How do you make your partners productive in a Sales 2.0 world?
Sales 2.0 (http://sellingpower.typepad.com/gg/2009/09/the-sales-20-movement-accelerated-in-chicago-part-ii-.html) has many facets, one of which is the discipline of more science in sales, that is, there is more measurement, analysis and predictability of the sales forecast. In addition, Sales 2.0 encourages (almost mandates) a tighter level of cooperation and participation between Marketing and Sales. HP’s Kevin Hooper reports that Sales 2.0 in his environment means that Marketing takes 15% of his quota — Get ready Marketing for the next forecast review!
But what is happening externally with Sales 2.0? Almost by tradition, partners are recruited and trained (and in the non-SaaS they typically pay a fee as well) and they are off and running. They are then left on their own. Partner metrics (if there are any) are usually one-sided (vendor only); they are rarely shared or co-developed.
What’s been the result? Well, you can’t treasure what you measure; more often or than not, everyone is disappointed and well angry. Partners feel deserted and see nothing for their investments. On the flip side, the partner management team reflects their disappointed by not reaching out and instead hunts for new revenue with other NEW partners to try and make their quota. All of that ‘feel good’ goodwill at the beginning of the partnership has faded. No one is surprised, we (partners and vendors) just take it in stride; it’s what we always done (in the Sales 0.0 and 1.0 worlds).
Sales 2.0, however, give us a new start to address an old problem: how do you make your partners productive, now in a Sales 2.0 world?
Although a great deal of the emphasis of Sales 2.0 is about Inside Sales; partners do and can plan a key role in joint success. After all, part of the Sales 2.0 philosophy is building and sustaining a meaningful dialogue with the customer. Who else knows your customers as well? (even better?) Who else knows the ‘gotchas’? Who else has a finger on the pulse?
- So, first off, do you measure Partners?
- Do they know the metrics? (Are they aware they are being measured in the first place?)
- Describe the partner’s sales roles; is this common knowledge with the partner?
- What measurements are jointly developed?
- What investments are both sides going to make to realize these goals?
- What’s the process to review the results and tack a new course?
Sales 2.0 is both a dialogue and a process (and in many cases. technologies). There is a viable, if not critical role for partners in a Sales 2.0 world (yes, for both SaaS and On Premise). A successful Sales 2.0 dialogue means shared metrics with partners.
Last week at Sales 2.0 several vendors described how they track and measure disqualified leads in the sales funnel. It is an interesting concept because it implies that the company understands what a qualified lead looks and feels like in the first place. It also hints at the growing convergence between Marketing and Sales but that is another subject.
On the channel side, how many vendors proactively qualify their partners (meaning are they actively culling partners that aren’t productive)? This may mean a conundrum for SaaS companies, particularly those in the early stages of selling and deploying their applications. How do you convince partners to invest time and resources when the sales model isn’t clear?
Most early SaaS companies take a more reactive approach and recruit partners with the HOPE of recurring revenue. After a few months or maybe after the first year of sales (multiple by 7 to get the equivalent in dog-years for premise solutions), early stage SaaS companies often find that their ecosystem is full of partners recruited because they were ‘friendly’ or ‘family’ but have demonstrated limited ‘sell through’ momentum and success. They are left with the unfriendly and less than fun topic over the phone (not even over coffee or drinks) to politely ‘disengage’.
It is true that SaaS applications are easy to deploy and derive early value for customers. It is certainly logical to have a low-barrier to entry from a partner model perspective. It does, however, make some sense to at least develop the profile of the ideal partner. Not only based on their geography or reputation but take a closer look at their business model, how they provide value to their (yours-to-be) customers and the shared domain expertise. The profile of the ideal partner is a recipe of some blend of these 3 elements.
Some up front, thoughtful work about aligning the vendors’ SaaS application, domain expertise and the partner’s capabilities will save some grief on the back end of partner ‘disqualification’.
I attended Sales 2.0 Conference last week and a mid-tier Microsoft partner explained how his company has used Twitter, Facebook and Linked to drive new revenue. Revenue that was not only important for the VAR but ALSO led to significant incremental, new revenue for Microsoft. This was a surprise for the VAR and Microsoft. The Microsoft team took note and the new revenue was one of several factors that Microsoft identified why Microsoft named the VAR Regional Partner of the Year.
Large(er) companies like Microsoft have some challenges with the speed with which they can deploy Social Networking tools by its employees for business purposes. There are number of thorny processes and procedures that (naturally get in the way – but note, that Dell and Apple established communities of the 3 ‘majors’ of the Social Networking Tools’).
Company privacy policies, security and the overriding need to protect the company’s brand have delayed (I wouldn’t say permanently) but definitely postponed the company’s ability to quickly leverage the value of Social Networking tools for lead generation and nurturing processes. In this case, the VAR (albeit much smaller) was able to rapidly and deftly leverage these tools to create and nurture relationships that were not known to them before. The relationships pushed new opportunities into the pipeline and ultimately realized revenue for the VAR and Microsoft.
So, if you are a partner with any ISV, hardware vendor, you may want to take a second look at even a modest investment of time (these solutions are free) and give some thought what it might take you down the path to be Partner of the Year.
I was meeting with a group of high powered, highly successful VPs of Sales yesterday and we were discussing the SaaS partner model (as it is).
Several colleagues have built their careers in the semiconductor business and were astounded to learn the most SaaS vendors do NOT provide any revenue to the partner in the second or third (or beyond) renewal cycles. They were further shocked to learn that the initial compensation of a mere 10% or 12% as the partners’ referral fee covering the initial sale was astoundingly low, but felt better (somewhat) after a better understanding of SaaS business model cost structure.
In the on-premise world, VARS and resellers provide value by taking on some of the financial risk of invoicing, logistics and deployment. They are typically compensated by a margin on the sales deal and as much as 10% additional discount, to provide 1st level customer support. It’s a common perception in the industry that the partners take the additional Customer Support 10% discount as additional margin and don’t invest in customer support training or tools — they just take the cash.
SaaS vendors have taken both back in house (1st level of support and the cash). But vendors often struggle when it comes time for the SaaS customer to renew the contract: Who Owns the Customer? The vendor? Or the partner?
The big SaaS CRM vendors struggle with this issue and it has created quite a bit of tension between vendors and partners. Here are some discussion points to help answer the question:
- Vendors: vendors need to think about what life would be like when a SaaS customer is threatening not to renew and avoid asking the partner at the possible moment and as a last resort ‘ what can the partner do to save the account’?
- Partners: In the SaaS world partners need to think about investing MORE up front in the SaaS vendor’s technology and take the high road: vendors can benefit from the vast knowledge of best practices of what customers really need to optimize the benefits which will in turn make renewals automatic (well almost).
SaaS Renewals: Who owns the customer? The vendor? Or the partner?
I was meeting with a group of high powered, highly successful VPs of Sales yesterday and we were discussing the SaaS partner model (as it is).
Several colleagues have built their careers in the semiconductor business and were astounded to learn the most SaaS vendors do NOT provide any revenue to the partner in the second or third (or beyond) renewal cycles. They were further shocked to learn that the initial compensation of a mere 10% or 12% as the partners’ referral fee covering the initial sale was astoundingly low, but felt better (somewhat) after a better understanding of SaaS business model cost structure.
In the on-premise world, VARS and resellers provide value by taking on some of the financial risk of invoicing, logistics and deployment. They are typically compensated by a margin on the sales deal and as much as 10% additional discount, to provide 1st level customer support. It’s a common perception in the industry that the partners take the additional Customer Support 10% discount as additional margin and don’t invest in customer support training or tools — they just take the cash.
SaaS vendors have taken both back in house (1st level of support and the cash). But vendors often struggle when it comes time for the SaaS customer to renew the contract: Who Owns the Customer? The vendor? Or the partner?
The big SaaS CRM vendors struggle with this issue and it has created quite a bit of tension between vendors and partners. Here are some discussion points to help answer the question:
- Vendors: vendors need to think about what life would be like when a SaaS customer is threatening not to renew and avoid asking the partner at the possible moment and as a last resort ‘ what can the partner do to save the account’?
- Partners: In the SaaS world partners need to think about investing MORE up front in the SaaS vendor’s technology and take the high road: vendors can benefit from the vast knowledge of best practices of what customers really need to optimize the benefits which will in turn make renewals automatic (well almost).
This blog is one in a series that discusses the opportunities facing companies as they expand into international markets, particularly through indirect or channel sales.
Why ‘Going International’ is Good for Your Domestic Channel Business Part 3 Summary
Typically, ‘going international’ means you’ve developed a successful channels business for North America. But before you pull the lever on investing in international channel sales, take a step back and assess what your domestic channel partners have been telling you for some while.
You may be surprised to find that as you initiate your search for successful international partners, your domestic channel partners are a valuable source of experience and knowledge of what has worked and what has not. In turn, this reflective pause can help you re-energize your domestic channels business you’ve been working so hard to develop.
Summary
To recap, developing a channels sales strategy for your (new) international markets is a great opportunity to take a self-assessment of your domestic channels business.
1) Channel partners are constantly looking for nurturing and feedback. Your candid assessment can help them to re-commit scarce resource dollars in your company. Their experience is a treasure trove of experience that will help shape and establish a path for early revenue with your new international channel partners. In the meantime, your domestic channel partners will love the attention.
2) A good understanding of the domestic model will help you refine and prioritize (cull? even tier?) your most successful partners, this helps with the never-ending battle of resource allocation and commitment that you can offer your proven domestic partners.
In the, end a good domestic program provides ‘sure-footing’ to confidently step outside your traditional local markets and will position your company for early and sustained success as it enters the race in the international marketplace.
