Thursday, May 31, 2012

Through Partner Marketing – Marketing Automation alone is not enough

Many of our clients are wrestling with how to best enable partners to design and execute better co-marketing campaigns. With the advent of new media channels, the range and type of marketing activities available has grown exponentially from the early days of direct mail, email and advertising. We view Through Partner Marketing as being grouped into the following areas: 

1.  Corporate assets are packaged materials available for download that partners can use along with their own means to execute campaigns.

2.  Marketing automation includes items that are traditionally automated and available online via software and usually do not require a third party services company to deliver the customized piece. They can be downloaded and executed by the partner using their own means.

3.  An Agency Network is a single agency or network of agencies clients can engage to deliver tailored solutions that are usually provided via services directly to the partner.

In terms of Through Partner Marketing, the maturity curve moves in the 1-3 order, with clients usually starting with downloadable assets, adding marketing automation and then eventually offering an agency network for the full marketing suite. Best in class clients layer in a marketing concierge service help-desk, focused partner/CAM marketing training and enable MDF/Co-op funds to be spent directly in the agency network.

Through Partner Marketing – the Marketing Automation fallacy

Marketing automation of corporate marketing is top of mind for many and there is a large, rapidly growing group of software companies in this space.

However, marketing outreach through partners requires a very different approach than what works for corporate marketing. There is an extra step on the way to the end customer, as Partners are expected to co-brand, embed and repurpose marketing content before it gets to the end customer. This step makes a direct translation from corporate Marketing Automation tools to partner marketing entirely inappropriate.

If you have (or want to have) significant revenue moving through the channel, you need a partner-centric approach that includes more than marketing automation.

The simple fact is that marketing automation vendors cannot provide the full set of capabilities necessary to effectively manage Through Partner Marketing. There are a number of key capabilities to consider when implementing Through Partner Marketing:
  • Management of traditional MDF and Co-op spend in a seamless partner experience
  • Allowance of third party service providers (Agency Network)
  • Seamless integration of the Marketing Automation and Agency Network “ordering” process with MDF requests and Co-op dollars
  • Closed loop reporting that is standardized across MDF/Co-op, Marketing Automation and the Agency network
  • Partner rating of the marketing plays from the Agency Network
Enabling Through Partner Marketing requires a dedicated solution, coupled with key services from a network of professional agencies.

Friday, May 4, 2012

Clouding the Importance of Incentives in the Channel

One essential area that is undergoing change in the channel is in the area of incentives, in part due to rapidly changing business models ushered in by the Cloud.  The Cloud is way too overused and can mean many different things depending on the audience.  For this post, let's focus on partners that are faced with needing to move to re-occurring versus transaction revenue models.

Incentive programs are important because in the channel, employees at the point of impact are not employed by the vendor company and are not going to share the same level of commitment unless given an incentive to do so.

In addition, incentives drive incremental channel revenue and profit, encourage new solution adoption with partners, establish a competitive differentiation for your channel program, and increase partner loyalty. In short, incentives programs strengthen vendor relationships with partners.

Whether a vendor is selling traditional software or hardware — or is expanding their solution set with more services offerings — incentives remain key to channel success. Traditional transaction-based revenue models are giving way to recurring revenue models: vendors know this and partners know this. In a Darwinian channel, those that adapt, survive. That means we are seeing more partners with multiple revenue streams — both transaction-based and subscription-based — as they begin to morph their business model.

How should incentives programs adapt to the changing landscape?

First, incentives programs need to reward partners on the true value of a sale. Incentives programs are designed to drive positive partner behavior, strengthen loyalty and ultimately, increase sales. The recurring revenue model doesn’t change these goals, however, the methods used to influence behavior need to be adapted. Rewarding partners throughout the entire partner lifecycle is an effective way to capture their attention, maintain engagement, as well as promote and drive revenue.
Partners should be incentivized for subscription-based (cloud computing) sales based upon lifetime value of the deal rather than unit price; this is the true value of the deal. All vendors need to do is replace the word “price” with monthly, quarterly or annual recurring revenue in their sales compensation model. Then they have the ability to accurately calculate rewards that are proportional to partners’ sales.

Second, Vendors need to integrate individual and company rewards into a single points-based system, and design the incentive scheme around partners, individuals and teams; ensuring that all stakeholders derive tangible benefits through earning and redemption opportunities that align to the partner’s business model, and generate an incremental shift in the desired partner behavior. Because the end goals for both individual and company level incentives are the same — loyalty and a surge on incremental sales — an integrated approach is cost-effective for vendors. In addition to this very obvious benefit, a unified approach to incentives builds deeper relationships with target accounts (partners), a necessity for effective complex services and solution selling.

Incentives for the Next-Generation Channel

Clearly, incentives for a channel populated by hybrid partners — those who pursue multiple revenue streams — and vendors who also are expanding their sources of revenue, will remain an integral component of channel programs. There is no need to start over or redesign incentive programs every time the channel landscape evolves. A focus on the true value of a sale means that as the channel changes, only variables used to calculate the value of sales need to be modified to keep an incentives program timely and relevant.