The pitfalls of partnering

In the IT market, partnering is one of the essential go-to-market strategies. The major vendors primarily run on this, but data centres, IT resellers, hosters and other service providers also work with partners. Partnering can therefore be very lucrative. But as lucrative as it can be, we often see partnering also be far from successful. Partners also deserve time, money and attention. To fully understand the pitfalls, it is good first briefly to explain the types of partners:

Resellers:

These are organisations that buy and sell the products or services of an IT company. The invoice relationship lies with the reseller, managing the relationship. These parties usually do not add any 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 the contacts with the customer change. Often there is and ‘prime contractor’, and this party also adds value to the IT Company’s service.

Referral partners:

This is a collective term for anyone you introduce to a potential new customer. The invoice 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 the revenue or margin.

There are also other names and perhaps even more detailed descriptions and categories possible, but broadly speaking, we encounter these types in the market. We also see that companies have an overlap of the kinds of partners. For example, all major brands (Microsoft, HPE, Dell, et cetera) have both resellers and partnering partners.

Boot about to step on a banana

Boot about to step on a banana

Partnering is often a good intention

For many organisations, the creation of a partner channel has been accidental. You are active in the market and come across people you click with at customers or events, or you see the added value of their company for your own. It seems like an easy route to more sales and margins. And there is already the 1st pitfall of partnering. I will list them:

A partner is only a partner if he also sells

At the beginning of a partner relationship, all prospects are super good. Expectations are high. The other party has friendly customers that you would also like to be at the table with.We have a partnership! Too often, I’ve seen those kinds of intentions fail. A partner is only really a partner if he sells something for or with you. When it generates a turnover for you, until that time, it is mainly a good intention. 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 partner with will just 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 now and then is not compelling enough. Both you and your partner need to get serious about it. Be top-of-mind and be part of his portfolio or focus areas for his clients.

Partnering is like a marriage

Now, this doesn’t seem like a pitfall but hang in there. After you get your partner started, he has all the knowledge and skills, is seriously focused on your services or products. It doesn’t stop there. We very often see the focus on the new partners slacken. Things are going well, sales are growing, and there is contact about orders and orders. But, that’s not enough to remain successful in the long run. You have to keep giving partners proactive attention, knowledge, support and information. You have to keep investing in each other.

Partnering is more than a portal

Another pitfall we see a lot is that the sales material and pricing for the partner are well worked out. Much time and money are spent making the quotation and ordering process easier for partners via a portal. The hygiene factors for a successful partner strategy are beingcompleted. But partnering is more. It’s also working commercially with their organisation, setting up an ecosystem, having regularly scheduled contact at all levels about operations, 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 indeed occurs. This is especially true in IT services. If an organisationchooses to resell an IAAS service, for example, he is choosing a party. That does not mean that he sells a similar solution like Azure in addition. In fact, partners are never alone.Successful partners have other hijackers on the coast, and the more generic your solution, the more choice he has.

There are more pitfalls and potential downsides to partnering. At the same time, we believe that if you set up and implement partnering well, it can be a game-changer for you as a company. The advantages are numerous, without having to set up a large commercial organisation, you gain access to new markets and clients, 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.

Partnering, however, is a conscious choice. There are several aspects to a successful partnering strategy. As a commercial consultancy firm for IT companies, we are happy to share our vision and experiences on this, including our white paper on how to implement partnering successfully. We can also do this specifically for your organisation via a 1st new business scan.

Would you like to know more about the latest developments in portfolio innovation, marketing and sales in general? Read our other blogs or have a chat with one of us.