Creating a Partner Program

I think one of the most frustrating parts of being a manufacturer is getting your product, name and services out to end user accounts. You may have the best idea in the world but how do you let the market know about it and still make money?

Over the past 10 years I've been almost singularly focused on working with partners in the channel and from two perspectives, the Manufacturer and the Distributor. What I learned over that time is that a solid partner program can make or break the success of how items make it to market. Working with partners is a big step but can reap huge success because it puts a lot more feet on the street. It also provides access to areas you may never have thought of before.

Here is a quick outline of some things to keep in mind:

• There is going to be cost to you 
• Write it down 
• It needs to be dynamic
• Partner skin in the game is essential
• Create several levels
• Provide resources
• What's in it for the Partner

There Is Going to be Cost to You

It's that old saying in the business world, "It takes money to make money". No matter what type of Partner Program you create you need to be ready to invest some money, time, ideas, and man power towards it and the Partners. Far too often I've seen this be the downfall of many a good idea because there wasn't enough investment but only you can determine what is affordable. Programs can be simple enough that you have a contract, some marketing materials, a bit of online training and basic phone support or way up the ladder with deep pockets. As you can see this will have some cost associated with it. Start with a budget. This will ensure that you can measure ROI. A budget consists of a plan and I don't know anyone who hasn't succeeded in business or in life without some kind of a plan. Which leads to my next point.

Write it Down

You and your partners are going to need to understand what the program is all about. A written document helps each partner know it's a serious part of your product access. Do you need to have a lawyer review it? Might not be a bad idea but most likely not at first. Once you start building on it and see places where you start bumping into business law, then have your lawyer do his magic.

In writing it down you start to define partners, your expectations and their benefits. From this you'll be able to create the excitement you need partners to feel to be want to invest in your program. Realize its going to change over time as you improve upon its content and benefits.

 

It Needs to be Dynamic

 

Dynamic is energy, vigor and movement. What I mean by this is that the program will take on a life of its own over time if it's successful. It will grow and become more complex but that usually is a good thing. During my time with HP I saw this happen with their PartnerOne program. The document that covers all the elements is well over 150 pages long but 10 years ago was only about 30 pages in depth. HP's PartnerOne program look and feel has put it at the top for years. Though Partners often are frustrated because it's so big those who take time to pull out what they can use and gain the certifications and knowledge are beating out those who don't. Which leads to Partners have to put skin in the program to see benefits.

 

Partner Skin in the Game

Skin in the game is where the real relationship starts with a Manufacturer and Partner. Many manufacturers make it easy to sell their product, just sign a simple contract. But, if they really want to see the huge returns, which translates into higher margins, creating a partner program requirements is how you start scoring in that game.

Here are some ideas:

• Training, Sales and Technical
• Manufacturers certifications and tests
• Complimentary certifications and capability
• Demo equipment
• Business planning and reporting
• Annual reviews

What this leads to is a deeper understanding of products and more of a commitment by the Partner. If they are going to spend the money, time and man power, most likely they will also ensure it becomes a part of the what they offer the market.

As the program develops over time and becomes more dynamic it will morph into something bigger often forcing you to create several levels of authorization.

Creating Several Levels

Creating several levels helps establish who is really standing behind a manufacturers products. Like I stated above, it can be as simple as signing a contract to start reselling a product but wouldn't you like to know who that 20% are that make the commitment. Creating several levels helps. Now don't make it easy for a Partner to jump of the different levels. Sales over time, additional certifications and even approval by area managers are good ideas to create value and show commitment. Building on capability establishes the Partners worth to you and the End Users they sell to. I know a lot of Partners who proudly display their levels of authorization and certification in the lobby of their HQ or on their web pages. If you as an End User had to choose between a partner with a Business class certification compared to a Platinum certification, who would you go with?

Providing Resources

Having a program without resources is a table without legs. You have got to put someone, a dedicated person, on this program. Most likely as it grows over time more and more people will need to be a part of it. You have to educate your entire staff about the program so they can be a resource as well to potential Partner about its value to them. I can't stress enough the importance of this. This person and or group of people should be aware of the programs use, how partners perceive it, listen to partners response, make changes, and are constantly looking for ways to improve it. The resources also need to be available if possible, 24/7. Email should be responded to within minutes, phone calls should be answered and not go to Vmail and if they do return calls are within minutes not days. The documents that detail the program are on the net, up to date and downloadable. Resources, Resources, Resources. This will ensure a program is worthwhile and provides benefit to the Partner.

