In the IT market, partnering is one of the essential go-to-market strategies. The major vendors run on this, but data centers, IT resellers, hosters, and other service providers also work with partners. Partnering can therefore be very lucrative. Despite its potential profitability, partnerships frequently prove to be unsuccessful. Partners also deserve time, money, and attention. To fully grasp the potential pitfalls, it is essential to first outline the different types of partners.
These organisations purchase and sell an IT company’s products or services. The billing relationship lies with the reseller, and they also manage the relationship. These parties usually do not add additional value to the products or services.
- Collaboration partners:
These are parties that partner with the IT Company they work with. The billing relationship and also customer contacts change. There is often a “prime contractor,” and this party adds value to the IT company’s service.
- Referral partners:
This is more of a catch-all term for anyone who introduces you to a potential new client. The billing relationship is between the customer and the IT company, and often there is a kick-back construction. The referral partner is paid a percentage of sales or margin.
Other designations and perhaps even more detailed descriptions and categories are possible, but broadly speaking, we encounter these types in the market. We also see that companies have an overlap of types of partners. For example, all major brands (Microsoft, HPE, Dell, et cetera) have resellers, and collaboration partners.
Partnering is often a good intention
In many organisations, creating a partner channel has been accidental. You are active in the market and meet people at clients or events that you click with or see the added value of their business for your own. It seems like an easy route to more sales and margin. And there is already the 1st pitfall of partnering. Let me list them:
- A partner is not a partner until it also sells
At the beginning of a partner relationship, all prospects are super good. The expectations are high, the other party has desirable clients that you would also like to work with, and they are friendly people. We have one more partnership! Too many times have I seen such intentions fail. A partner is only really a partner when it sells something for or with you. If there is revenue coming out for you. Until then, it’s mostly good intentions. You can measure whether a new party is going for it, which brings us directly to pitfall number two.
- A partner never just sells
Rarely a party you want to work with will sell any of your products or services. Sharing product or service information and prices and margins is not enough. Even calling or emailing the (new) one once in a while is not compelling enough. Both you and your partner need to get serious about it. Not just being top-of-mind but being part of his portfolio or areas of focus for his clients.
- Partnering is like marriage
This does not look like a pitfall but hang in there. After you get your partner started, he has all the knowledge and expertise and is seriously focused on your services or products; it doesn’t stop there. Very often, we see the focus on the new partners slackens. Things are going well, sales are growing, and there is contact about orders and commissions. But that is not enough to remain successful in the long run. You must continue to give partners proactive attention, knowledge, support, and information. You have to keep investing in each other.
- Partnering is more than a portal
Another pitfall is that the partner’s sales material and pricing are well-developed, and a lot of time and money has been spent on making the quoting and ordering process easier for partners. Through a portal, for example. The hygiene factors for a successful partner strategy have been completed. But partnering is more; it is collaborating commercially with their organization, establishing an ecosystem, and having regularly scheduled contact at all levels about the operation, annual plans, and strategy. And so, there are more components of successful partnering. Partnering is much more than just a portal.
- You often don’t have a partner alone
Exclusive partnering certainly does occur. This is especially true in IT services. For example, when an organisation resells an IaaS service, it chooses a party. That doesn’t mean he sells a similar solution to Azure in addition. Partners, in fact, you never have alone. Competitors are also looking for successful partners; the more generic your solution, the more choice he has.
There are other pitfalls and potential drawbacks of partnering that can be identified. At the same time, we believe that if you set up and execute partnering well, it can be a game changer for you as a company. The benefits are numerous; without setting up a large commercial organisation, you gain access to new markets and customers, your branding and awareness grow, you get “warm” feedback and input for the further development of your services and organisation, and I could go on and on.
Partnering is a conscious choice. There are several aspects of a successful partner strategy. As a commercial consulting firm for IT companies, we are happy to share our views and experiences on this, including through our Whitepaper on implementing partnering successfully. We can also do this for your organisation through a 1st new business scan.
Interesting articles on Partnering: