In any market climate it is a significant financial risk to invest in new staff members to improve or create relationships with partner companies; the length of time taken for the benefits to be realised from such business activity is significant; additionally it is expensive to recruit a suitably senior, experienced and appropriately-connected individual that can make this happen. Once created, it is also a challenge to maintain levels of sales from existing partners without appropriate and continued management.
Managing and developing partners to do the business you want and expect is not the same as selling direct to the end client. Direct selling is a well understood and measurable business process, normally adding a sales person increases revenue by a given amount. Many companies make the mistake of assigning a sales person to a Partner account to develop and yield consistent financial results. This action is in direct conflict with their sales targets. When the sales person asks themselves ‘will this activity deliver my target for this quarter?’ building a partner rarely gives the answer they want and so the relationship suffers over time.
Types of Partnership
Channel Reseller – buys goods from manufacturer and sells them on unchanged for a margin.
VAR – Value Added Reseller, buys goods from manufacturer/software author and sells them as a complete solution as their value added proposition to their customers.
Partner – A company with whom a business provides sustainable business and revenue opportunities through complete management programmes offering rewards for performance (usually in sales revenue).
Alliance - An alliance is an agreement between two or more individuals or entities stating that the involved parties will act in a certain way in order to achieve a common goal. Strategic alliances usually make sense when the parties involved have complementary strengths. Alliance partners may also compete at certain levels and this must be managed. This is the most complex relationship of all partnering activities.