Partnering

Key stakeholders in a partnership process

In Strategic Selling, Rob Miller and Stephen Heiman define a 'complex sale' as one in which "several people must give their approval before the sale can take place."

These people play roles in the buying process such as guiding the seller and providing information ('Coach/Influencer'), screen possible suppliers and make recommendations ('Technical Buyer'), make judgments about the impact of your product or service on their job performance ('User Buyer'), and give final approval to buy ('Economic Buyer').

In some of my recent work with startups trying to sell through partnerships it struck me that there are roles in the partnership process that are comparable but different in important ways. By selling through partnerships, I mean convincing another organisation to use its resources to sell your product or service to its customers, and sharing the revenue in some way.

For instance, if your product is an email marketing tool for small businesses you may want to sign up a network of resellers to distribute it to their existing network of customers rather than trying to sell to each small business individually.

Signing off a partnership typically does not involve any money changing hands, so there's no 'Economic Buyer' whose budget you need to access. Similarly, there's no 'User Buyer', because the partner is not the one who will use your product.

However, there will be 'Technical Buyers', who will assess whether your product or service actually works, whether it fits in with the rest of the portfolio, and whether your company fits the right profile for their company to work with. There will also be a 'Coach/Influencer' role, to guide you through your potential partner's organisation and politics. It is typically the Coach/Influencer role that you initially have to convince that the partnership opportunity is worth exploring.

In place of the 'User Buyer' I suggest that an important role in any partnership discussion is Sales. It will be the sales team that is responsible for answering questions such as:

• Which customers will we target first?
• How will we engage them?
• How will the sales team be incentivised for selling your product or service?
• What support will they need from marketing and who will provide it?

In place of the 'Economic Buyer' I suggest the key equivalent is the 'Project Lead', who will typically be an executive in your potential partner's organisation, responsible for answering questions such as:

• What is the commercial model for the partnership?
• Who will be involved in overseeing the ongoing success of the partnership?
• What are the key metrics for the success of the partnership?
• At what point will the partnership be re-evaluated?

The roles may overlap and some individuals may play several roles during your negotation.

To summarise, there are four key roles that you need to involve before you can feel comfortable signing up a new partner for your business:

• Project Lead – for commercials, metrics, and management
• Sales – for targets, sales strategy, incentive plans, and marketing support
• Technical – for product assessment, compatibility, and legals
• Coach/Influencer – for validating market size and value proposition, and helping you navigate the rest of the organisation

Posted by Paul Higgins on September 8, 2011 at 1:51 pm in Blog, Partnering, Sales | Permalink | Comments (3) | Trackback (0)

         

Good entrepreneurs are risk-averse

Ask a man on the street what he thinks about entrepreneurs and risks. He’ll likely say that entrepreneurs thrive off risks. In reality, the best CEOs of start-up companies are very risk averse; their skill lies in their ability to mitigate risk.

We are currently helping a client raise funding and design a go-to-market strategy for a technology it is building. A focus on risk mitigation has been central to this strategy.

Historically, a company at this stage would have faced two key risks:

1. Technical – can a solution be built to specification? Will it work?
2. Market – will the market adopt the technology? Will it do so within acceptable timeframes and costs? Is there a product / market fit?

In today’s environment, investors are much less concerned about technical risk. They assume the system can be built to requirements. Their key questions are all around market adoption, and this was the area our strategy looked to address.

Step one – market selection

The solution, once built, will be applicable across a wide range of markets. We began by selecting a niche one for initial deployment. This way the solution can be built precisely for this market, from the ground up, and therefore compete by being better able to meet precise user-requirements than the generic solutions of its competitors.

The market was selected because it will face new legislation in the next 18 months: no driver is stronger than a legislative one, where the result of non-compliance could be a criminal conviction. Our strategy is for the solution to enable companies to gain assurance of and demonstrate compliance to the legislation in the most cost-effective and straight-forward manner. Currently there is no effective solution on the market to enable them to do this.

