Building High Impact Alliance Programs
By Debra Murphy, Vista Consulting
Many software companies start by trying to go it alone – sell their software product directly to end customers. For the early stage startups, that may work out. But once you have launched and built some awareness around your product, how do you continue to grow your client base, gain credibility, and increase revenue without adding a lot of sales people?
For software companies, synergistic relationships with complementary solutions providers, system integrators and consulting partners are critical to your expansion in the market. Done properly, benefits of having alliance partners far outweigh the investment. Quality, revenue-generating partnerships can lend credibility to your software solution, expand your market into areas where you may not have expertise, and provide an extended sales force without having to add resources. A network of skilled partners with technology, integration and implementation expertise helps your customers solve business problems by bridging the gap between disparate products and real business solutions.
In addition to creating the alliance program with the usual categories, benefits and materials, you should first address the following four key challenges that can sabotage the success of your program.
There Must Be an Alliance Strategy
Conceptually, most managers agree that an overall alliance program strategy is necessary to focus your resources on those alliances that make the most sense for your business. Signing up as many partners as possible is not a strategy. Signing up partners because they brought you one deal is not a strategy. Without a clear understanding about where your alliance program should take you, and what you want from a partnership, you can overextend your resources and set yourself up for failure.
Once you have established a program strategy, then each alliance needs to be backed by a business strategy. The individual strategies can be driven for many reasons, such as vertical expertise, integration services, a strong sales force, or credibility in a complementary technology, such as XML or Java development. The true value of any alliance is measured in terms of its contribution to your strategy, not solely on the costs and revenues of the collaboration.
Even knowing this, companies will still take on partners without really understanding why. This is due in part to the business development manager seeing the alliance itself as the goal. By ensuring your business development managers clearly understand the overall strategy and how individual alliances fit within the strategy, they will be able to better assess which partners are critical to your success and eliminate those that are ineffective.
The Product Must Be Solid
Before you try to recruit system integrators and consulting partners, be sure your product is at the point where you feel confident that they will see its value. In the early stages of your product, you should target complementary technology partners that extend your product and a small number of consultants and system integrators that you utilize as advisory partners as you develop the product. Nurture and invest in these companies by training them, getting feedback from them on product requirements, and having them accompany you on a customer implementation. Turn these consultants into product evangelists who lend credibility to your product. You will be far more successful recruiting larger, more influential system integration and consulting partners if you already have outside references that can speak with prospective customers, partners, industry analysts and press. Trying to recruit these partners without a solid product that meets their expectations, and customer and partner references that support your product strategy, could seriously damage your product’s reputation.
Business Development is Not the Same as Sales
Many companies confuse business development with sales. Business development, the recruitment and management of alliance partners and alternate sales channels, is an integral component of strategic marketing. Your sales organization is a day-to-day activity that brings in the revenue. To effectively acquire and retain quality alliances, business development managers need to be goaled on the strategic relationship. The alliance should bring you revenue opportunities, but that may be a secondary goal. If your strategy is to establish an alliance because they have credibility within a key vertical market, then you should measure that relationship on how effective it is in getting you customer opportunities within that vertical. One you get the opportunity, closing the sale is your sales organization’s responsibility.
Another reason for this distinction between business development and sales is that your alliance partners need support from you in order to be successful – something your sales organization cannot afford to provide. Your alliance partners need the tools, such as training, collateral, demos, and joint sales opportunities, to promote your product and the confidence in the product to effectively represent it to their customers. By investing in these tools to help your partners establish a successful practice around your product, you enable the partner to drive revenue not only for their company, but also for yours.
Build the Relationship, Not Just the Business
A signed contract does not make a relationship. Before you venture into a relationship, make sure you have the resources you will need to service the partnering agreement – business, technical, and administrative. Once the contract is executed, it is imperative that your business development manager understands the spirit of the alliance agreement and the reasons for entering into an alliance in the first place. They must nurture the relationship to keep your product foremost in your partner’s minds.
To build a successful alliance takes time. If companies are to succeed in the competitive markets in which they exist, they must build partnerships on trust and mutual respect and ensure that they can work together effectively. To do so means that both parties be able to function with an attitude of what is best for the partnership, resolve conflict quickly and effectively, solve business problems jointly, give as much as they get, and communicate openly. Only then will the partnership mature and reach the results you had envisioned.
Effective Alliances Extend Your Reach
Alliance programs are being revamped to focus strongly on business strategy, go-to-market plans and mutual value propositions. A software product benefits by having a wider sales channel communicating this value to the customer. By creating a strategic business development plan and focusing your resources on its effective execution, you can acquire customers that you would normally not reach, and help your company grow to its desired level of revenues.
