It is typical for companies to spend a lot of effort and money to pursue new relationships but then invest little to maintain them. In December's column, we highlighted how to identify and secure relationships with valuable potential. In this month's column, we will address what is involved in sustaining these relationships and making them productive with measurable results to the bottom line.
In a survey on the return on investment (ROI) of strategic partner relationships, it becomes very clear that those companies that invest more in developing these relationships receive a greater return. Those that made four times the investment per partner generated eight times the revenue and received more than seven times the return (see Figure 1).
Several steps are required to sustain these valuable partner relationships:
- Motivate partners to give you more of their limited time.
- Support your partners in their efforts to roll out your program.
- Communicate with them through established means on a regular basis.
- Monitor key actions and results.
Figure 1: ROI Survey Results
The goal is to encourage your partners to invest in the effort. The key is to earn their commitment through your commitment to them.
Motivate. Your partner program needs to be designed to deliver the benefits that really interest and motivate your partners (see November 2000 column). This may be the trickiest part of the whole process. It is best not to assume what will motivate your partners. The question to answer is what motivates them beyond the money to invest their time and resources? One company looking for partnerships with e-business vendors said, "It takes trust and dialogue. We want partners who bring intellectual capital." It is best when the benefits are regularly communicated to the partners in their language. Use tangible ways that motivate partners to stay engaged and continue to be productive.
Support. Partners are neither customers nor employees. It is easier for a partner to switch vendors than for a customer to switch technology or an employee to change jobs. Partners need support that reinforces their relationship status. Don't assume that the initial training will be enough. At first, they will need more hand-holding to ensure that they get off to a solid, productive start. This can include helping them with joint calls and presentations. If you expect your product will need significant tech support, set up a special support system for your partners including a toll free help line.
Communicate. Perhaps an overused word, but if you want to have a long-term successful relationship with the partners in your market ecosystem, you will need to communicate with them on a regular and consistent basis. Once they are functioning smoothly, they'll need less direct support. However, regular communication is essential to keep them motivated. While it is good to include them in your general information distribution, a special communication designed for partners will prove very effective. You can include information that helps them implement your program, shares what others have learned and provides tips that work. This allows you to be proactive instead of reactive. In the long run, it will take less time and produce better results. Whether mailed, faxed or e-mailed, the delivery method should be chosen according to the preferences and styles of the partners. As a minimum, hold an annual in-person meeting. There are typically events throughout the year that most of your partners are already attending. You will achieve maximum attendance early on by meeting at one of these events. Ideally, you should have two or three meetings throughout the year. Communication is a two-way activity, so encourage feedback. A partner council is a good feedback mechanism, whether an informal group or a formal one with bylaws. Whatever structure you choose, it is important to ensure the participants that their contributions are valued and that their candor is appreciated.
Monitor. Each partner has a different purpose and resulting value. Understand the goals, objectives and expectations of each new partner; and then measure and evaluate the expected results based on this information. An after-action audit and evaluation forms are useful tools. Once the agreement has been solidified, it is important to measure these results on a regular basis. To keep the relationship on track, look at the results every month during the initial stage, with quarterly reviews thereafter. This allows you to avoid wasting time with partners that do not produce the results by either finding out what they need to get on track or dropping them from the program. In a program we developed for Microsoft, we found early on that a partner was competing; and we were able to drop them from the program. Remember to review the results for both sides of the partnership. Look objectively at how well you have fulfilled your commitments and whether your partner is getting what they expected from the relationship. Discuss any concerns or issues on either side with your partner and encourage them to do the same.
The significant investment required warrants that you recruit and support only the most productive partners. By investing the right efforts in the partnership, the rewards can be very high. Software Success found that at least 25 percent of the vendors it surveyed reported a 37.5x return on their investment in partners.
February's column will be about working with associations to build and support the market ecosystem for e-business.
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