Consequently, vendors have fine-tuned, and in some cases, completely altered their partner programs, but for some reason, partner profiling and segmentation practices have seen little change over the years. Partner segmentation or tiering practices are often comprised of some basic revenue analysis combined with individual knowledge of partner types, their business performance and potential offered by account management staff.
Several factors have significantly changed the technology partner landscape. Key changes revolve around:
1) The growth of Cloud-based solutions and the associated recurring revenue model
2) The economic recession reduced the number of technology partners and caused an acceleration of mergers and acquisitions
3) The fact that partners increasingly demand a true business relationship with vendors rather than a buy-sell relationship.
The lack of a rigorous and best practice partner segmentation seems odd when considering the millions of dollars technology vendors invest in partner recruitment, enablement, and incentives.
Now more than ever, vendors need to have a best-in-class methodology in place to ensure that they are recruiting and onboarding partners that are capable of thriving in a rapidly changing marketplace.
The Changing Landscape
The changing landscape has affected the channel and the number of partners that will not only survive but prosper. Some estimates predict that vendors will only be able to “bring along” 20% - 30% of partners and will have to part ways with the rest – leaving an enormous hole to be filled through the recruitment of new partners. Hence, vendors need to re-assess the tools and methodologies they employ to identify those partners with the right attributes and business models.
In today’s technology marketplace, partners often aggregate technology solutions and platforms from vendors while adding their own solutions and services. This “mix” of solutions requires that both vendors and partners invest in business relationships where both parties deliver value to the end user customer. For vendors, establishing a best practice partner profiling and segmentation methodology is now more essential than ever to ensure that they make the right investment in the right relationships. A haphazard and subjective profiling processes can result in a partner ecosystem that lacks the capacity to achieve revenue and market share targets.
Five Best Practices for Partner Profiling and Segmentation
- Start developing a partner profiling and value scoring worksheet by defining core attributes in order of priority/importance by identifying the attributes that help your top performing partners succeed.
- Stack rank partner value scores to segment your partners
- Assess the results and test your attributes and scores in “real live” against top performing, middle of the pack and worst performing partners
- Profile and segment partners separately for product groups or business units with distinctly different go-to-market strategies and end customers
- Re-assess and update partner profiles and segments on an annual basis
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