training is another issue.

Quite often technical training leads to a certification of some description, even if it is just a certificate that says you have attended. Now picture this, you have built a pipeline, have some great opportunities then your competitor, not known for their thought leadership or investment in the market thinks “we will have that pipeline”.  The only thing they can do to beat you is undercut your prices in a race to the bottom. They approach your vendor and discover their is a cost associated with becoming a partner, suddenly there is a barrier to entry for your competitors who are not willing to invest.

As revenue recognition policies become tighter, large software vendors they are looking to their partners to help them out. The blue bird sales they get, the brand new partner and the partner who last time paid them in 120 days means they cannot recognise the revenue. In the past the simple solution was to speak to your friendly partner and ask them to assist in the transaction. As the partner made additional margin everyone was happy. Many vendors are now approaching their reseller partners to ask them if they would like to become a distributor. What this means in plain English is

• A small margin for you, as all the sales work has allegedly been completed
• You own the risk on getting paid, your vendor will still demand payment
• Any fulfilment issues or problems are yours
• If the partner orders the wrong items, it’s your problem
• Can you afford to take the hit if the customer pays late or not at all

Whilst this may be good business for some people you really need to do the maths to check this is good for business. Some questions to ask yourself are 

• What is the average order size, so how much margin can I expect to make?
• How much does it cost me to process an order?
• Do I have enough man power to process these orders?
• How do I pay, or do I pay my sales team on this?

It’s a pertinent question that many companies do not ask when they decide to embark on a partner strategy. Many companies enter into a partnership strategy with the goal “I want more sales” but never develop the strategy so it can be articulated into words that a partner will understand. It is strange bearing in mind we would never sell to a customer like this. 

To understand why someone would want to partner with you, you need to understand the pain chain within your target organisation. Who is feeling pain at the moment, and what is that pain? How does this reflect up and down the chain of command? What are the repercussions of this to the organisation? 

In addition to this you then need to understand their corporate strategy and what is actually happening on the street to meet the revenue goals. An example maybe the corporate statement is “We empower senior management within our clients to manage their business by use of management dashboards”. On the ground the company is actually selling lots of consultancy to build standard business reports not used by managers. The reasons for this divide needs to be understood. 

You then need to combine these pains and goals with your company offering to create a sales pitch as to why you are the solution to these problems. If you can’t articulate this, you are never going to have a successful partnership. 

Remember one sale doesn’t make a good partnership, it takes five to ten!

Ian I agree with you completely, I have had set up a number of alliance programs, and management quite often have two problems, the first of these is an unrealistic expectation of what they are going to achieve and the second is conflict.

 When people talk about what they are going to achieve it is not only a monetary value, it is also about change in the organisation. Managers need to think about how this will effect there services, support, marketing and sales operation as each one of these will be effected by the addition of a channel.

 The conflict is caused by a lack of understanding by all parties of what this change means.