Honing Your Partner Proposition Part Two: Understanding Different Partner Types

From resellers to consultants, you have plenty of options when it comes to partners

If you’re a fan of the Annual Westminster Kennel Club Dog Show, you know that dogs come in all shapes and sizes.

The same is true for business partners, though even partners themselves would joke that some of the dogs are better groomed.

Looks notwithstanding, your channel partners can be your best friends in the market. They will steady your company in good times and bad, and provide your customers with satisfaction that you alone simply cannot provide at scale.

In part one of Honing Your Partner Proposition, we zeroed in on the basic components of building a channel. In this installment of the “Channel 101” series, we will focus on the different types of partners you will likely encounter, especially in the high tech, cybersecurity and fin-tech markets.

Once you identify and create the components of your basic partner program, you will want to consider creating specific requirements and rewards for different partner types. To do so, it helps to understand their businesses to a greater degree.*

Partners differentiate or categorize themselves in a variety of ways, including:

• Business model
• Technological capability
• Geography
• Services specialty
• Vertical market focus
• Customer segments

When you consider your total addressable market (TAM), you might be surprised to learn that there is a wide array of third-party organizations that may be suited to help you achieve your objectives. Here’s a sampling of different partner types, complete with an overview of what they do and why it makes sense for you to consider working with them.

 

Partner Types

Volume Resellers

High-volume partners are skilled in delivering innovation at scale. They often trade in multiple geographies and are very responsive to changing market dynamics buffeted by disruptive innovations, economic upheaval and changing customer buying habits.

For vendors, they offer existing relationships, sales competency, local influence if not presence and strong logistical capabilities.

On the downside, volume resellers are not always brand loyal or technically astute. Because they work in highly competitive environments, they often demand financial uplifts and marketing development funds.

Your best bet to connect with them: demonstrate your proactive sales and marketing prowess (so they don’t have to do that heavy lifting) and show them a way to achieve higher margins with the sale of your products and services.

VARs/Systems Integrators

For tech and other vendors, VARs and SIs are credible and influential sales and delivery partners.

They boast subject matter expertise (SME), vertical market knowledge and market reach. They are tight with mid-market customers and thrive in complex, multi-vendor environments.

What makes them difficult partners? It’s hard to secure their mind share. They have high employee turnover, long sales cycles and meager marketing resources if not capabilities. In many industries, they are experiencing significant financial upheaval as a result of digital transformation among their customers. They are looking for help transitioning to a new business model in many instances and are looking for organizations that can lead the way.

Your best appeal to these organizations, thus, is to showcase the additional service opportunities your innovation creates for them and your commitment to them regardless of what business model they latch onto.

Service Providers

Service providers thrive on repeatable business, long-term contracts and project-based fees.

Their strengths: longstanding ties to customers, and/or legal regulatory incumbency. Though they may be lumbering, they have scale and outsized influence in many markets. They also have honed businesses and can thrive in low-margin conditions.

Their weaknesses are they are challenged by stiff competitors including outsourcers. They are sometimes slow to react to disruptive innovation and have limited partnering experience in many instances.

What they want is upsell opportunities, new service offerings and scalable pricing.

In some instances, they also want to be treated as customers, not partners, which can muddle your contractual relationships with these companies.

The key to working with these organizations is understanding their business models and intersecting with their existing workstreams.

Sales Agents

In many industries, such as insurance, Real Estate and telecommunications, sales agents are ubiquitous. They are sales and transaction-oriented, and motivated by commissions and fees. More and more, they are very eager to embrace recurring revenue sales models that reward them over time.

Sales agents boast close ties to customers and an ability to close transactions. Because of their ubiquity, they often give vendors unrivaled geographical reach.

On the downside, they are often short-term focused and brand agnostic. In some fields, they are technical wizards while in others they are outmatched by specialty resellers.

Sales agents want clearly defined programs, leads and proven compensation models that pay out over time. And they expect and prefer that a vendor handle billing, support and more.

Consultants

Consultants are driven by business relationships and service projects. Historically, they have lived off billable hours and project-based fees though their business models are changing. Many now prefer service level agreements (SLAs) or contracts that reward them for improving business outcomes.

