The difference between partner and customer

Introduction

In this series of three articles, I will explain the difference between partner and customer, list the most common types of partners in the technology world and finally, why is it important to differentiate between the two. 

I hope that this question has brought you here and that I will be able to provide the answer. Keep in mind that industries are vastly different and you should be conscious of how my explanation would apply to your situation. 

First things first

 It’s often difficult to know the difference between a partner and a customer. This is unfortunately a problem for many B2B companies, where the biggest hurdle is not the lack of ability to separate them, but the lack of knowledge that you should. 

Before we dive in however, I would like to first point out that I am not talking about strategic partners here, but I will be focusing on indirect sales channel partners. The strategic partners are usually the ones you buy from to complete your product. They are practically your suppliers, and you would rarely talk about them unless they are one of the big blue-chip companies, or a leader in your respected industry. You can quickly scratch those partners off your list by simply asking the question - Is company X critical for the development of my product? If the answer is “Yes”, then you are looking at your supplier. However, If the answer is “No”, then you might be looking at a channel partner.

Customer or partner?

Now that we know who our channel partner potentially is, we need to identify who our customers are to confirm it. To figure out if a company is your customer or a channel partner, you simply need to look at the revenue dependencies and what the company communicates to the outside world. 

Revenue dependency

For example, a customer is not interested in your revenue. They would often look for a way to get your product at the cheapest price possible as that will influence how much profit they will make from selling their finished product. In this case, we, the supplier, have our revenue tied up to the customer’s. We make money only when they make a sale and need our product to complete theirs. If the customer finds a superior substitute then we do not make a penny. A channel partner on the other hand has the opposite relationship with us. Their revenue is tied up to ours, as they make money only when they sell our products to their customers. The more they sell from our products, the more they earn and consequently we do as well. Therefore, they are more creative when they speak with us about finding solutions to sell more of our offering. They would rarely negotiate the manufacturer’s suggested retail price, as the higher it is the larger revenue they will make due to margin (unless it’s unreasonably high and there is no sales potential). To summarize, you may ask the first partner probing question: Does company X’s revenue depend on ours?

Communication habits

Now that we have an idea what is the revenue dependency, let’s check how company X communicates about us with the world. A good channel partner would have your logo everywhere and they would be pushing your product leadership agenda with their customers. Remember, it’s in their interest to sell as much of your product as possible, so this is what they will do. A customer on the other hand will have a totally different approach. They have their own product leadership goals and that’s what they will be promoting anywhere they can. They will never show or share your name unless it is crucial to closing a deal. An exception here is the promotion of big brands. If company X’s strategic partner (supplier) is one of the big players like Meta, Microsoft, Amazon, etc., they will have that logo everywhere they can fit it. This is often the case for businesses that are small or relatively unknown. This way they piggyback on the brand to gain access to the market. To summarize this, I will give you the second partner probing question: Does company X tell the world about our relationship?

Final thoughts

The two partner probing questions apply for most industries and would help you tell customers and partners apart.  You are looking for a strong “YES” on both questions. Sometimes, you might get a “No” on the second one, but you should make sure you understand the reason why company X is not promoting your brand. The issue could be caused by your branding guidelines, legal restrictions, etc. Clarify it before you move to segmenting the business in one of the two categories.   

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Thank you for reading. The following article will cover some of the different types of channel partners in the technology world. Looking forward to sharing it with you!