Creating Successful Partnerships
Lee Levitt
Managing Director
Successful
partnerships expand your market reach, strengthen your market
position, increase your opportunities for profitable revenues, and
bring highly profitable sales engagements.
Yet some 90% of all
partnerships fail to deliver these results. Why?
Establishing and
managing partnerships, as with most issues in marketing, is not
particularly difficult. It requires two simple ingredients:
- a good strategic
process of planning and selecting potential partners
- a careful and
thorough implementation that takes into account the needs of both you
and your partners.
The downside of not
doing this can be dramatic – ineffective partnerships can exhaust valuable
company resources, waste time, and defocus companies from their key
opportunities. We know of at least one company that went out of business
due to a particularly poor choice of channel partners.
In this article we will
explore the first of two primary causes of failed partnerships – that of
an inappropriate or ineffective process of selecting potential partners.
In future articles we will explore the mechanics of managing successful
partnerships.
The Process of
Selecting Partners
Whether these are
supplier or marketing partner relationships, few companies take a rigorous
approach to identifying their needs, researching the universe of
prospective partners, evaluating the strengths and weaknesses of specific
partners, and then approaching the “best” prospective partners.
Instead, many companies
take a quick look at the partner list on a competitor’s website and
contact those partners. Alternately, they browse the industry journals and
target the companies identified in relevant articles.
Not that this approach
in identifying prospective partners is wrong…far from it. On the
other hand, many, if not most companies use this process to both identify
and select their partners, a process that is neither rigorous or
exhaustive.
In working with clients
to identify methods of increasing market reach through partnerships, we
use a much more extensive process of identifying and qualifying
prospective partners.
In working with a
technology services client seeking to develop its presence in a new
market, we first interviewed a number of entities across the value chain –
ranging from potential end-users of the product, to company administrators
and purchasing agents, and then to product managers in both distributors
and buying groups.
We talked with
end-users to identify the decision making and sourcing process for the
company’s product, ultimately to answer the question – who makes the
buying and sourcing decisions.
Once we identified the
key points of influence in the value chain, we then began to identify the
leading players. We interviewed and profiled those companies that
represented potential partners, specifically looking to understand the
following of the prospective partner:
- Strategic direction
- Financial health
- Product mix and how
our client’s product would fit
- Justification
(financial and otherwise) for taking on our client’s product
- Potential conflict
with other products in the partner’s lineup
We also developed a
simple forecast of sales for each partner. Using a back of the envelope
methodology, we determined the rough size of the opportunity for each
partner. We then evaluated potential growth opportunities given the
partner’s financial health, size and focus.
This analysis provided
two benefits – first, we identified the partners with the greatest
potential return, and second, the financials and positioning provided the
basis of the discussion with each potential partner.
In this particular
case, the focus was purely national. In other engagements we have looked
at coverage issues on a region by region and industry basis.
The overall goal is to
develop a thorough plan for expanding reach through channel partnerships
that provide profitable, long lasting and effective reach into new market
opportunities. And a thoughtful, comprehensive process can help to ensure
that this goal is reached.
. . .
Comments on this article appreciated
Article Copyright 2002,
The Acelera Group. All rights reserved.
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