This blog is one in a series that discusses the opportunities facing companies as they expand into international markets, particularly through indirect or channel sales.
Why ‘Going International’ is Good for Your Domestic Channel Business Part 2
Typically, ‘going international’ means you’ve developed a successful channels business for North America. But before you pull the lever on investing in international channel sales, take a step back and assess what your domestic channel partners have been telling you for some while.
You may be surprised to find that as you initiate your search for successful international partners, your domestic channel partners are a valuable source of experience and knowledge of what has worked and what has not. In turn, this reflective pause can help you re-energize your domestic channels business you’ve been working so hard to develop.
HERE’s Part 2
Channel Revenue and Productivity
Think about the compensation model you have with your domestic sales partners: discounts, resell and referral s that are typically on the front end. What is your partner compensation for customer renewals and retention? In a traditional resell model, the latter might be not as important but if you have a subscription-base solution, you’ll want to give this some good thought. Describe the success of your best domestic revenue partners. What’s been the key factor in their financial compensation? Can this be duplicated across your domestic program? The next step is to define the implications for your international expansion plans.
Also, give some attention to the rules of engagement (RoE). While the RoE may not be an immediate issue in your new international markets (that is, the conflict between direct vs. indirect sales) be prepared for a confident answer on the question of exclusivity. International channel partners are prone to ask (sometimes naively) at an early stage in the courting process. Typically, exclusivity is rare. Do, however, think through your answer in advance. A confident and rationale policy on exclusivity helps build candor and transparency, key values in building a successful international (and domestic) program.
I saw that SuccessFactors recently RE-subsribed to Salesforce. They WERE a Salesforce customer up until and through their 2007 IPO. Then the rumor mill started and it broadcasted that SuccessFactors was not happy with Salesforce (read between the lines here) and opted not to renew. Instead, SuccesFactors ‘jumped ship’ and went over to the Dark Side of Siebel on Demand. Fast forward 18 months and Salesforce has REPLACED Oracle/Siebel!
In the on premise world this wouldn’t have been possible. The deployment of a robust CRM solution would have taken 9 months alone and at least another 6 months to identify some modicum of improved productivity. The fact that SuccessFactors could unplug, plugin and unplug and plugin (yet again!) a solution that was running a very large data set and was probably a key, if not mission critical, asset to ensure day-to-day operations.
The fact that a large company, some ($111m in sales) could decide to do so and continue uninterrupted operations is quite amazing. (I’m sure thought the Marketing and Sales Operations teams are sporting the shaved head look any hair after tearing it all out) Most importantly, the ability of a company to steer its destiny in a SaaS world is testament to the fact that SaaS has matured (at least to this level).
http://blogs.zdnet.com/BTL/?p=23045
This blog is one in a series that discusses the opportunities facing companies as they expand into international markets, particularly through indirect or channel sales.
Why ‘Going International’ is Good for Your Domestic Channel Business
Typically, ‘going international’ means you’ve developed a successful channels business for North America. But before you pull the lever on investing in international channel sales, take a step back and assess what your domestic channel partners have been telling you for some while.
You may be surprised to find that as you initiate your search for successful international partners, your domestic channel partners are a valuable source of experience and knowledge of what has worked and what has not. In turn, this reflective pause can help you re-energize your domestic channels business you’ve been working so hard to develop.
Customer Alignment and Retention
At the heart of any successful channel program is the customer. In the end, customer acquisition and retention are the number one priorities for all. Of paramount importance is to look for the partners that have had the most customer success and understand the underlying business model they have with you, and similarly, with their customer.
Think about the 5 top qualities that comprise your most successful partners. While it is true the profile of your early international channel partners will be somewhat (yes necessarily) different, they will also share several key capabilities and skills that might surprise you. What are they? Defining these key ‘virtues’ can help you identify (or cull those that don’t) and establish a path for you and your partners to create more value and in the process, create more predictable revenue. More to come in the next blog.
I recently attended a webcast of a major IT vendor. During the call, they offered a bargain-basement pricing for new training at the rate of $5k for 3 people, all at a local hotel. The ‘deal’ did include the hotel for 2 of the 3 people and the vendor would give a credit if the reseller reached certain success metrics.
Let’s take a step back, plus $500 travel (at least), plust the opportunity cost of 30 hours (90 for all three out of the office). So, that’s $5k, plus $1500 and let’s see 90 hours at $50 an hour, that’s $4500 and they aren’t doing a lick of work!
This type of heavy investment is unheard of in the SaaS world. Sales 2.0 rules the day-to-day operations and partners are no different. In fact, they are seeking all options to lower their costs and increase productivity. ebcast, This by the way not certified training, just show-up-and-listen event. You would think a technology vendor would be the first ones to lower costs through technology….me thinks that somebody’s feathering their nest, while the SsssssSale 2.0 serpent winds its way up the tree for an easy snack!