What's in it for the Partner

If the Partner can't perceive, see and or understand the, What's in it for me, part of the program, you might as well pick up your ball and bat and head home. This game is over. They need to easily understand the upside at least with a quick explanation. There can be more to it behind the scene but you want to at least peak some interest with, here is what you could be making with this additional investment on your part.

 

Additional benefits might be: 

• Reduce upfront cost
• Backend dollars for achieving sales levels
• Exclusive selling rights
• Marketing and Development funds
• Higher levels of Technical support
• Dedicated Account Manager
• Leads
• Guaranteed territory
• Sales Spiffs

These are just a few ideas. Partners today are looking for any advantage they can acquire to separate themselves from others in the market. When you take the time to understand their needs and wants and create a program that meets and exceeds those expectations, you've won a huge battle. You get whatever you want in the world when you've helped enough other people get what they want first.

Partners, Resellers and VARs are Hero's

Partners, Resellers and VARs, let's just use Partner, are an essential and important part of the Channel.  They are the glue that brings what a Manufacturer has to the End User, installs it, and keeps it running.  They often are the consultant to an End User who is lost in the world of IT.  All the End User wants is for their systems to work just like their car.  They don't need to know the mechanical engineering that's going on in the engine.  They just want to sit down at their desk, turn on the computer, and see it work.

Partners have evolved with the Channel over the last 25 years.  They've had to change with the market, become smarter and more competitive.  Most End Users are more informed about what computers do for them and have basic knowledge of different types of applications for office use.  But more complexity have come into play with Storage, Virtualization, Disaster Recover and Converged Infrastructure.  These have replaced common terms like CPU, memory and hard drive. Customers can look up most of this stuff on the Internet these days.  But, if you asked most Customers to explain how Virtualization works they would be at a loss.  Thus our hero arrives, the Partner.

I've worked with Partners who focus on one specific market offering as well as with those who carry everything you need and if they don't have it, will get it for you as long as they can make a dollar.  Some Partners will only provide service like installing cables for your network or just break fix.  There is one Partner here in San Diego who has built a nice solid company on break fix of products.  They service in Southern CA and have 10 people in the company.  Nice little business that brings in $2 or $3 million a year.  Another local company has a national reach with offices across the US.  They work with large global organizations, government (federal and state) as well as smaller mom and pop shops and they do it well.  They have sales numbering in the $700M to $800M and over 500 people working for them.

If a Manufacturer and or Distributor wants a Partner to purchase their products and resell them, then the Partner is going to ask, what's in it for me?  It might be the best price for one item or a whole solution.  Maybe it's training and certification or additional marketing funds to promote their business and find new customers.  The best approach, I found, it to first understand their business model, market, corporate structure, customers and goals.  This may take some digging but once you've answered these questions, it becomes easier to show them the value in your product or offering.  I use Question Based Selling (QBS) as my sales methodology (see link here or on the right).  If you are struggling with building re pore in your sales and meeting quota, QBS can provide help.  Standardizing on a methodology is a must.

Margin is a key part in this equation.  If a Partner only make 5 points in a deal and their overhead is 6, they've lost money. (thus why you need to understand their business model)  Your product might bring in great margin but if they don't know how to pitch it to a potential customer they won't sell it.  You might have to provide training and go on a few calls with the Partner account representatives to get the ball rolling.  Great, they've made a sale but are their technical people capable of installing it and maintaining it?   As you can see there is a lot of parts to getting into the Partner market but it does put a lot more feet on the street driving your offering.  Like any model, you have to have money and resources to make money.

Determining which Partner market to go after is hard.  There are generalists in the US alone which numbers in the 30,000 or more.  That's a lot of opportunity but getting your foot in the door is a challenge.  Do you go out and knock on all of them with your own staff or do you look for help.  This is where distribution might be an option.  They have a staff that is managing Partner accounts already.  But, there will be a cost plus it has to have a compelling story.  $2 items won't get it.  If it helps compliment a virtualization install reducing ramp up time from days down to minutes, you've most likely got their attention.

