Satisfaction is Key, Especially when Leveraging Channels
By Diane Krakora, Principal, Amazon ConsultingAt the core of every repeat sale, product upgrade, or word-of-mouth referral is a satisfied customer, the ultimate driver of most successful business ventures. Satisfied customers turn into loyal customers, who not only buy more products and services but also help recommend and promote the offerings to other prospects. Conversely, businesses that continually fall short of meeting customer needs—and repeatedly register low customer satisfaction—will eventually go out of business. In addition to providing a high-quality product or service, one of the most strategic ways to increase customer satisfaction is to develop and leverage effective channel and alliance partnerships.
In order to increase customer satisfaction through the strategic use of system integrators, solution providers, resellers, developers, distributors, consultants, software and hardware alliances, and other indirect partners1, organizations must focus on leveraging these external partners to build, market, sell, and support high technology products and solutions. Amazon Consulting has identified six critical activities that, when employed together in a concerted program, can help build and maintain these effective relationships. Called “The Six Stages of Partner Development,” the framework enables companies to develop an effective network of indirect partnerships.
The Key to Satisfied Customers
One way to ensure satisfied customers is to leverage channel and alliance partnerships to design and bundle full product and service solutions.
Disappointment is an almost certainty when opening an electronic toy with “batteries not included.” Besides creating a hassle, customer satisfaction is lowered because the customer has to wait to enjoy the toy. However, if a toy manufacturer partners with a battery manufacturer, such as Duracell or Energizer, to include batteries in all electronic toys, they can change the dynamic of the purchase experience. The toy company can save its customers the time and effort involved in finding the required batteries and offer customers a full solution—ready to use right out of the box.
In the high-tech world, an equivalent but more complex example is a wireless end-to-end full solution. To wirelessly enable a field sales force, for instance, requires six different products and services:
1) a wireless device (e.g., a RIM pager or Palm handheld),
2) the service from the wireless provider (e.g., Bell South),
3) translation services between Wireless Application Protocol (WAP) and Internet Protocol (IP) (e.g., Aether Systems),
4) a corporate gateway server,
5) a content server (e.g., HP or Sun), and
6) the sales force automation application itself (e.g., Siebel).
The customer must research and purchase each of these products and services—individually—to create a usable solution.
In contrast, giving customers access to a full solution—combining, bundling, or partnering several products with the services needed to install and support them—is an effective means of increasing customer satisfaction. For example, if a company purchases IP telephony equipment from Cisco without all of the required hardware or software or the means to install, configure, and maintain the equipment, customer satisfaction with the solution will be low, regardless of whether the product is technically superior. Through the strategic use of indirect partners to combine additional products and services to create a full solution, Cisco is able to improve customer satisfaction ratings.
In addition, customers need different channels from which to purchase products and services because each customer has unique needs. Some like the self-service of the web, while others prefer the in-depth service of a specialized consultant. Channel partners can be further utilized to offer unique service options—from consulting to design, implementation, integration, and support above and beyond what the manufacturer provides—to increase value to the customer.
Effective partnerships are integral to providing customers a full solution with targeted product and service options in a convenient-to-purchase environment. These benefits can increase a customer’s satisfaction with the product and purchase decision, which is the primary reason partner development is critical to the success of any company.
The Six Stages of Partner Development
Amazon Consulting designed The Six Stages of Partner Development methodology to effectively develop channel and alliance partners, increase customer satisfaction, and drive bottom-line revenue. The key to creating profitable partnerships is to follow a clear and concise program that consists of the following six stages: Attract, Engage, Educate, Motivate, Support, and Manage.
The Six Stages of Partner Development is a cyclical process. A company must continually strive to attract new partners and strengthen existing partners to further engage, deepen, and lengthen the relationships. The methodology relies on fluid measurements (e.g., “Attract” and “Engage”) that offer an interconnected and holistic way to track effectiveness. For example, “Engage” ties together communication, chemistry, and business proposition to determine if a partner is excited about the opportunity to work together. Progression through these stages can be rapid. In fact, partners can successfully navigate through these six stages in less than six months given a well-defined multi-channel strategy and program framework.
Let’s take a closer look at the first two stages of partner development.
