I’m always a little bit surprised when I hear a Channel Manager comment on the inability of one or more of their partners to achieve their “assigned quota”. It seems somehow contradictory to juxtaposition the concept of a mutually beneficial business partnership with the concept of assigned quota. However, I’m not sure it’s all that uncommon – which might explain why so many partners are struggling to perform to their vendor’s expectations. Driving revenue through a partner channel isn’t about assigning quota, it’s about motivation; and the vendors who want to succeed are taking an active role in defining, building and maintaining that motivation with their partners.
Motivating a channel partner has little to do with the margins you pay. Oh sure, you have to have a reasonably competitive economic model to offer them, but ultimately that’s just the “price of entry”. Your partners aren’t deciding on a day-to-day basis whether to push your product or not simply based on the additional 3% or 4% margin available in your “Gold” level partnership (although they’d sure like you to believe that when they’re negotiating with you!); they are making daily business decisions on where and how to spend their resources and time based on what activities will help them achieve their strategic business objectives.
If they’re a consulting house that resells your software, every decision they make is based on how to increase their overall consulting revenue and profit through more deals, better utilization of existing resources, and higher rates. If they’re a solution provider whose solution is built on top of your platform, every decision they make is based on how to maximize their subscription or license revenue through more users, more product, and fewer discounts. At best, your software or platform is a means to an end – and frankly, not always a required means.
Motivating partners starts at the strategic, organization level. We must fundamentally define and agree on why we are in business together (i.e. where are we headed together as a partnership over the long-term), what we hope to accomplish together (i.e. what market opportunity and how much of it do we intend to capture over the long-term), and how we best work together towards our common long-term goals (i.e. who is involved, when will we review strategic progress, etc.).
When we collaborate with our partners on a mutual long-term, strategic goal, we don’t need to “assign quota” because a specific level of performance is implied or “required” from both of us in the next period (month, quarter, year, etc.) in order to take the first step towards achieving our longer-term objectives together. Of course, that means setting short-term goals together, but that’s a lot different than assigning quota! When we do the hard work of creating this kind of strategic alignment with our partners, the short-term goal setting and day-to-day tactical execution becomes much easier.
What are you doing to create better strategic alignment with your partners?