Strategic Partner Development in the Software Industry
While working through a channel of independent value-added resellers may allow you to scale must faster and much wider that any organic growth strategy, it certainly also has its challenges.
Only very few of your channel partners have growth potential.
This article provides suggestions as to what you can do about this.
The limited growth potential of channel partners
All channel-based software companies know that most channel partners have limited growth potential. Thus, if you want to grow your market coverage you will have to keep recruiting new channel partners. As you extend your partner base you will find out which have growth potential and which do not.
You base of channel partners will look very much as illustrated in fig. 1.
Tier-A: Less than 5% of your partners have the potential to grow of their own accord.
Tier-B: With some support and coaching another 10% can release a hidden growth potential.
Tier-C: 85% of your partners have no growth potential.
Tier-A partners have ambitious and capable management. They have their own ideas and take their own initiatives to grow their businesses. You need to address and challenge the strategic growth options Tier-A management are considering and executing. Operational support is obviously also required, but Tier-A partners have delegated this to middle management and staff as they concern themselves with more strategic issues. You need senior executives as partner managers to match the style and format of Tier-A management.
Tier-B partners require management coaching and support. They have the ambitions, but maybe not the experience and tools required to release the growth potential. You must have a framework for working with your Tier-B partners to systematically release the potential. Your Partner Account Managers must be entrepreneurial, business savvy and possess management consulting type skills.
The lack of growth potential is exclusively a management issue and there is nothing you can do about it. Your best option is to reduce the cost of support serving the C-tier partners.
The strategic Partner Development Framework
Applying a different approach to each partner is never going to work. You must put a generic framework in place, which can be applied individually with each partner.
The framework must provide a consistent vocabulary for working with business strategy and must enable the linkage between your own strategy and the strategy of the individual partner. The framework must be simple to learn and execute for your partner account managers and must yield immediate results when applied with the partners.
TBK Consult have decided to use and promote the ValuePartner® .
ValuePartner® is based on the Balanced Scorecard principles and are adapted to reflect the strategic priorities of the individual software vendor.
ValuePartner® is a strategy alignment framework designed exectly for companies who rely on business partners for selling and implementing their products and services. ValuePartner® enables a vendor to align his own strategy for growth with that of his individual business partners’.
After performing a ValuePartner® exercise with a business partner the vendor will have achieved the following advantages:
- Have direct access and a solid line of communication with the Partners’ top management
- Have a documented (growth) strategy action plan for the business partner which is fully aligned with the vendor’s own growth strategy
- Have identified the instant issues for improved business performance and areas where the business partner must focus / invest to achieve the growth targets
- Have a plan of action helping the vendor’s Partner Account Manager focus his/her support and follow-up on areas critical for meeting the agreed growth objectives
Other articles in this series
- The Best Process for Recruiting Channel Partners in the Software Industry
- What’s a best practice solution for managing channel partners in the software industry?
- Steps to designing and executing productive Partner Channel Programs in the software industry
- Partner P&L – the path to productive partners in the software industry