On the plus side, they have influence with decision makers and subject matter expertise. On the downside, they typically have their own agenda, do not make the bulk of their money on the sale of goods and services, and may prefer a level of independence you might find uncomfortable.

What they want most is anything that they can turn into a service opportunity. They also want referral revenue.

Managing these relationships requires significant effort. And your return on investment (ROI) can be difficult to quantify. But their access to key decision makers can be very appealing.

Distributors

Think of distributors as the middleman’s middleman. They are responsible for providing the products and services that vendors develop. Everything they do they do it at scale. They are known for the breadth and depth of their relationships.

Their strengths include existing reseller networks, support sophistication, proactive marketing and sales support.

Their weaknesses include challenging finances, outmoded business models and a lack of sales sophistication for more advanced ideas and innovations.

Your best option for winning them over is showing them sales momentum, complementary relationships and/or helping them launch into market adjacencies.

One thing to note: they require significant attention (think cash) to get their internal salespeople interested in your offerings. Once you sign up a distributor, in other words, your journey just beginning, not ending.

ISVs

In many industries, these are specialized developers of digital products and services sold commercially or embedded into other products.

ISVs are driven by the sale of their products and the retention of users. They are also keen on aligning with those who can pair up to create new combinations of value.

For third-party vendors, ISVs offer their own marketing and sales mechanisms, and additional lift for your products and services. On the downside, they can be slow to decide on anything and they get territorial if your “complementary” products and services compete with anything they offer now or plan to do so in the future.

What they seek is anything that can help make their own product more useful or “sticky” with a customer.

Trade Associations

Professional associations may not be the first partner type or organization that comes to your mind when thinking about partners, but they should be considered, nonetheless.

Trade and professional associations range in size from the American Medical Association (AMA) to the local Kiwanis Club. Organizations like these live to provide value to members and to raise awareness of their industry, market and/or cause.

They generate revenue from member dues, event attendance fees and more.

Why are they a possible partner? Well, consider their strengths. They are in regular contact with decision makers, provide invaluable insights and networking opportunities, and attract a consistent following.

Weaknesses? As a rule, they generally do not sell on behalf of vendors, and they often lack a formal mechanism for translating influence into action.

What motivates them? They want research, new members and sponsorships for ongoing activities.

Working with them takes some effort. But the returns can be enormous in terms of awareness and influence building.

 

Final Thoughts

Finally, it’s worth spending a moment on what Tenego Academy* calls model alignment.

After gaining traction with partners, you might learn that you could do more business through partners if you change or alter your deliverable in some fashion. The change could be in how you sell your technology, to whom and for how much.

You might learn, for example, that your ideas or innovations are too expensive compared to your competition. You might discover that there is insufficient add-on revenue opportunity associated with the sale of your product or service. You might also learn that third parties consider you difficult to work with.

All of this is perfectly natural and to be expected. Relax, in other words: you got this.

After thinking through your partner value proposition, make sure you don’t let that good work go to waste by under-investing in partner automation. It is worth repeating: The products and services you provide the market are only a portion of what partners evaluate when considering your value proposition. They also take into account your onboarding, marketing support, training and more — the kind made possible by world-class automation. For more insight, sign up for an Impartner demo today.

Coming next in Part Six: Partner Agreements and Negotiations

*The Channel 101 series was produced with insight and information provided by Tenego Academy. Tenego Academy is a Cork, Ireland-based company that provides support to companies wanting to grow their organizations with third-party “channel partners” be they dealers, agents, referral partners, distributors, consultants and more.

Tenego Academy’s 12-part “Build Your Partner Program Like a Global Leader” education program helps companies looking to create, grow and/or optimize a partner program regardless of their size or market focus. No matter where your company is in its channel partner program journey, you will benefit from Tenego Academy’s 12-part program, which covers everything from channel strategy to partner recruitment to automation and more.

T.C. Doyle is the Channel Growth Evangelist at Impartner, the leader in channel management and Partner Relationship Management (PRM) technology. A journalist, book author and analyst, Doyle has worked in media for three decades. As channel evangelist, Doyle produces podcasts, case studies, e-books and more for Impartner. Doyle can be reached at [email protected].