Channel partnerships are key to success in the tech sector – not only for early stage and startup companies, but increasingly for niche sector leaders and established multi-product players who cannot create a one-stop shop for customers through internal engineering alone.
A partnership that makes good commercial success is often easy to identify, even easier to get excited about and difficult to close. Between that moment of initial excitement and ironing out the details, I have found there are three straight forward questions you should ask a perspective partner to see if you are one the same page as you.
1. How to you measure the commercial value of this opportunity?
New partners often get overly excited about the potential brand fit with a partner – proclaiming things like, “our product would be a perfect fit with the Walmart / Starbucks / Old Navy” in-store customer experience” or “our software perfectly extends the capability of the Saleforce / OpenText / Google platform”.
That inspirational moment where you identify fit is critical to sparking a partnership – but move past it quickly. A year into a deal, no one will be talking about fit or alignment – they will be looking at results. Understand form your partner what KPIs (key performance indicators) will define success – in direct sales, incremental sales, gross / net revenues, repeat sales or whatever other quantifiable metrics are going to secure and enhance the partnership for years to come. If your partner is looking to a partnership to sell your product or service as a tactic to achieve other commercial objectives (think enhance loyalty, grow sales of a related product or grow traffic to a location or site), know that upfront and define success.
2. What do you expect us to achieve, in what time frame and how did you arrive at that conclusion?
With your KPIs identified, you need to establish targets around each. Think of this in terms of a range of results – minimum acceptable, target and stretch. Don’t just negotiate to the target numbers though – flush out the logic behind how the target number was derived. This will provide you with lots of data points and could flag potential issues early.
3. How will be work together to resolve a customer impact if something goes wrong?
Channel partnerships are great when things are going well and everyone is making money – but what happens when there is a bump in the road a customer is impacted?
Beyond the legalize of warranties and indemnities, you want to understand how your partner will respond is tough times so you can plan accordingly. Generally, the channel owner will provide level one and level two support and the product owner will provide level three support; but, go deeper than simply divvying up responsibility by asking this question.
Your potential partner’s response should give you valuable insights into how they value customers and how critical your product is to their customers’ experience. If possible, ask for previous examples of where something went wrong with another partner and what the outcome was.
Asking these questions early on will not only give you a better idea of what your channel partner is all about, it will save you time and money by making sure the potential partnership is a real, and not an aspirational, fit.