Will you sell direct?  Years ago when Dell hit the market they upset the apple cart and started to sell computers directly to End Users both at home and in the commercial market.  IBM, HP and others scrambled to fight this be selling direct as well which created a lot of ripples of unhappiness in the Partner and Distributor part of the Channel equation.  To Partners it looked as though the big manufacturers where taking business away from them.  Eventually things settled down and programs where created to make this one of many ways to market that all could benefit from.  As an example partners could recommend a product from a specific manufacturer to an End User and have the End User buy it direct adding the Partner name and ID number to the order.  Then the manufacturer would provide a commission to the Partner.   

There is good and bad for the Partner when End Users buy direct.  Good, because they don't have to carry inventory or tie up their credit line.  Bad because those commissions are smaller than the over all sale, obviously, and thus sales numbers are small (no inventory no sale).  How do you grow your business and credit if you can't show sales?  Banks won't give you credit or loans if you can't show business growth.  Plus the Manufacturer will give less product sales credit to the Partner who uses this model compared to one who uses Distribution.  Example: if one Partners sells $100,000 of computer hardware using Distribution and another only receives commission on the same amount, the Manufacturer may only credit the commissioned Partner for $7,000 in sales (using a 7 % margin).  End of the year comes and the Manufacturer looks at the total sales of each Partner.  One Partner has $100k and another only $7K.  Who do you think they might want to work more with. Each Manufacturer has their own program and I highly recommend that a Partner completely know these types of details or call in an expert to assist.

But the real secret sauce for Partners is how they bring all the elements together for an End User.  As I mentioned earlier, they have evolved over the years.  Selling just a computer won't pay the bills.  Partners need to install it, maintain it and bring additional value as well.  A foot in the door with an End User might be with a project to replace an aging sever farm of 4 systems.  That partner, if they are smart, is going to take a look at what the End User has, what might replace existing units with but also how to improve that End Users other business elements.  Can he reduce costs, help them go green or free up employee time. Lets say the End User creates a lot of paper that has to then manually be entered into a system.  The Partner might recommend some options to help reduce that paperwork and process with a Multifunction Device and software from a company like InfoDynamics.  InfoDynamics has several solutions that extra detail from those documents and stores them for easy retrieval later.  This frees someone or possible several people's time at the End User to focus on other elements of the business thus saving them money.  To me, this is the true meaning of Value Added Reseller (VAR) another name for Partner.

Again, I hope that I've added some ideas and knowledge to the hero's of the computer world as I refer to them.  They have been the bread and butter of my career.  Many have been fantastic business partners and still others turned into great friends as well.  Big or small I love them all.

What is the Channel?

We all have it happen to us. You meet someone and they ask you what you do for a living. For me the last 10 years have been focused on the, "Channel". The next logical question is always, "...what is that?"

The Channel is one way in which the Computer Industry will express product to market. It's an every changing and dynamic flow kind of like a river. Once it was very cut and clear but in today's market these different elements are crossing lines and creating new paths. But, there are really 4 distinct parts for basic knowledge. Here are the key elements: Manufacturer, Distribution, Partner/Reseller/VAR (Value Added Reseller) and End User. Let me quickly define them and then put the pieces together.

Manufacturer - this is where the product and or service begins. It's the entity that makes something because they feel or the market demands it. IBM, HP, Intel, Microsoft, CISCO, Oracle are just a small handful of names that could be associated with this. IBM, HP, Intel and CISCO primarily produce hardware though they now also have software elements in their mix of offering IBM as an example has sells Lotus Notes is one (see morphing). Microsoft and Oracle are software oriented though Microsoft has dabbled in hardware; Xbox would be an example. These companies spend a great deal of time on R&D, focus groups, etc to bring products to market that customers need.