Step two – partner selection

Our second step was to form a partnership with a major ($2bn turnover) services company, operating across a wide range of markets, and currently number two in our chosen market. We will build them a solution ‘free of charge’ (i.e. fully funded), they will input user-requirements and market it to their customer base. This partnership will mitigate market risk in the following ways:

1. The resulting solution will have the endorsement of a leading market brand
2. The system will be ‘best-of-breed’ in terms of precisely meeting user requirements, thanks to the partner’s input of expertise during the build process
3. Most crucially, there will be a ready-made large customer base (i.e. that of the partner’s) to enable a smooth path to revenue upon product completion 
4. There will be a significant reduction in terms of marketing spend due to the partner’s ability to promote to its customer base. The partner’s current number two position in a strategically important market means it is strongly motivated to leverage the incoming legislation to gain a leading position – our client’s solution will be a chief enabler for this
5. Market development – subsequent target markets are also served by the partner

Posted by Guest Author on August 1, 2011 at 12:18 pm in About RIG, Blog, Entrepreneurship, Partnering, Strategy, Technology | Permalink | Comments (0) | Trackback (0)

         

How a flea can move an elephant

One entrepreneur recently described his revenue-generation challenge like this: “I need to get a flea to influence an elephant.”

He had recently entered into partnership discussions with a potential reseller, through which he would be able to access a large market of potential customers. However, going indirectly via the reseller to these potential customers forfeits a significant amount of control over the process when compared to selling directly. Simply put, you’re relying on individuals outside of your organisation to make things happen for you.

Generating impetus for your product or service within another, much larger organisation might seem like trying to get a flea to move an elephant. At a very high level it requires two things to be true:

1. There are sufficient drivers for the organisation to act now; and
2. There are sufficient drivers for each relevant individual in the organisation to act now.

On point (1), the elephant’s executive team (its head?) must believe wholeheartedly that partnering with you has a significant and immediate impact on its overall strategy. Following on from an earlier post (what’s in it for the partner?) you have to work this out in terms that make sense to them. To continue the analogy, the flea must enable the elephant to compete better with other elephants.

On point (2), the elephant’s operational team (its legs?) must all have individual incentives to support your organisation. If the partner’s salesman gets a bigger bonus for selling his own products rather than yours then you are unlikely to get the elephant walking in a straight line in your direction.

Ensure that these two points are in place and your flea might become the most important part of the elephant’s armour.

Posted by Paul Higgins on April 21, 2011 at 10:37 am in Blog, Partnering, Strategy | Permalink | Comments (0) | Trackback (0)

         

Choose your customers

One of the topics I like to discuss with prospective RIG-ers at interview is what the first steps are that they would undertake to plan the demand generation (i.e. marketing) strategy for one of our typical earlier stage clients. I describe this ‘typical’ client as having the following characteristics:

• A market ready B2B SaaS offering
• One paying customer
• A recent angel investment with the objective of driving sales and marketing

There are numerous mechanisms, processes, and strategies in planning the initial stages of an effective marketing effort for such a company. However, I try and guide the discussion to the central tenet of any successful plan – the fact that you need to begin by choosing your customer. This becomes remarkably obvious to the candidate when I tell them, but it is non-the-less a vital step in any marketing strategy.

The key of course, is how to invest limited resources to maximise chances of market traction. In order to do this, you want to sell your solution to an organisation which has:

• A problem / opportunity which your product solves / enables them to exploit better or cheaper than alternatives
• An awareness that this problem / opportunity exists
• Available budget

Now you have chosen your customer, in which markets do you find them? What is the best way to reach them? How are you able to articulate your proposition in such a way that it is most compelling? How do you make it more compelling than going with a competitor, doing nothing at all or doing something in house? How should you price the solution and what is the anticipated return on investment? How do you navigate the complex sale?

Once you have found a way to do it, how you codify this process to drive both repeatability and visibility for the purposes of revenue predictability? What are the key hires and what can be done to ensure the optimal candidate is recruited and able to perform? When is more investment required? Would growth objectives be better met if partnerships were formed in certain areas? How are the best partners found and what management processes are needed to reduce the risks of failure?

These are all the challenges we not only advise our clients on, but actively execute for them, and they are all areas that I will cover in future posts.

At this stage in the interview, the candidates are always suitably fired up about our business!

Posted by Guest Author on March 31, 2011 at 9:55 am in About RIG, Blog, Demand Generation, Entrepreneurship, Partnering, Pricing, Recruitment, Sales, Strategy | Permalink | Comments (1) | Trackback (0)

         

The arrow-head principle for partnerships

You’ve signed up a new reseller for your product and service. The reseller has 500 customers to whom it could sell all 5 of your products. You’ve done the maths – your premium products sell at £100k and your ancillary products sell at £10k so the overall market opportunity for the partnership is in excess of £100m. If you win just 5% of that market then the partnership will comfortably deliver seven-figure revenues. Enthusiasm is high and neither party can wait to get going.

