As discussed in last month's column, vendors can reach new customers and better serve their existing ones by continually working with and expanding their External Delivery Infrastructure. This broadens the channel and types of business partnerships vendors can harness. Most technology companies think in terms of products and come up short in the relationships needed to help customers use their products. Virtually all technology companies enter into strategic alliances to bundle products, add new features or co-market through mutual channels. However, these latter agreements are product-oriented "supply chain" type relationships. What's needed are "value chain" type relationships that address customer needs and optimize customer relationships.
J.D. Edwards provides a good example of a company working with its third-party developers to not only sell into vertical markets, but also to work with customers in specific industries to meet their needs. The company's Partners in Development program provides tools and funding for niche software vendors in the publishing, finance and healthcare industries to provide customers with industry-specific functionality. These partners are responsible for defining and meeting customer needs through new product features, customer installation and support. The program extends the company's "value chain" to reach new customers. J.D. Edwards expects to start seeing significant revenue from this new program next year.
How do vendors build complete External Delivery Infrastructure with partners to include both product-oriented and customer- oriented relationships? Vendors need to:
Step 1. Select which segment(s) they want to reach. Effective partners have expertise in specific types of markets. (The role of segmentation will be covered in my next column.)
Step 2. Identify those product and service areas where vendors need to extend their services to reach and serve these customers.
Step 3. Identify the partners who provide these products and services. The types of partners include associations, consultants, instructors and trainers in addition to third-party developers, VARS and system integrators.
Step 4. Develop programs and tools to work cohesively with partners on an ongoing basis.
Step 5. Recruit only as many partners as can be supported. A rule of thumb is that one full- time person can support 20 partners.
Step 6. Treat the partners like part of the organization. Include them in company communications and conferences.
Step 7. Add partners only when resources are available to support them.
Top Producer, a small Canadian company that targets the real estate industry, provides another good example of a company that has developed solid relationships with "value chain" partners. Top Producer unseated their competitors who, at the time, had solid market share and a dominant position. While many companies, including some with deeper pockets and arguably better technology, have since tried to compete with Top Producer, no one has been able to unseat the company's now dominant position. Top Producer achieved its leadership position by developing relationships and working closely with the associations, instructors, trainers and consultants who influence the market's technology buying decisions. Many of them recommend and/or sell Top Producer. They install it. They teach the real estate industry how to use it. In fact, based on their relationship with the company, the instructors have built Top Producer's product into their certification courses.
Vendors need both product-oriented "supply chain" and customer- oriented "value chain" partners in order to address all of a customer's requirements. The External Delivery Infrastructure is crucial to the adoption of any technology. Focusing on product-oriented "supply chain" relationships early on is necessary, but a focus on customer-oriented "value chain" relationships will accelerate the customer's adoption of new technology.
My next column will address the importance of segmentation in a customer- oriented solutions approach, including how to identify meaningful segments and how to understand the market and its infrastructures in relationship to segmentation.
A Checklist for IT and Customers to Facilitate Adoption
Step 1. List the products and services needed to implement the technology/solve the problem. Be sure to:
- Customize the product to meet end-users' requirements.
- Provide education to motivate end users to use the new technology and inform them about how it fits in their business.
- Offer training to help the end users learn how to use the system.
- Make support available for ongoing questions, system crashes, etc.
Step 2. Do an internal assessment to identify what resources are available to support this and what resources are needed.
Step 3. Ask the vendor for a list of partners, their partners' specialization and contact information.
Step 4. Do reference checks to make sure the partners understand your business requirements and can meet your needs.
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