PARTNER RELATIONSHIP MANAGEMENT (PRM)

PARTNER MANAGEMENT – A CHALLENGING TASKS FOR EVERY COMPANY

Direct selling is important to many companies around the world, and many have successfully partnered with dealer networks to distribute their product and service offerings to their customers. Dealership business brings many advantages, not least the fact that the extended distribution arm gives the company a significant presence in the international market. The disadvantage is that it also brings with it some problems that are unique to this case.

For many companies, managing their relationships with each individual trading partner, including maintaining control over those relationships, is the most difficult challenge. This is because partners are independent companies with their own goals and plans. They are primarily guided by their own ideas and values ​​that they uphold. So how do you get your channel partner to prioritize the offers and solutions that are currently in their sales funnel?
A well-implemented partner management strategy helps the manufacturer to successfully shift the focus away from the customer. Implementing carefully planned and implemented partner management strategies allows companies to continuously evaluate the performance of their partners while supporting the “right horses” in sales.

1. What exactly is partner management and how does it work?

WHAT IS PARTNER RELATIONSHIP MANAGEMENT?

Partner Relationship Management is a structured process that regulates and coordinates cooperation with resellers according to the definition of the company's partner management framework.

This makes it possible to evaluate the performance of the partner network in a systematic and organized manner, as well as to define and plan business-oriented measures for the development of channel relationships. An effective partner management system offers both the manufacturer's employees and the channel partners the opportunity to optimize tasks and processes in the partnership if it is well thought out and implemented.

In addition, it provides important opportunities for personal collaboration with departments such as sales, marketing, corporate development, as well as the relevant channel account managers and others.

The most important areas of partner management include the following:

  • Identification and integration of new business partners
  • Recruitment, retention and management of high-revenue, business-relevant business partners
  • management of high-revenue, business-relevant business partners
  • expansion of new customer business
  • Outsourcing or ensuring necessary service and support services
  • Outsourcing or ensuring necessary service and support are all priorities.

Business development includes a variety of activities such as partner training, marketing and sales support.

In order for a sales partner to successfully collaborate with a manufacturer on product development, the manufacturer's internal resources and departments must be accessible. If this is not regulated within a clearly defined framework, there will inevitably be high costs for partner management in the future.

Strategic partner management must be implemented so that the manufacturer can manage as many partners as possible with as few resources as possible. These processes can be automated, self-service portals can be created and, above all, thanks to today's digitalization options, all relevant data can be managed centrally.

To ensure successful partner management, many manufacturers rely on a two-tier partner sales model, where value-add distributors are hired to handle certain aspects of partner management on their behalf, rather than the other way around. The distributor is responsible for a variety of tasks on behalf of the manufacturer, including recruiting, training, marketing and sales support. This additional sales layer can only work optimally if there is a high degree of system scale and if partner-related information can be made transparent to all parties involved.

A manufacturer's network must also be regularly evaluated according to specified criteria. Based on the information received, the manufacturer can also determine the most appropriate measures to further develop the most suitable partners.

2. The difficulties that have always existed in managing partners.

CHALLENGES IN PARTNER MANAGEMENT

Partner management is always faced with the same challenges: the market is often flooded with partner acquisition strategies and sophisticated partner programs designed to make cooperation attractive to a potential partner. In Germany, the share of indirect sales of goods and services is significantly higher than that of direct sales, with indirect sales accounting for almost half of total sales. Manufacturers who work with strong sales partners in the market have a better chance of gaining a foothold in the market. Today, good partners choose their preferred manufacturer, not the other way around. If the end customer prefers new solutions, the end customer's preferred partner is responsible for procuring these products and services on their behalf.

Companies are practically competing with each other for the best distributors in the industry, so the manufacturer must learn to respond to the partner's needs, not the other way around. The easier it is for a channel partner to develop their own business using the manufacturer's solutions, the more likely they are to remain loyal to the manufacturer and enter into a long-term partnership with it, the study found. A stable channel program and targeted business development initiatives from the manufacturer help increase channel managers' motivation to keep their companies on the path of growth and expansion.