Which of your products should the reseller discuss with its customers first? The arrow-head principle (with a firm tip of the hat to Steve Emecz, who was the first person I heard use the term) says that you shouldn’t pick your most expensive product nor your most profitable product: you should pick the product that is easiest for the reseller’s customers to buy.

The principle is derived from the idea that partnerships are delicate in their early stages and building momentum with real revenues – however small – is important for both sides to prove to their respective executive boards that the collaboration is worth pursuing.

Once your partner has sold one of your products to a customer then it will be significantly easier to cross-sell your other products to them. Make it easy for the customer to start working with you and build from there.

This principle won’t be followed on its own – for instance, your reseller’s sales team will need to be incentivised initially by the number of new customers won rather than total revenue or profit – so make sure that your product strategy for the partnership is discussed in detail during partnership negotiations.

Posted by Paul Higgins on March 24, 2011 at 1:53 pm in Blog, Partnering, Strategy | Permalink | Comments (0) | Trackback (0)

         

The emergence of the Chief Revenue Officer

It feels like some sort of Awards Season in the global technology world as well as in Hollywood at the moment as growth-stage companies are being recognised by an increasing number of ‘definitive’ top 100 lists. In the last few weeks we’ve seen JMP Securities release its Hot 100 list and AlwaysOn release its OnMedia 100; before that we had the World Economic Forum‘s Technology Pioneers and TechCrunch‘s Europas; in early April 2011 London will host the Telegraph‘s Start-Up 100 event.

Whilst reviewing some of the new companies on these lists I noticed that more and more of them have created a Chief Revenue Officer (CRO) role, particularly in the US.

Revenue Performance Management company, Marketo described its newly-hired CRO’s responsibilities as: “driving the company’s overall revenue strategy, as well as all facets of how Marketo’s sales and marketing departments collectively accelerate global revenue growth and profitability.”

To me this sounds like an interesting evolution on the more traditional ‘Sales Director / VP Sales’ and ‘Marketing Director / VP Marketing’ roles. The premise behind it is that direct sales, channel sales, marketing, and perhaps PR functions should be aligned under a single leader with overall responsibility for hitting the company’s revenue target, whilst elevating the role’s importance to board-level. Metrics for success would be then common across all of those functions so that no single function could be incentivised to work in a way that potentially damages any other.

What are the drawbacks of such a role? I’d say it is a question of timing. The CRO role is a different role from a VP Sales – it’s more of a management role and it requires a more general understanding of the science of revenue generation. It is unlikely to involve as much time in front of customers or prospects. It is more of a coaching and mentoring position for the whole commercial arm of the firm.

In the most challenging, early years of a growth-stage firm it is likely that both leads and ultimately revenue will come through relatively simple processes. There is a lot more market testing and validation to be done and this requires as much face-to-face time with customers and prospects as possible. Sales teams are under pressure to get sales through the door rather than worry too much about optimising processes. You will want to work with dedicated specialists at this stage, who can learn quickly from the market rather than looking inside their own organisation.

Soon, however, there will come a point where the lack of structure and process becomes the major impediment to further growth. Perhaps you have a sales team of 5-10 people, some account managers, some marketing specialists, some reseller partners and a channel manager. Now when you look at your revenue target at the beginning of the year it’s not so clear whether you should put more resources into direct sales, account development, or channel partners. It’s at this stage that a CRO’s responsibilities becomes important.

Posted by Paul Higgins on March 3, 2011 at 3:06 pm in Account Management, Blog, Demand Generation, Entrepreneurship, Partnering, Sales, Strategy | Permalink | Comments (2) | Trackback (0)

         

Demand generation options for B2B technology entrepreneurs

For many years at RIG we have been using an adapted version InTouch’s Multi-modal Lead Generation map by author of Lead Generation for the Complex Sale, Brian Carroll. Carroll’s map was designed to show all the different tactical options available to generate leads, and to show that your existing content can be re-purposed in a variety of ways without requiring much additional work.

