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Making Channel Partnerships Work

By: Lee Wilson

8/1/2008

A power imbalance between partners can create problems for both sides. If the large partner gets a cold, the small company gets pneumonia

Co-Marketing

Description: If you don't have a reseller program and don't want another company to distribute your products, you can still leverage the resources of partners through co-op programs. In co-marketing arrangements companies cross-promote each other's products in collateral, on their websites, and at events. They may also share leads if the products are complimentary. Many times there are either co-op marketing funds or commissions paid (one to 10 percent).

When to Use:

  • These deals work particularly well when the product lines are complimentary. Examples include hardware that supports software (e.g., scanners and grade books) or training that supports hardware or textbooks.
  • Sometimes one company will sponsor the other company's products to help sell their own. Textbook providers often do this with free-withorder materials. I've also seen companies sponsor grant-writing workshops to help people who write grants on contract get visibility.
  • If an incumbent product has a long life cycle this can be a great way to piggyback on their presence-- even if they are a competitor elsewhere. Products that compliment adopted textbooks or enterprise software are two examples, both of which have five- to seven-year lifecycles.

Issues:

  • Make sure both partners have a strategic interest in the outcome of the partnership. Without this, someone is bound to end up disappointed.
  • Sales reps get jumpy about who has access to their lead flow and they need to trust the partner to "dance with the one that brung ‘em."

Suggestions:

  • If you are passing leads between sales forces, make these relationships as exclusive as possible.
  • Be clear about how and when your brands can be used-- both partners should have review and approval of the use of their marks.
  • If commissions are changing hands, be sure to cut the reps and resellers in on it to sustain their interest.
  • Have clear escalation for disputes over lead generation and allocation. Address issues immediately when they arise. Don't expect that things will just "work out on their own."

The Bottom Line

At the end of the day, be clear about what kinds of partnerships are most important to your company right now. There are endless opportunities to partner-- the trick is to focus your energy on the relationships that will deliver most value now. When you do engage, make sure you pay close attention to the physical, logical, and emotional aspects of the partnership. A balanced and comprehensive approach dramatically increases your chances of partnering successfully.


Lee Wilson of Headway Strategies has been a senior marketing, sales, and business development executive at Harcourt, Pearson, Apple, and Chancery Software. He consults on strategic direction, marketing programs, and sales management for publishing and ed-tech companies.