Ask the leadership of any company that has scaled its sales and operations, and they will likely tell you that partners are essential to success. Fewer companies,however, have a focused and disciplined approach on managing their partners.
One reason is that partnership management is often not built to answer the right question. We’re all familiar with the traditional value proposition question:“why should I buy your product?” This question is often applied to partners when really the superior question is actually,“why should we bet our resources and reputation on you?”
This universal question can be applied to all partners, but it is also useful to group partners into three general categories: supply, distribution and influence. The very first step in building a successful partner strategy is understanding these three categories and grouping existing partners accordingly.
Supply Partners: The supply partner can provide your company with a broad range of products – everything from paper and pens to integral components of the end solution you sell to your customers. Some companies will manage all of these relationships through a Procurement function – more advanced programs will distinguish between supply partners whose products are used in the regular course of business operations (think paper and pen vendors) and the supply partners whose products have direct implications on product strategy.
The strategic analysis when managing these partners: is buy vs. build. Successful management of these vendors will create cost reductions and increased focus on your company’s core competency and will enable a faster time to market; It may also allow you to offer a more complete product offering to the market by including third party technology or products which compliment your company’s own.
Distribution (or Channel Partners): Channel partners extend the sales reach of your organization. They can be direct or indirect in nature and generally help to accelerate time to market (though they may be absolutely necessary to even operate in some markets where significant barriers to entry exist). Channel partnerships are particularly important for early stage companies that can quite often get caught in the chasm of needing to grow sales capabilities while not having the resources required to hire and manage a dispersed sales force.
My next blog entry will provide more focus on channel partners and applying basic portfolio principles for the effective development of a partner portfolio.
Influence Partners: This is admittedly a bit of an “other” category, but it is important nonetheless. The strategic analysis with these partners generally focuses on the delta of achieving a defined goal alone vs. in partnership. Examples can include marketing partners, association partners, co-selling partners, ecosystem partners and government partners
With thanks to Best Practices for Measuring Partner Relationships by Professor Lynda Kate-Smith. Offered as part of the Stanford Innovation and Entrepreneurship Certificate.