Many people are not aware that, in addition to the entire theoretical framework, soft skills also play an important role in successfully managing partners. A fact that is often overlooked in the heat of the moment. In this situation, trust, reliability, quality, values ​​and standards are important factors that must be taken into account. Nobody wants to work for a company that constantly changes its sales strategy every six months, every year or even more frequently. Since the partner keeps the annoyance and, in the worst case, scares away the customer loyalty that is important to them with competing products, partners also expect high-quality products from their suppliers.

The market has clearly shown that well-functioning partner networks often collapse and partners leave the company after mergers or acquisitions. Losing important contacts, restructuring operations based solely on the manufacturer's preferences or the general quality of products and services and support are common occurrences. When a company takes a dual approach and uses both direct and indirect sales channels to reach customers, the task becomes even more difficult. Due to the pre-programmed nature of this environment, channel conflicts require the development of a well-thought-out strategy and the creation of even more specific framework conditions.

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3. Is there anything special I should pay attention to as I begin my career in strategic partner management?

START WITH PARTNER MANAGEMENT

The key to the success of a partner network is that this sales channel is viewed strategically across all areas of the company and is fully integrated into all functional areas of the company. The desired added value for the company can only be achieved with a two- or three-tier sales channel.

Basically, the definition of precise rules, procedures and processes is necessary to ensure smooth cooperation over a longer period of time. The importance of clearly defined responsibilities and objectives cannot be overestimated. In addition, both the manufacturer and the partner are satisfied with the outcome of this agreement, which is rarely the case. Both parties expect clarity and transparency in the cooperation and the development of a common business strategy. The ability of a company to communicate effectively with its various stakeholders along the entire value chain is a key success factor for its operations. This constant exchange of information is necessary to ensure that both parties stay on the same page and do not lose sight of the mutually beneficial goals.

In order for the partner network to continue to grow and thrive, it is necessary to implement agile business processes and open interfaces in the systems. In the 21st century, customers expect uncomplicated points of contact with the manufacturer that are time-optimized and, if possible, digitized. This applies equally to all departments, regardless of their size. Accessibility is crucial for all aspects of a company, including sales, marketing, logistics, purchasing, support and customer service. In order to reduce the number of sources of error and the need for manual, resource-intensive routine tasks, processes should have a limited number of system breaks. The terms "integration" and "dismantling" of data silos are on everyone's lips today. Due to the digitization of today's world, cooperations can quickly no longer work if the effort for one partner becomes too great for the other to bear.

4. What is the difference between Customer Relationship Management (CRM) and Product Lifecycle Management (PRM) systems and how do they work together?

DIFFERENCE BETWEEN CRM AND PRM SYSTEMS

Systems for managing customer interactions are called customer relationship management (CRM) systems and are used to systematically organize and manage a company's interactions with its customers. A customer relationship management (CRM) system enables the tracking and management of all tasks and processes within marketing, sales, and service organizations, with the end customer at the center. CRM systems are becoming increasingly popular. To manage and control pre- and after-sales tasks, as well as the development of a prospect into a purchasing customer, a customer relationship management (CRM) system is used extensively.

A PRM (Partner Relationship Management) specialist specializes in designing and supporting collaboration with partners while creating added value for the manufacturer they work with. To ensure that a manufacturer's partner ecosystem remains effective, the manufacturer must, in addition to the numerous individual tasks associated with partner acquisition and development, carry out a regular and comprehensive assessment of its partner ecosystem. To do this, all critical key performance indicators (KPIs) must be documented and weighted (key performance indicators). The key performance indicators (KPIs) that determine the success or failure of a company vary greatly and depend on the company and the partner program being evaluated. In addition to sales, there are a wealth of other individual key performance indicators (KPIs) that are used in the vast majority of cases to comprehensively assess the future potential of a partnership. ERP systems provide a daily view of this situation and automatically calculate the current performance level and the unused potential of all individual partners in the collaboration. This scoring can also be displayed by sales region, segment or other individual filters using the intuitive dashboards that are also available. Overall, everyone involved in the company is able to develop their action plans much more efficiently and effectively and thus also work more resource-efficiently.

