In Tenego, we work with many great software companies that are growing strongly to become established international, and sometimes global players. With a number of these companies, they have grown primarily through direct sales but have begun to work more with channel partners seeking more scalable growth.
So how do companies drive quarterly sales targets at the same time as seeking scalable growth through building effective sales channels? How do companies meet targets today and learn to improve while doing it?
Firstly to understand your commitment, your mindset or the culture of your organisation:
1) When assessing a potential partner, do you look on it as how do you deliver the best results together, or predominantly what can the partner do for you?
2) If a lead comes in, will you pass it to a partner or will you assign it to your direct sales team?
3) Do you assess a partner’s target performance without assessing your company’s role in support?
4) Do you expect every partner to deliver as much sales as a dedicated sales person in the market?
5) Do you expect to be able to manage your partners’ pipelines as you do with your sales team?
For the sake of your entire company’s decision-making process you are best to be crystal clear what your company wants and your policies around direct sales and partners at each stage. You must be clear about the role of partners in your business, otherwise blurred lines, poor decisions and frustrations will occur and it won’t be the fault of your channel partners.
Stage 1: Plan
Plans & Activities: No active plans yet but see the longer term value of assessing if it makes sense for your business, and how to get started without too much investment and risk of distraction from monthly/quarterly sales targets.
Direct Sales: 80 to 100 percent of revenues
Partners: There may have some ad-hoc business, on a “you eat what you kill” policy, sharing of licence revenue and maybe some services, but no commitment to marketing or sales support to develop partnership.
Stage 2: Initial partnering activity minimal changes to sales organisation
Plans & Activities: Define a structure for initial partners and engaging (or re-engaging) partners to determine what effective partner recruitment, on-boarding and partner market engagement looks like for your business.
Direct Sales: Your sales team is clear on what is happening with the partners or regions being engaged and their roles with partners.
Partners: Initial proactive partners with clear market engagement taking place and sales pipelines started. Your organisation is consistent and transparent with the partners about how leads are handled between partners and the direct sales team. You are providing strong sales support with clear commitment to making the relationship work.
Stage 3: Additional partnering activity, sales organisational changing slightly
Plans & Activities: Initial partnering success refined and repeated with the shape of your partner programme getting clearer.
Direct Sales: Your sales team has a small defined part in the partnering activity, whether supporting sales activities within their regions or supporting training for partner on-boarding and induction.
Partners: The initial partners’ pipelines are progressing or have produced customers depending on the length of your sales cycle and you now could be delivering your first solutions together. Initial successes are easing partner selection, recruitment and on-boarding of new partners.
Stage 4: Partner programme, partner pipelines, sales organisational changed and building
Plans & Activities: You are now starting to feel that you have a partner programme and are developing processes, materials and an alliances team to manage and support the management of your growing partner network.
Direct Sales: The sales team’s function of working together with the partners is clearly emerging. The strategic longer term view is clear, the path on how direct and indirect will work together is defined and most importantly the immediate impact on sales people’s roles and commissions is announced. Direct sales team may well get some sales commissions for their part in supporting partner sales, while enabling growth in the partner relationship (this may be a very difficult task for sales people – be careful).
Partners: You are actively managing partner sales pipelines, forecasting revenues into your targets and operating with partners across every function of your business from marketing, sales, delivery, support and product development with feedback from the market.
Stage 5: Partner pipelines active, fully combined direct & indirect sales organisation
Plans & Activities: You now have a functioning Partner Programme that has been built by executing and learning and not just on paper as a back room exercise. With a number of active partners you are still learning as a company to become more effective at managing and developing your partner network. You are now proactively engaging many markets and reviewing how you get market coverage in each of the markets you are targeting.
Direct Sales: With the changing function and capabilities required in your sales team, the personnel type is changing and/or being augmented by ‘equal stature’ partner managers working closely with direct sales and partners. The sales organisation has changed completely over the transition.
Partners: The partners are almost part of your business and a strong source of growing revenues delivering further faster market reach with reduced financial risk and higher margins on greater licence revenues.
With a transformed business over this difficult transition, your organisation is now really set to be a global business on a high growth path. The critical elements are based by a clear business process, alignment of propositions and objectives and seeking to build a beautiful business engine functioning effectively to benefit all.
Great patience and perseverance is required while sacrificing a little of the present goals and targets for a great return in building your scalable business engine.
Donagh Kiernan is founder and CEO of Tenego Partnering, a business development services company providing hands-on international partner sales channels development for growing and established software product companies.