We have developed this map to make it more focused on the tactics that are most effective for entrepreneurs of growth-stage B2B technology companies. There is less emphasis on the sorts of tactics that larger organisations with significant marketing budgets can employ, such as Branding, Direct Mail, and Public Relations. We have added additional detail (some of which is hidden within deeper levels of the main diagram below) in areas that we have found successful for growth-stage firms, such as Email, Phone Calls, Networking / Referral, Lead Nurturing, Events, and Partnerships.

We have also included a section entitled ‘Information Gathering’, which is an important aspect of any marketing campaign. Some methods of information gathering would fall under the other options (e.g., phone calls, lead nurturing) but others are methods in themselves, designed more to support the other activities (e.g., surveys, industry reports).

Click on the map to view a larger version.

This version was created using the PersonalBrain mapping tool.

Posted by Paul Higgins on February 14, 2011 at 1:47 pm in About RIG, Blog, Demand Generation, Entrepreneurship, Partnering, Sales, Strategy, Technology | Permalink | Comments (2) | Trackback (0)

         

Steer clear of next steps in sales meeting agendas

This idea struck me whilst we were preparing an agenda for an upcoming meeting to assess a partnership opportunity for one of our clients.

The majority of agendas for sales (or partnership) meetings that I see from entrepreneurs are pretty generic, typically:

1. Introduction to me
2. Introduction to you
3. Product demonstration
4. Next steps

If you were the recipient of such an agenda then you would probably make little effort to prepare for the meeting. ‘Introduction to you‘ suggests that you will be asked to talk about your job for a while, talk about the people you work with, and maybe talk about some of the things that you find difficult. ‘Next steps‘ suggests there will be a slightly awkward point during the meeting at which you may or may not decide to do something.

Luckily, you have memorised a set of bland rebuttals to get you through these awkward moments, such as ‘obviously I’ll need to talk to the rest of my team and get their thoughts‘ and ‘if you send me some information then I’ll look at it and get back to you.‘

Think about how you would react if you received an agenda more like this instead:

1. Introduction to me (10 minutes) to explain: 
   1. who our other relevant customers are;
   2. what they’ve achieved with us;
   3. what we understand about your business;
   4. and why we think we may be able to help you.
2. Introduction to you (30 minutes) to explain:
   1. whether our assumptions about your business were valid;
   2. what the business case for further collaboration would be based on;
   3. how the business case would be formulated;
   4. and who else would be involved.
3. Product demonstration (15 minutes) to show how it solves X problem
4. Decision (5 minutes) to release the data required to create a business case

The first thing you would notice is point 4 – you are expected to make a decision at the end. Points 1-3 explain how you will be given the necessary information with which to make that decision (and some of this may be better communicated in advance of the meeting).

If you stop writing ‘Next steps’ on your agendas and write instead ‘Decision to do X’ then I think you will significantly reduce the number of wasted sales meetings that tail off into meaningless excuses.

Posted by Paul Higgins on February 3, 2011 at 1:21 pm in About RIG, Blog, Entrepreneurship, Partnering, Sales | Permalink | Comments (0) | Trackback (0)

         

What are the risks for your potential partner?

A good acronym to remember when thinking about barriers to adoption of any innovation is PEST:

• P – Political
• E – Economic
• S – Social
• T – Technological

A PEST Analysis is most commonly applied to global corporate strategy at a macro level, where Political refers to a country’s political stability, Economic refers to its tax schemes or interest rates, Social refers to the social or behavioural norms, and Technological refers to the level of infrastructure or the adoption of certain products.

Applying this framework to discussions with a potential partner gives rise to some questions that you will have to answer in order to manage a successful technology reseller or OEM partnership.

• Political – which executives have a personal stake in the success of the partnership? What are their personal interests and how would the partnership affect their day-to-day jobs? Is it in the interests of the partner’s operational teams to get behind this partnership? Who would run the project if the current project leader leaves? What are the risks for the partner if your company goes bust?
• Economic – what is the likely financial return for the partner overall? What will the financial incentive be for the sales team? How will your solution allow the sales team to make more commission?
• Social - what behavioural differences will a new partnership mean for the partner’s executive team, sales team, account management team, finance team, marketing team, technology team, and admin team? What kind of training and ongoing support will each team require? Who from your organisation will be responsible for communicating to each team? How often will they communicate and by what method (face-to-face meetings/phone calls/email)?
• Technological – how will your solution integrate with your partner’s? How much development work will you commit to undertake for the partner’s customers? How will you ensure that the partner’s development requirements do not ruin your existing product roadmap? Who will be responsible for gathering feedback and development ideas from the partner’s customers and how will that feedback be gathered?