Realistically, a PRM does much more than just evaluate partnerships; it also serves as a data hub that collects all relevant information about the partnership and serves as a central point of contact for all tasks within the organization. To start with, it should be able to perform at least the following functions:

Information exchange, sales data or the provision of offers, dynamic price lists, etc. are examples of managed content and services. Partner portals (formerly also known as classic partner portals)

– Management and control of forwarded leads

The intuitive project registration (deal registration) process includes collaboration tools such as email, chat and a community forum to facilitate communication.

Partner recruitment and onboarding processes as well as the automation of partner-to-marketing campaigns are automated through the use of analytical tools.

The platform's features include:

  • The offer of through-marketing campaigns and the possibility of direct execution within the platform
  • An editor for customizing marketing materials by partners
  • Managing marketing data files
  • The adaptation of the platform (white label)
  • Support for multiple clients and user management
  • An open API that can be used to integrate with other data sources.

By streamlining all processes and consolidating partner-relevant information from different departments into a single system, sales can benefit from Partner Relationship Management (PRM).

5. How to set up partner management in your company

IMPLEMENTING PARTNER MANAGEMENT IN THE COMPANY

To establish strategic partner management, it is necessary to follow the following steps:

1. PARTNER PORTFOLIO ANALYSIS

First, determine the current state through a partner portfolio analysis: In case you already work with partners, it is advisable to record the current state of your partnership landscape. To do this, create a comprehensive list of your partners' key performance indicators (KPIs). Based on the information collected, it is possible to carry out a structured and comparable analysis of each individual partner within the ecosystem. A so-called balanced scorecard is suitable for the analysis, as it allows the definition of key performance indicators (KPIs) and the weighting of these indicators. The use of KPIs defined as part of the partner program is common, but metrics that allow conclusions to be drawn about the size of a dealer's sales organization or the reach of its customers are also frequently used.

Whether or not a partner is performing satisfactorily and how to evaluate that performance depends on a variety of factors. There are other factors to consider besides the absolute number of sales. Even if some partners are generating good sales, it is important to consider how high those sales are compared to the partner's total sales, how much sales are lost to the competition and how much more sales a partner could generate if they had a more targeted sales approach. The answers to a whole host of questions are still waiting to be discovered. The ability of existing partners to grow with them in the future and, more importantly, how much potential there is for future growth needs to be assessed in particular detail.

Identify which partners have already passed the maturity stage and are on the verge of divorce and what led to their decision to end their relationship. It also discusses what partners still need to grow on a broader level. In order to make a strategic assessment of the partner landscape, you need structured and current data, no matter the situation.

It is advisable to use suitable software to implement a scorecard and collect relevant data. Excel spreadsheets are no longer state of the art in this area. Since the performance of partners should always be continuously monitored, an Excel spreadsheet either fails due to the lack of integration options or considerable resources must be planned for the maintenance of these Excel spreadsheets.

Creating a scorecard is a feature included in most partner relationship management systems, as is the ability to connect to a variety of data sources through open interfaces and keep them updated on an ongoing basis. In addition, good PRM systems provide appropriate KPI suggestions and questions that make completing the first steps of the process very easy.

Some Key Performance Indicators (KPIs) are queried in the following areas, for example:

  • A brief description of the partner's company, the number of employees, the locations, the markets in which they are located, the duration of the partnership, etc.
  • The partner’s product and sales segment portfolio includes complementary products, competing products and business segments.
  • Customer segmentation, your own marketing strategy, lead generation, social marketing experience (including a sales focus), customer events (including your own), and other marketing and sales expertise are important considerations for the sales process.
  • Sales figures have already been collected through joint marketing and sales activities that have already been completed.
  • The current state of training and certifications: The type of training and the number of participants are important factors.
  • Dependencies such as credit limits, payment security and other financial indicators, to name just a few (shareholdings, joint ventures, framework agreements)

2. EXPAND YOUR PARTNER NETWORK

With all this information you can answer the following questions:

  • What steps do I need to take to expand my network of business partners to remain competitive?
  • How I can collaborate with other companies to grow my new customer business (new business).

