Decision makers, especially in middle-management, are obsessed with an ill conceived veil of value. They use the term as code to really ask potential partners how much money can be made by working with them. Sometimes a more strategic response is desired, but most decision makers zero in on a quantifiable answer that is safe and justifiable up the food chain.
In other words, how much money will their company make.
While forecasting the revenue potential of a partnership is important, revenue is an outcome of value and not the foundation for building a partnership. True value is contained in your product, and it is amplified by a good partnership. Let’s differentiate between product strategy and partner strategy:
- Focus – Developing the best product possible
- Objective – Sell as many of those products as possible
- Attributes – Features and benefits
- Focus – Go-to-market channel or non-core complimentary features / benefits
- Objective – Create bias towards your product
- Attributes – Profit, incremental value, strategic alignment
The better question to ask a partner (and yourself) is, “Why should I bet my reputation and resources on you?” If you can answer this question, you will truly understand the value of the partnership and profits should follow.
The best partners will understand this contrast. When building a new partnership (or even when evaluating an existing one), follow these best practices:
- Understand the contract – use a lawyer and pay the fees
- Define your value to the partner
- Define your partner’s value to you
- Use partner scorecards – update progress quarterly
- Make sure you are included in the partners’s business plan
- Make sure you have top level buy-in – on both sides
- Look for personal buy in from stakeholders
- Make sure there is a good reason to partner
- Don’t let one negative incident ruin the partnership
- Only positive talk about a partner
Finally, commit to the idea of a partner life cycle. Not every partnership is meant to last a long time and using a partner scorecard will allow you to track where you are in the life cycle.. Are you gearing up and mobilizing support in the early stages? Are you demonstrating commitment and seeing continued growth? Is the partnership mature, requiring you to revisit it to redefine value?
If the rationale isn’t there to continue to bet your resources and reputation on a partner, wind the relationship down and part as friends. Markets move, requirements change – new opportunities will be on the horizon.