Attract
This first stage focuses on attracting the most beneficial partners to the organization. Not only must the company identify the best potential partners, it also must provide a compelling business proposition in order for the partner to invest in developing the relationship. Think of this stage as partner recruitment and feedback. The consequences for doing it poorly are disastrous—a company that recruits the wrong partners wastes valuable time and resources.
Innovative companies first segment the partner universe, focusing on a few key partners that will return the greatest leverage. One innovative way to segment the partner population is based on role or function—identifying which partners can play specific roles in the company’s program.
Partners will want to be involved in a successful program of bringing the right group of products and services to the right market, so it is important for a company to aggressively solicit and recruit the partners it wants rather than wait for partners to come to it. For example, BEA Systems doesn’t sign up every company that requests a relationship in its alliance program. If it did, supporting unnecessary partners would drain its resources. Instead, BEA specifically targets potential alliances based on customer product or service needs, then approaches the key organizations whose value proposition fills that need. This active approach to recruitment is imperative to ensuring that the right partners are involved in the program.
Simplifying the partnership programs also helps attract the best organizations. By clearly defining and communicating the types of relationships a company is looking to create, potential partners self-select to partner with the organization. And by simplifying the levels and categories of partner relationships, potential partners can more easily identify where they fit into the overall partner program. Of course, the organization still has to fit target profile in order for the company to accept it as a partner.
Partner advisory councils gather the most influential partners—those that are creating or entering new markets—to solicit feedback to improve the products, materials, and partnership program. Intel requests quarterly feedback from their Premier Program Advisory Council and then implements recommendations based on their suggestions, ensuring that partners will continue to feel valued and attracted to the relationship.
Engage
Once a company has attracted potential partners, the next stage is to move beyond a handshake into a productive relationship by engaging new partners in every facet of the organization. Unfortunately, however, many partner relationships end with a simple handshake—unproductive and idle—before they even get started. An effective partner program requires creating a partner-centric organization that supports partners from all departments, including training, finance, marketing, sales, product management, and operations.
To engage a new partner, a company must formalize an agreement that clearly spells out the relationship, particularly the financial commitments of each side. At this early stage, simple is better. A long and arduous agreement full of legalese can chill a relationship before it gets started. Many innovative companies use a simple “Memorandum of Understanding,” or MOU, that outlines the commitments and expectations of both sides without the full-blown legalese of mediation, indemnification, and termination.
In addition to the agreement, companies should define “rules of engagement.” This would include more specific expectations of a partner, expectations not covered in basic terms and conditions. For example, a description of the company’s direct sales’ focus—including which vertical markets and specific customers are sold to directly—is critical for new channel partners. For a long time, Hewlett-Packard was considered a benchmark for defining rules of engagement. H-P declared, and lived by, a “hard deck”—a well-defined target company description that served as a roadmap for its direct sales force and made it clear which customers could be approached by partners. A company can further describe its sales cycle and what resources it will commit—and when—to help partners close opportunities. These rules of engagement can be incorporated in partnership maps—short business plans that map out the training, marketing, sales, services, and revenue commitments of both sides.
Innovative companies can help develop partner-to-partner connections and serve as the catalyst for initiating additional networking opportunities for their partners. In the quest to deliver a full solution, partners are constantly seeking other resellers or vendors to help provide complete solutions to customers’ business needs. Providing the means for partners to become acquainted with one another—whether a face-to-face networking event or online tools and resources—helps keep partners engaged.
Next month we will continue our discussion with the remaining four stages of partner development: educate, motivate, support and manage.
1Throughout this article, the term “partner” refers to the colloquial sense of a valued business relationship – not the existence of a legal partnership. These partners include indirect channels to end-users, such as Value Added Resellers (VARs), System Integrators (SIs), Independent Software and Independent Hardware Vendors (ISV, IHV), Alliances, OEMs, Retailers, Distributors, Solution Providers, eTailers, Application Service Providers (ASPs), Managed Service Providers (MSPs), Developers, and Consultants.
Diane Krakora founded Amazon Consulting in early 1998 with a vision of helping high technology companies increase sales by focusing on their need for effective, efficient alliance structures. Amazon Consulting has grown quickly over the years and Diane now leads an experienced team of consultants who develop and implement partnering and marketing strategies and programs. For article feedback, contact Diane at: dkrakora@amazonconsulting.com.