To ensure that my service and support is delivered locally, I need to find out which partners I will work with.

  • Which business partners will support me in expanding my business now and in the future?
  • What specific actions do I need to take with each partner to get them to focus on my products?
  • Which of my partners should I avoid at all costs and why should I avoid them?

After you have gathered enough information, you can start planning your next steps based on your findings. Automated to-channel nurturing campaigns allow you to target partners who have potential but are not actively working with the company to increase their motivation and engagement. A key benefit is the ability to communicate with a large number of people at once.

When it comes to managing partners, it is often assumed that their Partner Account Managers (PAMs) take care of everything. However, in practice, it has been shown that managing even a small number of partners (up to 15) is almost impossible without the use of automation tools. Creating action plans directly from the scorecard and automating them in a meaningful way is common practice when using a Partner Relationship Management System. Depending on the needs identified by partners, different campaigns are carried out in different locations.

As with any process, marketing plays an important role here. To achieve this goal, the creation of texts and templates should be carried out. If these resources are not available in the company, it is advisable to hire a marketing agency with experience in multi-channel campaigns. DigitaSol, for example, offers similar services and is available worldwide.

Additional incentives can be created for partners who are already active but have the potential to become even more active through PAM or automated lead and pass-through campaigns. This is done by examining potential growth areas and identifying the most likely reason for the partner's lack of activity in their sales efforts. In addition to joint lead generation initiatives, training, incentives and events, there are numerous other methods to motivate partners to collaborate.

When you get to this point, you should ask yourself: How much money do I need to put into my partnership to get it to deliver more revenue-relevant performance? Therefore, even in the dealer environment, there is no return on investment without an initial investment. It is also worth noting that investment planning and MDF management functions are always included in PRM systems, so the PAM can manage and evaluate all the important factors for this from a single platform.

3. RECRUITMENT OF NEW PARTNERS

Increasing the number of partners in the portfolio is a priority.

After analyzing the partner portfolio, it is usually determined that additional partners are needed to enable the organization to continue to grow. Undoubtedly, you can now start sending out your PAMs and placing orders to attract the partners you want. Given that top managers are still available by phone these days, traditional cold calling methods fail miserably in trying to lure new partners out of the closet.

Sales practices like the following are an example of this: To convince a partner, multiple touchpoints are required within the partner organization and at the contact level. To make key contacts aware of the offer and accessible, the PAM's activities must therefore be complemented by an effective digital marketing and content strategy that communicates the partner company's value proposition. A partner acquisition campaign is more than just a PAM's hunt for potential partners, to put it another way.

From the moment the contract is signed, it is necessary to go through a carefully planned partner journey with regular touchpoints along the way. Partner Relationship Management (PRM) systems that automate the path to the partner and provide key metrics on the success or failure of partner acquisition activities are also beneficial.

4. LONG-TERM COMMUNICATION

Establishing long-term communication with business partners is step number four.

Much like in a love relationship, when communication doesn't work, is one-sided or misunderstood, discussions quickly turn to whether or not to end the relationship. The task of communicating relevant information to the right people at the right time and in the right form is, according to many experts, probably the most important but also the most difficult task in partner management. This can only be achieved by establishing clearly defined processes and agreements between management and the various departments of marketing, sales, finance, service and partner management. Of course, any company-wide changes that affect partner relationships should be coordinated with the stakeholders involved and communicated to partners in an appropriate manner well in advance of the change taking effect. This way, you can better anticipate and avoid potential conflict situations.

Important end-customer information should be made available to your partners as early as possible so that partners can pass the information on to their customers as easily as possible. Prepared campaigns, information and documents help you and your partner to spread the information faster in the market. Another option is to give partner companies the opportunity to communicate with their customers directly from their PRM. The information can be used not only to position new products and marketing campaigns, but also to streamline contract renewal and extension processes. The easier your content can be communicated by your partner, the greater the reach of your message will be.

