Companies all over the world are constantly searching for competitive edge. In mature industries, monopolistic situations rarely occur. Even when they do, it is a short-time phenomenon. Hence, for any long-term survival, gaining an edge over competition is a Key Focus Area at all times.
IT is a highly evolving industry. Thanks to the technology evolution, the industry is able to offer multiple choices to customers. Hence, delighting customers by exceeding their expectations is one of the business goals for all companies. Achieving a strong market presence is almost a must for technology companies. It is only then that price premium can be established. It is needed to generate higher profits than competition in order to invest in R&D that enables development of new and better products and services, which ultimately provides the competitive edge. This is a typical business cycle observed in many companies.
Hence, there have been conscious efforts in identifying the criteria that can provide sustainable competitive edge to companies. The Japanese companies discovered
“Quality systems” as a BIG enabler for achieving competitive edge many decades ago. Later, American and European companies adopted various “Organization Quality measures” going beyond manufacturing.
It is now settled that there are 5 Enablers and 4 Result areas that measures competitive edge of a company. One of the Enablers – and I call it a BIG ENABLER–– is the “Partnership”. Hence, it can be surmised that the presence or absence of strong channel partners can make or break market shares for most of the companies.
Hence, there is hardly any debate on whether or not partners are needed. Or, whether or not they add values to the company. That debate used to occur a few years ago. The central issue nowadays is how to identify good partners, retain good partners and develop their loyalty and effectiveness. Let us address the issue of retention as “partner attrition” is as damaging as “employee attrition” and is one of the biggest challenges in the industry.
The retention of partners is a function of three measures:
1. Right Selection: Partnership is analogous to marriage. Like any association, there has to be a suitable match. It is always advised, both for companies and partners, that sufficient thought and time must be invested before signing on the dotted lines. You never marry thinking of a divorce. In the Indian culture, marriages are sacrosanct and supposed to be for lifetime. Partnerships must also be seen through that prism. Like matching horoscopes, matching expectations and constraints must be undertaken before entering into partnership.
2. Profits: Marriages are emotional partnerships, but here we are talking about “Business Partnerships”. Channel partners appreciate partnerships that get them consistent profits. Over distribution, deal-based pricing, dumping of goods, target- based sales pushing, etc. often lead to price discounting as well as diminishing future profits. Partnerships experiencing this are bound to fall apart. It is usually a good practice that the market share objectives are agreed upon, areas well defined, recources commitments discussed beforehand and the focus of the approach made more on partners’ sales thru’ than their purchases. The old thought of putting heavy stock pressures on partners will make them sell more is just like an’“old” thought.
3. Engagement Programmes: As partnership grows, it needs to be nurtured just like any other living organism. Any partnership involves people and whenever there are people, there are sentiments. Respect for each other is the first fundamental requirement. Trust is probably the second most important. I have seen some partners not sharing complete details and talking to principals like they are talking for some deal. This erodes the essence of partnership. Similarly, many vendors do not trust partners and yet expect partners to build business for them. Transparency usually builds a strong trust – and I strongly recommend that. Recognition is surely the third most important requirement in the emotional part of relationship. We should never be stingy in recognizing good performance. Successful companies have successful partnerships based on successful partner programmes. Whether it is for development or motivation or “best practices” sharing, etc., they must be unique, differentiated and relevant.
I can go on and on, but there is a time and space constraint. I just want to sign off by saying that in the channel business – and a whole lot of IT industry is dependent on that–– I see three Gods in marketing success:
The GOD of product or technology
The GOD of brand or company image, and
The GOD of partnership
God bless the partnerships… Good Luck!
