Ramblings about commercial alliances for SMEs

Since 2015, I've had the pleasure of working with partners in small to medium-sized companies. The experience has been quite a journey, and it's changed my perspective on alliances and partnerships in significant ways.

In this post, I'd like to share some of the lessons I've learned over the years, along with a process that I've developed. If you're also working with commercial partners and alliances, you may find this information useful.

To start, there are a few lessons that I wish I'd learned earlier in my career. It's essential to note that partners are always looking out for their own interests, and they don't owe you anything. They work for themselves, and while they can be incredibly beneficial, they take a lot of work, all the time. Additionally, partners are not obligated to see the value in your work, which means you'll need to find, recruit, onboard, train, and motivate them to achieve success.

With this in mind, I've developed a process that can help ensure successful partnerships.

Identification: what partners does my organization need?

Partnering with other organizations can be beneficial, but it's not always necessary or appropriate for every activity. To determine if partnering is the right approach for your organization, I recommend using your favourite version of the Customer Lifetime Cycle and leveraging your organization's knowledge.

For the sake of simplicity, I will use a four-stages Customer Lifetime Cycle: Awareness, Engagement, Purchase, and Loyalty (I am deliberately leaving aside any consideration on product quality or product-market fit). By considering the following questions for each stage, you can gain insight into your organization's strengths and weaknesses and identify opportunities for partnership:

• Awareness: How do potential customers learn about your brand? Is your brand well-known in your target market?
• Engagement: How do you connect with the right customers? Do you have effective marketing and outreach strategies in place?
• Purchase: Do you have the sales skills and resources necessary to close a deal with your customers?
• Loyalty: Why do your customers continue to buy from you? Do your products or services meet their new needs? How do you address their new needs? Would it make sense to rely on external specialists to add specific use cases to your product?

By answering these questions, you can determine where partnering may be beneficial and what skills or resources a potential partner could bring to the table.

Awareness

An "Awareness" partner can be especially beneficial in a specific situation: when you have a mature product with proven product-market fit and solid references, and you're ready to move beyond the startup phase and attract the Early Majority.

Unlike Early Adopters, who are more willing to take risks on a promising vision, the Early Majority requires a fully-working product with solid references and a good price. In this case, an Awareness partner can help you reach the Early Majority and showcase your product.

For example, one of my recent clients had an excellent and mature product that had been in the market for several years, with excellent references from world-class retailers. Despite this, they were experiencing a staggered pattern of sales: a big deal, followed by a plateau, then another big deal, and so on. They found that their partners did not fully understand the nature of their product and were struggling to reach the Early Majority.

An Awareness partner can help you overcome this challenge by providing the opportunity to present your product to a wider audience, build brand recognition, and establish credibility in your market. This can be particularly helpful for companies with a proven product that are looking to scale and achieve sustained growth over time.

Engagement

In the customer sales cycle, engagement refers to the stage where a potential customer has shown interest in your product or service and is actively seeking more information. At this stage, the customer is engaged with your brand and is willing to spend time learning about your offering, evaluating its features and benefits, and considering how it can solve their needs or problems.

Engagement can take many forms, including visiting your website, signing up for a newsletter or email list, attending a webinar or event, or interacting with your social media channels. The goal of engagement is to build a relationship with the customer, establish trust, and move them closer to making a purchase.

Engagement Partners can be particularly valuable if you're having trouble converting leads into sales proposals or if you feel that you're not effectively engaging with potential customers during the early stages of the sales cycle. An Engagement Partner will help you create the necessary experiences (content, demos, social presence...) that drive acquisition and retention. They may also do the data analysis you need to identify trends, segments and develop engagement strategies.

Purchase

If you SME lacks the resources or expertise to develop its own distribution networks or is looking to enter new geographic or vertical markets, Channel Sales Partners can be of help. Channel Sales Partners play a critical role for SMEs looking to expand their market reach and drive sales growth. These partners are typically third-party organizations that work with SMEs to sell their products or services through established distribution channels.

One of the primary advantages of working with Channel Sales Partners is the ability to tap into their existing customer relationships and reach. By leveraging the partner's established customer base and sales force, SMEs can relatively quickly and efficiently expand their market reach and access new customer segments. This can be particularly valuable for SMEs that are looking to enter new markets or that have limited resources to devote to sales and marketing activities.

In addition to helping SMEs expand their market reach, Channel Sales Partners can also provide a range of other benefits. These may include expertise in specific industries or markets, access to marketing and sales support (they can help you with your Awareness and Engagement), and the ability to provide localized customer service and support. By working with a Channel Sales Partner, SMEs can benefit from the partner's knowledge and resources, without having to invest in developing these capabilities fully in-house. Overall, partnering with a Channel Sales Partner can help SMEs drive sales growth, increase market share, and build stronger customer relationships.

Having said this, channel partners are far from being plug & play - I will elaborate further.

Loyalty

By Loyalty I do not mean Loyalty cards, which I despise with a passion, but the stage in the relationship with your customers where you continue to address their needs, old and new, as they evolve in the usage of your product. I do not include Customer Support either, which may be a reasonable concern but I lack the experience to say anything of value about it (and I don't find it honest to copy-paste a bright-sounding paragraph from ChatGPT ).

I have found this type of partner to be more necessary for open products and platforms, whose success depends on an ecosystem of developers and service providers on top of it. The most obvious example that comes to mind is Nokia Mobile Phones in 2008: they had the hardware, the cameras, they knew users would want to share photos and download music but among other problems they did not have the right platform and developer ecosystem to build the apps that Apple and Google had . Stephen Elop may go down in history as the person who sank Nokia, but time has proven that his analysis was spot-on.

