Let me start by thanking you all for reading my first blog entry – it was an interesting range of response’s starting at some very encouraging supportive words right through to those contacting me concerned about the state of my mental health (I guess that gives you some insight into my prior views to blogging ;-) But fear not, I am perfectly sane and thank you to everyone for your responses, kind words and encouragement!
So on to this week’s post which is on the business side and has come about as result of a number of interactions I’ve had over the last couple of weeks with people looking to work with Ceridian but also from a couple of friends looking for some advice on how to build their business. It can be summarised like this – you’ve discovered this Secret Sauce, and you want to sell lots of it but you need a partner to help distribute it for you. You’ve approached some partners but aren’t getting the response or engagement from them your product deserves. I know this world well having first setup my own business based on channel sales and then turning from poacher to game-keeper by identifying and managing strategic partnerships for Ceridian. I’ve seen some spectacular successes and I’ve seen some damp disappointments so I thought it might be worth summarising the key elements of what drove the successful ones....
#1 Be Honest....
The most important step – be honest with yourself about why you are looking for the partnership. Securing a partner to sell on your behalf will be a long and difficult process (see later point – ‘Be Committed’) so before you start, make sure you are approaching the potential partner for the right reasons and not just because you think it’s a low effort short cut. For example if your reason is they have distribution you could never hope to achieve yourself within a reasonable time frame – then great. But if you could within 18 - 24 months build your own at a level similar or better by investing the effort to raise the finance and build out your own team then do so. Securing a large partner is not ‘easy’ and will require a significant time commitment not too dissimilar to raising finance (think financial models, legal paperwork and not least the dreaded corporate board approval.) So don’t be timid – if you can build it yourself then do it. If you honestly can’t, then find a partner but be prepared for the time and emotional investment that will be required.
#2 Be Selective....
Like any good relationship – be selective. I am always flattered by the approaches we receive for partnership as it validates what we’ve achieved in the market – however all too often there is a demonstrable lack of selectivity. The two questions I will always ask a prospective partner; “who else are you speaking to...” and “why have you chosen to speak to us....” When I hear generic answers like “because you’re big” or “because we both speak to the same prospects” it turns me cold. It neither demonstrates a customer focus nor provides a reason why you want to speak with us ahead of our competitors. All of the partnerships that I have seen be successful are grounded in a selective approach where the value of entering into the partnership is clear from the outset at both a commercial and a customer level. To illustrate, the answer to those same questions in the successful cases would have sounded more like “after building a number of custom integrations with your solution, we decided to survey our customer base and we found over 60% them using your product. We think by working together we can attract a greater volume of customers whilst at the same create recurring revenue for you worth $Xm within 5 years.” Talk about power answers – clear demonstration of the reasons for the approach whilst also articulating what it could be worth to both my organisation and the customer. Now I’m listening...
#3 Be Prepared....
You are going to need to make all the running – don’t entering into the process if you expect the partner to do large amounts of work in order to validate your claims. By example we’ll assess upwards of 2 partnership requests a week and as a result we don’t have time to investigate the details of every request we receive. I guess what I am saying is, before you even make an approach to a prospective partner you need to be prepared with all the key information to help them make a decision. The easier you make this the better so I would recommend you cover at least 4 key areas in your initial proposal;
Market sizing & Background; You are the specialist in your given product area. Assume worst case in that the prospective partner knows nothing of your industry – even if it appears complimentary to their own. Everyone – even big guys – are looking for validation on their own assumptions, so make sure you clearly articulate how big the potential market is (current and forecasted growth), what the key industry trends are and why you are approaching the prospective partner with a proposal.
Value Proposition; The last thing our customers want is to be sold technology or services via a middle man. So be very clear on what you believe the value story is that we could take to both customers and prospects rather than us both bid separately. It isn’t enough to think just because the partner has a large customer base that this will make it an ‘easy sell’ nor that customers will accept the benefit of being able to sign for both services on one contract. It has to be much deeper than that and demonstrate clear value that couldn’t be obtained without working together at depth.
Sales & Marketing; remember a large sales force will be carrying quota already, undergoing significant volumes of training and be locked into a sales compensation plan. Their desire to learn and sell a new product will be directly proportional to how easily this new addition will help them create & close opportunities. Therefore be very clear on how you would propose to educate, incentivise and support the sales force on an ongoing basis. Furthermore, what would be the recommended marketing plan that would support the sales plan through the generation of warm leads and opportunities?
Financial Modelling: ultimately people like me have hurdle rates of revenue and profit attainment which much achieved by any submitted business case. Therefore have a commercial model built which demonstrates how you would see the partnership generating revenue & profit over 3 – 5 years, how you see it being being split and what underlying costs need to be taken into account. You can use also sorts of clever tricks to project profitability dependant on the type of partnership you are looking to put in place. But the most important thing is not to expect the prospective partner to do the math for you – check your assumptions by all means but make it easy for the partner to say yes by understanding your numbers from every angle.
#4 Be Committed....
Probably the most important factor to take into account! When working with a large provider you will experience significant amounts of frustration that will test your commitment to the partnership. Inevitably the large organisation won’t operate as nimbly or as fast as you would like. Remember the very reason you are attracted to their scale does come at a price of bureaucracy, internal controls and extended internal politics. There is little you can do to avoid this other than steel yourself for the long journey by having a clear goal and understanding of how much the channel is worth to you. I have seen partnerships fail as a result of partner frustration bubbling over with the small provider trying to sell direct or poach staff. That never ends well...If the channel is worth it, don't waste time getting frustrated about symptoms of scale - spend that time understanding it how you can best manage around it.
So in summary, if you want to successfully sell that secret sauce via a partner then my advice would be; Be Honest, Be Selective, Be Prepared & Be Committed! Kind of sounds like a Boy Scout / Girl Guide motto crossed with the golden rules of dating. But you know what, when it comes down it those lessons learned as kid will get you pretty far in life....
