Making the Partner-Vendor Marriage Last
Guidelines for a prosperous partnership that can last, well, 'til death do you part.
- By Keith Lubner
- January 01, 2007
Most Microsoft partners I work with are trying to expand their businesses, and the most common approach is by piling vendor relationships on top of a Microsoft relationship. These vendor-partner unions aren't always happy.
Here are five practical guidelines for increasing your chances of finding a suitable vendor and making the marriage work.
1. Revenue Generation: Show me the money!
The primary reason to enter into a relationship with a vendor is to make money. The best vendors offer their partners an opportunity to achieve that goal by selling both products and services. It's not good if the vendor's strategy involves you merely selling their product with little or no services attached, because most Microsoft partners have a services component to their business. The product margin might be nice, but you won't be able to grow all parts of your business.
Conversely, if the vendor has a low-margin product on which you make money primarily by selling services, this model will eventually cause you pain. In the beginning you might generate decent revenue, but over time the disincentive of the low margin on the product can result in your company not focusing enough on generating new deals. Business will dry up once the last services project ends.
2. Core Technologies: Square peg in a round hole?
Every Microsoft partner has a core competency (official or not) in certain Microsoft technologies, which its employees thoroughly understand. Keep this competency in mind as you evaluate other vendors. Choose those that best match your technical skills.
In addition, you should ask vendors how their technology influences or drives Microsoft software sales. If they're aligned properly, they'll have the answers ready. But if their responses don't include the Microsoft technologies that are at the core of your company, you should walk away. Otherwise, you'll be trying to fit a square peg into a round hole.
3. The Vendor's Program: It should be a challenge.
Great vendors place a premium on recruiting and enabling partners. Take a careful look at the details of the vendor's channel program. Does the program have performance criteria, marketing funds, lead generation and sales incentives? Is the vendor's direct-sales force compensated for working with partners? If not, be careful. The more comprehensive the program and the more the vendor makes you jump through hoops, the better. Due diligence on the vendor's part translates to due diligence on your part, which can lead to a successful marriage.
4. Marketing Expectations: Leads or no leads?
When it comes to marketing, vendors typically choose one of two strategies. With the first strategy, the vendor will (or should) give you a high margin, but will expect you to do much of the marketing in return. This is fine as long as you already have the appropriate lead-generation programs and people in place. With the second strategy, the vendor will give you a moderate margin but will also supply leads. While you give up margin, you gain new customers.
Both approaches have merit and, of course, a vendor program that blends the two together may be best. But choose the approach that best fits your organization to optimize success.
5. Executives: They have to commit.
The biggest factor to partnering success is understanding whether or not the executives within your company are prepared to work with vendors. Are they committed to developing joint business plans? Are they ready to deploy people to manage the vendors? Are they prepared for the invariable bumps in the road? Keep in mind that these same questions apply to the vendors. Nothing happens until all executives are 100 percent committed.
I recommend that partners create a simple spreadsheet with five tabs corresponding to these five guidelines. On each tab, score the vendor on a scale of one to ten, with one being "low" or "poor" and ten being "high" or "excellent." Obviously, the highest score wins.
Bottom line: If you do your homework when examining potential vendor relationships, you will increase your chances of making a successful match and growing your business and revenues as a result.
Keith Lubner is managing partner of Channel Consulting Corp., a N.J.-based global consulting organization focused on channel strategy, design, enablement, outsourcing and training for growing companies.