Distribution - this is one way to market for the manufacturer and where many Partners/Resellers/VARs acquire purchase. A Distributor will often carry thousands of items and thus be a one-stop-shop that is, if their pricing is in line with others. Shopping is smart and an option. So now that Partner/Reseller/VAR can fill up his bag with all the items he needs in order to fulfil his end users needs. Some distributors specialize while others carry a wide range of items.

Partner/Reseller/VAR - these are the guys who will take a computer or some other hardware and or service, add something to it like software, configure it, test it, install it and even maintain it for an End User. They have many names as you can see but to keep it simple let me use Partner. The Partner is usually highly skilled in what they do and considered an expert. They are in business to help End Users. Maybe one, maybe many. Some are small, 5 or so people, and others are huge with thousands and branches across the US. Some focus on a specific vertical like medical or local government while others sell to anyone. Location doesn't matter either. You even see some partners working together especially if one has a skill set that another doesn't. They agree not to touch other elements of the business and play well in the sand box together.

End User - this is the last point in the chain for a product and or service. Meaning, the product, service or whatever, lands and stays here. The end user can be a small company down the street in the local mall or a huge global company like Ford. They often have a business and use computers and software as a tool to run their operations. They don't want to be in the IT business most of the time but may have a dedicated staff.

Now the confusing part starts at the End User end of things in the Channel chain. As many of us know you can purchase items directly from say...HP. So is that a Channel? Yes. Will it be cheaper? Maybe. Will it be installed and supported? Good question. Partners bring that type of value to the End User. Do you know how to install an air conditioning unit or lay concrete? Most likely not so you call in an expert like a Partner. What about new technology to help me save money or reduce cost? Again, a Partner can be the hero here.

Can the Partner purchase products from the Manufacturer directly? Sometimes, depending on contracts between the Manufacturer and the Partner. Each Manufacturer has their own rules and restrictions. Some contracts insist that products only be purchase from only one distributor. Also, partners may be required to keep up to date on certifications and have enough sales to keep authorizations.

So why does a Partner sell one product over another, say IBM and HP. That can depend on the benefits to the Partner for reselling the Manufacturers specific product and the End Users needs. Many Manufacturers make it beneficial to the Partner when they sell more of their line card. This benefit might be more leads, cheaper cost to them, marketing and develop fund and additional help. End User wants and needs may dictate the products they use. Some End Users only buy IBM because, that's what they have standardized on. But other times there may be very special needs like the ability to backup, off site, to a secure location, using very specific protocols. Maybe only one Manufacturer offers that.

Distributors over time have become more than pic and ship companies to Manufacturers and Partners. Today they offer services, training, facility use, and financing just to name a few things. In my last position I was an extension to HP because I had a vast knowledge of the HP PartnerOne Program which was very big and covered almost every aspect of what HP has to offer; printers, desktops, servers, storage, networking, software, etc. This was a huge value to Partners who were new to HP or not large enough to have a full time representative on their account. But, I worked for Ingram Micro and thus could connect to other values in our offering. I became an extension of a business resource to both ends of the Channel chain.

My hope is that this provides an idea of how this market works. I plan to follow up with some more in depth discussions which will show how these 4 different elements are changing. As more morphing takes place there are opportunities to provide and find value at these different junctions.

It Can Be a Long Road....

28 June 2010 - It can be a long road to reemployment but I was prepared for that. In actuality it hasn't been that long since I was laid off from Ingram Micro, April 2nd of this year. Ingram was a fantastic company to work for. In the back of my mind I was hopeful that it would be a place to grow and possibly retire from in 15 or 20 years. But, things often happen way above our pay grade and often for reasons beyond our control

I was the first HP person hired under a new division, Infrastructure Technology Solutions (ITS), run by our VP Scott Look. (article CRN June 2007) I was interviewed by Scott on several occasions over the phone and immediately liked him. Scott was brought on board from Avnet and with him came several other people from there, Doug Bell and Carmen Alameno. Doug was also someone I spoke with during the interview and hiring process. Again, another person I was impressed with and someone I could learn a lot from. Carmen was the last to come on board after the team was in place and who I reported to.

Joel Capizzi had opened the door for me to this position at Ingram when he got wind of it. Joel was part of the HP BladeSystem team at IM working with partners in the field. He and I had connected at an HP event in Houston a year or so prior while I was at Bell Microproducts. Joel became my ISR and I was very lucky to have him. His understanding of HP and knowledge of Ingram was instrumental in my success.