In addition, you should provide the partner with a central location where they can access all their needs and requirements. An excessive number of portals, logins, email messages and individually sent documents will tire you out over time, so plan accordingly. To be successful, a partner, such as a PAM, needs direct access to the current status quo, to all data relevant to their work and access to key contacts or resources within the manufacturer.

6. Factors to consider when building partner networks

BUILDING PARTNER NETWORKS

If you have not worked with an affiliate network before, we recommend that you first consider the following factors:

1. DETERMINE IF THE CHANNEL IS READY TO ACCEPT TRAFFIC

There are many considerations to make when developing a strategic partner management program. The first step is to determine whether or not your offering is suitable for distribution before moving on to the second step. Is the product or service suitable for distribution and implementation by a partner organization, to put it another way?

The more complex the offer and the higher the level of expertise required for sales success, the more likely the success will be.
As offerings become more complex and more specialized skills are required from partners to sell and implement them, it is important to ensure that these skills are readily available in the market for the partners offering them.

2. WEIGHING UP THE ADVANTAGES AND DISADVANTAGES OF A TWO- OR THREE-TIER DISTRIBUTION CHANNEL

Another thing to think about is how to weigh the pros and cons of affiliate selling and determine which option is more beneficial to your business than the other.
Faster and better market access are two benefits of partner distribution, along with lower transaction costs. Many manufacturers also benefit from the partner's brand awareness, existing customer relationships and geographic proximity, among other things. What motivates customers to buy from a retail company? For the simple reason that they believe in them. In most cases, this significant trust advantage increases the likelihood of closing a deal quickly and decisively because you no longer have to overcome this obstacle alone.

While this approach has some advantages, such as the possibility of sharing profits and service revenues, it also has some disadvantages, such as increased uncertainty and the risk that marketing functions are not adequately taken over by the partner network, resulting in sales targets not being met or not being predictable in the long term. The lack of proximity to the customer means that the manufacturer misses out on important project and customer information that would enable it to follow market developments and adapt its products if necessary. On the other hand, a lack of knowledge among dealers can lead to difficulties in the marketing department.

Consider the advantages and disadvantages of each alternative. Check how many partners would be eligible for a partnership and how much effort it would take to set up a partner network. Consider the costs of hiring your own staff and introducing suitable marketing and sales strategies to achieve the same high return as your previous investment (direct sales). Conduct a test to determine which scaling strategy is most effective. A PRM system can provide initial assistance here by recording the potential partners and the key performance indicators (KPIs) for their selection and evaluation in easy-to-understand scorecards.

3. DEFINE YOUR PARTNER'S VALUE PROMISE AND YOUR PARTNER PROGRAM IN VERY DETAILED DETAIL

You should take steps to make your offer more attractive to potential partners once you have determined that an affiliate network is a legitimate way to sell your offer. The ultimate goal of every entrepreneur is to maximize their profit margin at all times. This is the first and most important item on the list of priorities. This raises the question: how can you use your offer to help the partner increase their profits? It is important for manufacturers to keep in mind that their partners incur costs or investments when they add a new product to their range. The partner therefore carefully considers whether the investments they have to make are proportionate to the output (profit) produced in the future.

To achieve this, traders consider the following factors:

  • Market attractiveness is determined by the size and stage of the market.
  • Market volatility is determined by the volatility of the market.
  • The attractiveness of a product is determined by the manufacturer's market share and the product's unique selling points (USPs)
  • The attractiveness of the company
    Brand awareness and image, sales strategy (direct or indirect), goal congruence and cooperation design are important factors that determine the attractiveness of a company.

Developing a distributor program is one of the most important tasks.

