The 7 Pillars of a Strong Partner-to-Partner Relationship
I'm often engaged in conversations with Microsoft partners around how to structure partnering arrangements -- often called P2P, or partner-to-partner, relationships.
Many partners come to me either on the brink of starting their partnering efforts and wanting to know how to build their strategy, or after they've been doing P2P for a while but don't feel that it's working for them.
I genuinely believe that partnering is a great way to drive long-term success. It involves lots of investments and time, but when you do it right, it will give you a great ROI. Partnering not only gives you additional revenue, but it also encourages you to specialize -- another characteristic that I truly believe has its merits for partners, as the days of "Jacks-of-All-Trades" are long gone.
However, if a partnering arrangement is not successful for all parties involved, then it will eventually die, either slowly (because none of the parties care about it anymore) or violently (because one of the parties says that enough is enough and just terminates the agreement). In order to build lasting P2P arrangements, you'll need to have the right mindset, be generous and look after the success of all parties.
Here's a list of what I think makes a strong P2P relationship. It's based on my experiences serving the partner ecosystem for many years, and seeing both tremendous successes as well as quite a few failures.
- Margins: It's important to have a reasonable margin that motivates the efforts around both making the sale and also managing the ongoing relationship.
- Suggested margin is 20 percent for projects/assignments for year one and 10 percent for additional years.
- Suggested margin is 20 to 30 percent for SaaS and licenses for year one, and 10 to 15 percent for additional years.
- It is important that the partner that takes the burden of doing the actual selling gets a decent margin so they can compensate and motivate their sales teams.
- Prime Partner: One of the partners should have the legal agreement with the customer. This partner is the "prime partner" (or "originating partner").
- Documentation: Always document the terms of your partnership. It doesn't need to be complicated, and the Partnering Agreement Template I've created is a great starting point (it's also an official IAMCP template). For every project and assignment, I strongly recommend that you create a Statement of Work (SoW). It's easy to forget to document the terms of doing business or to save it for later, but it's crucial when you bring in more people in both organizations, as it provides an important safety net for all parties.
- Elevator Pitch: Make sure you have a partnering-friendly elevator pitch and practice it so it comes naturally -- even if someone wakes you up in the middle of the night. You shouldn't brag about your company; instead, it should be about what you're bringing to the table in a partnership and articulated in a way so that people want to bring you in. This is art in itself; don't feel embarrassed to practice with your co-workers. Everyone in your company that has conversations with partners should use the same pitch.
- Bi-Directional: It's important that both partners strive to sell each other's services. This is not always possible, but the mindset should be to help each other's bottom-line profits. Partnerships often fail when one partner thinks they are superior and don't care for the other partner. It needs to be a two-way partnership in order to last!
- Visibility: Be proud to show the customer who your partner is and don't try to hide it. Customers love partners that bring in other specialized partners, while still taking responsibility.
- Conflicts: If a partnership is going to survive long-term, you'll need to take care of potential problems early. You'll need to measure and discuss both customer and partner satisfaction regularly so you keep your customers happy and eliminate unnecessary friction. And be generous and help each other! Remember, you're in it together.
Here are some useful assets that will help you standardize:
- The IAMCP's Partnering Agreement Template package (which includes Partnering Agreement Template Instructions, the Partnering Agreement Template and Discussion Questions for Partnering).
- The P2P Maturity Model endorsed by IAMCP and IDC.
Posted by Per Werngren on December 28, 2022