We slowly started to build the team over the next 6 months. This started in Oct of 2007. Scott and Doug asked me to speak with potential candidates for Channel Account Manager (CAM), my counter part position, as well as Field Technicians. I'd then provide feedback on potential applicants.

Erik Eagleston and Todd van Uitert where two of the CAMs I spoke with and eventually hired. We had several other people on our team. It was a lot of talent. Unfortunately my Field Tech was new to HP and had a steep learning curve to tackle. He did well but was replaced within a year. The Field Tech was an important part of our team. I'm not super technical and when it came down to bits and bytes, I needed their talent.

It took time to understand the direction Ingram wanted to take this division, create a solid message and marketing for our partners and start driving to new business. I had a huge leg up on my counter parts except for Ron Falbo who came over from Bell Micro with me. Ron was covering NY. We had been working on exactly the same program at this distributor. But, it was easy to see that there wasn't enough resources to support the ramp up time and partner needs to sustain Bells channel strategy. That is why I went to Ingram. They had a lot more backing.

In 2008 I was selected to be in Ingram's Presidents Club. The trip was to Aruba for several days. I had not expected that and actually suggest it go to my ISR, Joel Capizzi. He did all the transaction end of the business and could use the break and a big thank you. Unfortunately it would have to pass to the next winner if I declined. So, I took my wife to the island of Aruba. We did have a good time.

My focus was on the partners in the Southwest at first, Southern CA, NM and AZ. I had been working this territory for over 7 years up to that point so there was a well established base of partner contacts. However, the new HP Storage program which created a lower entry level to HP Storage Authorization brought with it a new set of partners. Each week, month and quarter, I set myself goals on signing up partners. Once on board they had to purchase this product from Ingram and if they added BladeSystems or other qualified products, that would normally be open sourc, to a Value Big Deal letter, it too had to be purchased from Ingram.

Keeping up with HP changes and understanding the PartnerOne program was a key element in my strategy. My value add to the partner was being able to extract those elements that fit their business needs. But it took time to sit down with the owners and executive staff first to fully understand their business models. From there I could then determine what, within the PartnerOne program, would provide the greatest benefit. Partners loved this because so many of the smaller ones were not really being covered by HP any more. I was an extension of the HP field source.

I gained territory when in 2009 Ingram reduced the staff in our division. The person covering the Pacific Northwest was let go. My territory now grew from 2 1/2 states to 13 over night. I immediately found that I had a lot more potential. I had to connect with additional Ingram Account Executives (AE) and Business Development Managers (BDM) who were main contact on larger accounts. Early on I established solid relationships with these folks. Working with them opened a lot of doors and produced success via combined efforts.

Over the last 8 plus months the numbers were really topping the charts. Sales has started to roll in all areas as the market opened up the purse strings on budgets. Most partners now had smiles on their faces and the large pool I had signed with Ingram where finding a lot of business.

When I received the call that I was being laid off I was...shocked. The reason given was HP had cut funding which I had anticipated. When this division was created back in 2007 it was supported in part by HP who wanted to drive greater share of the storage market with several new distributors, Ingram Micro, Synnex and Tech Data. But it was to be a business that would at some point be self sustaining such as in our area when business was up and running.

The relationships I was building with partners was not just for the HP Storage but also included the Ingram entire offering. It was pretty regularly I would hear a partner talk about another part of their business while in a meeting that was an opportunity for the AE, BDM or some other division at Ingram. I can't tell you how many times I passed that along.

Even after leaving Ingram I've been receiving calls from partners with questions about HP, signing up for storage and who to speak with to find some help. Towards the end they will hear I'm no longer at Ingram and apologize for taking up my time. But to me, it's all a part of the value add I bring to the market. HP has been a focus in my career for the last 10 years all the way back to when I was first hired by Compaq. That history brings with it knowledge, points of contact, and understanding that can't be taught over night. The relationships I've built with partners is long standing. They trust my insight because I've taken the time to understand their business and how to help them grow and be successful.