We all know the expression “walk a mile in my shoes,” which means “understand my situation and what I am going through before you criticize me.” All too often, vendors develop value propositions and communicate to partners based on their objectives or what they think a partner wants to hear. However, unless technology vendors have a fundamental understanding of the partner’s business and everyday challenges, they will miss the mark. Partners will feel like they are being sold instead of entering into a true partnership that benefits both businesses.
Rapidly changing technologies and changes in partner business models during recent years have made it even more challenging for vendors to deliver compelling value propositions to different groups of partners with varying business models. Technology vendors have become very adept at rolling out comprehensive partner programs that provide the tools and benefits they believe will motivate partners to participate as one of their top-tier vendors. They often include partner-benefit statements showing partners what they have “earned” and how much program benefits can increase were they to move up to the next program tier.
The challenge for the partner is that the information provided by the vendor is only partially useful because it may not align with the way the partner measures his/her business performance and profitability. In addition, key program benefits touted by the vendor may not be important to the partner. A common set of metrics that directly relates to the partner’s business makes for a much more compelling value proposition and ensures that partner programs are focused on partner profitability. This also means that the vendor must create a value proposition for different types of partners.
Sharing Compelling Value Propositions
A compelling value proposition should be focused on providing resources, tools, and marketing supports that have measurable and positive impacts on the KPIs partners use to measure the growth and profitability of their businesses:
Vendor Value Proposition & Program Elements
|Rate of Customer Acquisition||Joint demand generation campaigns and MDF; new market penetration strategy|
|Average Revenue/User||Bundle offerings and additional services|
|Marketing Investment||Co-op and MDF funds; marketing campaigns; marketing concierge|
|Renewal Rate||Joint renewal campaigns, reminders, and special offers|
|Attach Rate||Training and incentives to add solutions and services|
|% of Leads Qualified||Joint lead campaigns and lead follow-up|
|% of Leads Closed||Lead campaign management training|
|Initial Deal Size||Joint pre-sales calls and resource support|
|Gross Margin by Offering||Solution and services incentives and rebates (upon achieving targets)|
|Resource Utilization||Increase partner resource utilization by funding headcount in marketing, pre- and post-sales|
|Managed Service Efficiency||Provide benchmarking analysis of managed service efficiency and provide training|
|Recurring Revenue||Joint outbound campaigns to existing customer base|
|Percentage Churn||Help reduce churn through outbound customer call campaigns and customer satisfaction surveys to identify & fix customer issues|
|Customer Lifetime Value||Provide CLV benchmarking and share “what works”|
Value propositions will vary by partner type. The level of and investment in the value proposition and related partner program elements vary by partner tier. The most important aspect of an effective value proposition is for a vendor to be able to “translate” the value proposition into measurable KPIs and to share those KPIs with (managed) partners for the partners to have a clear understanding of how the vendor-partner relationship will affect his/her business.
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