When creating a partner program, you can specify which services you will provide to the partner and at what cost, and which services the partner must provide themselves. For example, a partner program can provide answers to the following questions:

  • Where can you find information about training and further education opportunities and which courses must be completed as a minimum?
  • What educational requirements are there?
  • When can the partner expect sales and marketing support?
  • What happens when, for example, a manufacturer implements lead generation strategies? What is the result?
  • Does the partner offer financing or refinancing in return for the investments already made?
  • What margins, discounts or bonus programs are available to the retailer to take advantage of the current situation?
  • What policies and procedures are in place regarding shipping and warehousing? If warehousing, picking and returns are required, how is the partner supported in these areas?
  • What support does the partner receive with product-related questions? –
    What rules are there for the exchange of information and how are they enforced?
  • Are there different levels of participation in the affiliate program and how do they differ from each other? Whether the levels themselves are attractive is another question.
    In summary, many of the questions must be answered individually by each partner. It is true that in practice it is not always possible to achieve a perfect score in all circumstances.

In general, however, an affiliate program should be a win-win situation for both the affiliate and the merchant.
Using the information above, you can develop your business proposition for the partner in the following steps. I am referring here to the value proposition for your potential reseller as a distilled whole.

When evaluating your product's value proposition, it's always a good strategy to put yourself in the shoes of a manager at one of your potential distributors to see what they would do differently. Consider the merits of your offering in light of your current situation. Would you be willing to make a pact with me? If so, move on to the next step in the process.

4. DEFINING PROCESSES AND ASSIGNING RESPONSIBILITY TO THE APPROPRIATE PEOPLE

The next step is to consider how having partners manage your offering will impact your company's business. Strategic partner management is defined in more detail earlier in this article, and we'll expand on that definition here. The next step is to think about how you want to work with your partners, or if you already work with some of them, how you want to organize your partner management.

Partner management requires the allocation of responsibilities across a wide range of departments within your company. While appointing one or more partner account managers in a sales department is necessary, it is much more important to clearly define the responsibilities for the different areas of activity. Introducing partner management requires a transformation process in many companies before it can be implemented. Those responsible for setting up a new sales channel and overseeing partner management must be aware of the added value that such an endeavor and the associated partner management can bring to their respective companies. Additional stakeholders may need to be considered individually depending on the company and business model.

Participation in the transformation process is recommended for the following position holders:

  • The organization of sales support for partners must be defined.
  • It is necessary to define how the marketing department will organize support for partners. Who is responsible for what and by when, and how does it work?
  • Which methods are used to work on projects collaboratively? We go into great detail about which tasks are taken on by the manufacturer and which remain with the partner. When it comes to projects, it is important to know who is responsible for them.
  • The offer design, price lists and other sales-related information that the partner needs to be able to carry out sales-related activities must also be defined. A typical sales department has a high number of customer contact points and is therefore the most accessible.

5. CREATE MARKETING CAMPAIGNS

Marketing is responsible for the core tasks of communicating and delivering to and through marketing campaigns, as well as creating new marketing campaigns. In addition, marketing is often involved in the design of other services, such as the creation of sales or service materials. The development of partner acquisition campaigns and the implementation of strategies to increase partner satisfaction must be included in the process. For this task, many companies hire so-called channel marketing managers who are trained to carry out this task at a professional level.
If a company has a training department, onboarding training should be planned and delivered by that department. If there is no training department, a person must be found who has the necessary skills and qualifications to take on this task.

Detailed information about the partner's access to services and the services provided to the partner can be found below. Service departments, similar to sales departments, need to clearly define their areas of responsibility. It is also important to create an appropriate service description up front so that partners know what to expect in the event of a service call or emergency. This is often explicitly stated in the partner program or in the contracts with the partners. Credit limits, payment terms and master agreements are managed in the financial services industry.

CONCLUSION

To successfully manage strategic partners, it is necessary to assemble a diverse group of people from different departments and organizations. The easiest way to bring these skills together is to use Partner Relationship Management Systems (PRMS). Here, all data, processes and measures are managed and made visible to the entire organization and all connected partners...

As a continuous and agile process, partner management should be seen as a means to respond quickly to new challenges that arise on a daily basis and to respond proactively to market changes.

The lack of a PRM results in PAMs spending more time reporting and managing their partners than on conducting on-site partner visits and developing high-potential partnerships. It is long overdue to free up PAMs' time so they can devote their time and energy to what they do best: talking to the right partners and attracting the best fit for your business.

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