Partnerships are not straightforward: the more time you spend answering these questions at the beginning of your partner relationship the more successful yours will be.

Posted by Paul Higgins on November 8, 2010 at 3:50 pm in Blog, Partnering, Strategy | Permalink | Comments (0) | Trackback (0)

         

What's in it for the partner?

Once you have some proof of the value of your product or service in the form of paying customers who provide solid case studies and references, your challenge as the entrepreneur is to work out how to accelerate your growth. As we’ve said on this blog before there are at a high level three strategic options: invest in a direct, in-house sales capability, acquire complementary organisations to access their customers, or sell to new customers through partners.

Imagine that your product has given a remarkable return on investment for a couple of your core existing customers – say 10 times the initial investment within 6 months – and you identify a large organisation whose customer base shares exactly the same characteristics as your existing customers. It would be natural to approach them with a view to striking a partnership arrangement. (See here for the different types of partnership.)

Before you approach the potential partner, however, you should be very clear about what is in it for them. Organisations with large customer bases are approached all the time by small companies trying to gain access to new customers. The way you make your approach has to separate you from all of the others.

In our experience it is rarely compelling enough on its own for the partner that they could share in a significant amount of revenue. If the partner has 1,000 customers and your solution sells for £50k then you can wave the figure of £50m in front of their noses, saying that you will give them whatever reasonable percentage they desire in exchange for access to those customers. But if your case stops here this is the equivalent of trying to do a direct sale based only on features and benefits, without taking into account what else is going on in your prospect’s business.

The size of the addressable market in terms of revenue is an important starting point but for the partnership to work your solution has to give something more than this. For example:

• Does this represent an enormous and temporary market opportunity that will be seized by the partner’s competitor if they themselves don’t seize it?
• Does this allow the partner to win new customers that it previously could not?
• Does it support the partner’s overall strategy?
• Does it serve a need to which the partner’s customers have been demanding a solution?

Unless the size of the addressable market is ‘Google-sized’ then trying to force through a partnership on the basis of that alone is not likely to overcome the partner’s barriers to signing a deal.

Posted by Paul Higgins on October 28, 2010 at 11:01 am in Blog, Partnering, Strategy | Permalink | Comments (0) | Trackback (0)

         

Top 10 revenue concerns of a £1m tech company

I was asked today to put together what we thought were the ten most important revenue issues that challenge B2B technology companies with a turnover of around £1m. Typically these organisations have a couple of sales professionals, some sort of marketing support, and perhaps a small Account Development function, all reporting to a CEO or Country Manager.

In no particular order, this is what we came up with:

1. Reducing sales cycle – What are the key factors that determine sales cycle and how do I make measurable improvements in each one?
2. Marketing effectiveness – How many leads do I generate for each pound spent on each different marketing activity? What is the optimal mix for my situation?
3. Account management – How do I ensure that my customers will actively recommend me to their contacts? How can I drive this in a systematic way?
4. Account development – What is the most effective way of upselling to existing customers?
5. Pricing – How do I ensure that I am not leaving money on the table? How can I maximise my return within my prospects’ procurement constraints?
6. Sales distribution model – How can I reduce the risk of having to rely on one stellar performer? How can I encourage sharing of best practice within my sales team? What other sales channels should I invest in?
7. Sales process and sales team design – How do I ensure that the structure of my sales team is aligned with my sales process? How should I define roles within the sales process? How should I hire for each role?
8. Lead generation – What is the most effective combination of ‘push’ and ‘pull’ marketing activities? When should I move more resources from outbound to inbound lead generation?
9. Market leadership strategy – How can I develop a strategy that will capitalise on market trends whilst taking out the competition? Where should I look to carve out a leadership position?
10. New market entry – What is the most effective approach to a new market? How can I use my successes in existing markets to develop new ones?

Posted by Paul Higgins on August 3, 2010 at 4:26 pm in Account Management, Blog, Demand Generation, Entrepreneurship, Partnering, Pricing, Sales, Strategy | Permalink | Comments (0) | Trackback (0)