If your product is broad and flexible enough to be used in multiple ways, it may make sense to rely on external specialists such as developers, service providers, and consultants to add use cases that cover your customers' needs. Such specialists can be referred to as Service Partners. By collaborating with Service Partners, you can expand your product's capabilities and value proposition, attract new customers, and retain existing ones by offering them a wider range of solutions.

This systematic approach can help you make informed decisions about partnering and maximize the benefits of any partnerships you do form.

Joint Value proposition and other aspects

There are some basic conditions that your channel partners must meet, such as having an adequate sales team or distribution network, a significant overlap between their customer base and your target market, and your product fitting well with their portfolio. These are somewhat common-sense requirements, so I will not elaborate further on them.

However, it's important to remember that partners enter into alliances for their own selfish reasons. Therefore, there must be a joint value proposition that appeals to both parties. This could be as simple as a commission, or an opportunity to upsell their own portfolio, customer retention, or other benefits.

Besides these obvious aspects, there are other factors to consider that are not so apparent. For instance, your typical opportunity size and sales cycle must match those of your channel partners. While sales reps may love your product, if it doesn't help them meet their quarterly quotas, it's unlikely that they will be motivated to promote it. It's crucial to ensure that your offering aligns with your partners' priorities and business goals, and that there is a mutually beneficial relationship.

Onboarding and training

The onboarding process is crucial for Channel Partners who face customers, explain your solution's value proposition and drive deals. Knowing your Partner is vital. For instance, do they work with many other partners? Does your solution compete with other fifty partner solutions for the end-customer wallet?

In my view, managing partners is closer to marketing than to project management. We need to make our partner's life simple rather than enforce rules on them, which they are not obliged to follow. The simpler it is for them to present your product, the better. Here's a guide for the initial training that I am currently using:

Induction training:

• Overview of our services
• References - These are critical as they are the key to the Early Majority.
• Adoption drivers - Why do customers buy our product?
• Segmentation - Identify Industries, Buyers, Pains, and Value propositions.
• Success Stories
• What happens next? Who to contact?

By providing a comprehensive understanding of your product, customer segmentation, and success stories, your partners will be better equipped to promote your solution effectively. Additionally, setting up an onboarding program for new partners can be a significant competitive advantage for your business, making it easier for partners to work with you and drive success for both parties.

Material Repository

In addition to training, I have found very useful to share with my partners a repository of material they can use on their own.

• Use cases
• Success Stories
• White papers

Customer Portfolio

Finally, I like to give my partners the opportunity to review their customer portfolio together with my team and identify the most promising leads based on a combination of their customer knowledge and our experience with the solution. This collaborative approach helps to build trust and ensures that we are aligned in our efforts to drive sales.

In fact, I would go a step further and offer to write introductory emails for our channel partners. This not only saves them time and effort but also ensures that the emails are tailored to the specific needs of each customer. By providing this level of support, we demonstrate our commitment to their success and strengthen our partnership.

How to keep partners engaged?

While it might seem like I'm overusing the term 'engagement,' it's actually quite fitting when it comes to channel partners. Remember that your partners aren't obligated to see your value and will always prioritize their own benefit - just like your customers. That's why it's highly advisable to treat them as customers and provide them with the same level of attention and care.

Here are some ways to do that:

• Regularly provide your partners with content that they can easily share with their own customers, such as news and insights.
• Volunteer to create sales and marketing materials with them, such as webinars, white papers, newsletters, and demos.
• Support their business development efforts and accompany them on customer visits.

But perhaps most importantly, celebrate your successes publicly. Nothing motivates people more than success. If you close a deal with one sales rep, other reps will follow suit. Just like in sales, there are early adopters, early majority, late majority, and laggards. Use this to your advantage.

Governance

Structure is important, at its due time. Once I have developed trust with a partner and the mutual benefits have been proved, structure comes naturally and I find that both sides become more interested in using the lessons learned to outline a strategy and to set goals, schedule monthly pipeline reviews and quarterly business reviews, partner scorecards, etc.

In my experience, setting targets and governance rules too early can be counterproductive. It is better to focus on demonstrating the value of the partnership by working on a few concrete opportunities, then building a sales pipeline, and last establishing the necessary structure to manage it. This approach helps to ensure that both sides are fully committed to the partnership and that the governance framework is aligned with the needs of the business.

Monitoring Your Partners' Performance

Monitoring your partners' performance is crucial to ensuring a successful partnership. In order to do this, it's important to have a scorecard in place. A basic scorecard can include the following metrics, updated monthly:

• Number of induction sessions held
• Number of sales executives trained
• Marketing activities such as webinars, blog posts, etc.
• Number of Marketing Qualified Leads (MQLs) generated
• Number of Sales Qualified Leads (SQLs) generated
• Pipeline size (weighted and non-weighted)
• Sales closed by the partner

By tracking these metrics, you can get a clear idea of how well your partners are performing and identify any areas that need improvement. I find it helpful to use fast indicators such as MQLs, which provide a quick indication of activity. Using this information, you can make data-driven decisions about your partnership and determine where to allocate resources for maximum impact.

It's important to regularly communicate the results of the scorecard to your partner and have an open discussion on how to improve any areas that are underperforming. By doing so, you can address any issues that may arise as soon as possible and continue to build a strong, mutually beneficial partnership.

Do not hesitate to contact me if you would like to discuss more.