Factors Contributing To Successful Business Alliances

When I first started developing alliances, I strongly believed that a very systematic plan will be key to mutual success. But I was proved wrong. Good planning, regular meetings and other conventional rule book methods are essential but not sufficient. There will be few intangible factors which will play a decisive role in mutual success.

1. Have frank discussions
Frank discussions are extremely important right from the first handshake. Extra 'hellos', super animated and customized presentations forcefully fitting partner's vision etc. do more harm and no good. You will soon realize you are wasting time. If you are a services company and find a conflict in selling partner products say it upfront. Explore other partnership opportunities. Every single second spend in partner meetings should move the relation an inch closer to a dollar revenue.

2. Good planning is essential but not sufficient
Business relations like any personal relation will thrive only when the partners are accommodative of each others priorities. The plan may say completing server setup by March 31. But it is absolutely fine, even if it delayed by a week or two. Partner himself might not have expected the delay. Trust him and feel good whenever it is completed and move on. It is stressful but will serve as a good long term emotional investment.

3. The excitement should be mutual
The interest, excitement, quest for success should be mutual, in fact infectious. The moment repeated follows up for simple tasks start, it is a sign that the relation is heading towards turbulence.

4. Bear in mind who you are talking to
If you have a nicely maintained pipeline templates, regular review meetings etc. it is good. If your partner contact shows equal interest then it is wonderful. But expecting it from every partner is not a good idea especially when the partner contact is a senior executive level. This can actually hamper a good going relation. He may prefer talking about the pipeline in a meeting than filling out a excel.

5. Be patient
It takes time to see success. A little more for new markets. Be patient, dont rush and push the partner along with you.  Its okay if your quotas are not met for sometime. New partners need time to get competent in both technical and sales front.

Deciding The Right Price Point

Pricing will be a very important decision for you to take in your business development efforts. In fact it can eventually decide the fate of your business. However innovative your offerings can be, you cannot afford to neglect the price sensitivity of the target market. Most of the sales managers advocate showcasing value of the offerings - Flexible, ease of use, cost benefit analysis, 24*7 support etc - which may not be just enough to breach the barriers to enter a new market. There is surely some price tweaking required which is famously known as Pricing Strategy.

In eastern markets services are usually available at cheaper rates. Hence customers prefer building the solutions in house or outsourcing instead of buying new products. In such a scenario a vendor selling products cannot use the same global price list. His competition here is not just other product based vendors but also the services based vendors. Hence a very attractive introductory offer which is a byproduct of a good research is vital.

Very important point to consider is that the price sensitive markets can be too large to ignore. For example in India, Brazil or China a good discount can actually increase the volumes many fold. Which means your deal size can still be attractive and comparable to western markets.

If your offerings are of premium quality and you think steep discounts may hurt your positioning, try knocking off few features. I often use this example of selling in 'satchets' instead of 'bottles'. It will provide a great land and expand opportunity.

Also I believe it is better to have your price list in the local currency instead of having it in US Dollars or British Pounds. It might be an overhead cost for you to have multiple price lists, but it is worth considering. Some times it can  just be a mental block for the customer. I remember in few of my sales meetings 8000 USD was a deal breaker, whereas 400000 INR was still open for discussion.

Software product companies like SAP, Microsoft have already seen huge success in APAC region. This is a good indicator that customers here are very much open to innovative products provided the pricing is right.

Partner Enablement - Should It Be Free or Charged ?

Every time a dollar is at stake it demands for visibility, discipline and curiosity. Often in the same order. This I believe is the key reason why a paid training by vendors to channel partners is advocated. It is a good approach however not every vendor can demand this. It depends on the vendor power and also the industry. For a software vendor, I don’t think it is essential to always go the paid route.

Take a second to ponder if a free training is really free? I think it is foolish for a business development professional to think so. Every single minute his or her team spends in training entails an opportunity cost. Cost of losing time for planning, calling and meeting prospective customers. So for a partnership based on strong fundamentals both the parties inherently take up the training seriously. It doesn't really matter whether it is paid or free. This is the reason why I firmly believe that good qualification and a frank discussion before signing the partnership is always the key. The very thought of bringing seriousness through a paid training means you are not confident of partner commitment. Then why pursue such a relationship?

One of the hallmarks of a successful business development manager is to keep the channel partners excited and motivated. He or she should show the road ahead to the channel partners. How a successful training can lead to successful sales. A training plan with measurable KPIs should be defined. The key questions to ask are:

• What are the training perquisites?
• How many participants and their background?
• Who will lead the efforts and held accountable?
• What are the expected deliverables?
• What are the timelines?
• Importantly, what will be the future course of action if the defined objectives are met and not met?

Everything should be agreed in writing during the course of partnership discussions to avoid any potential conflicts. The success of the partnership is heavily dependent on both sales and technical enablement. So put your best foot forward.

Ruthless Prioritization In Business Planning

Entering into a new market just because you had extraordinary success elsewhere is foolish. A good market research objectively evaluated by the executive team is key to the success of any new business development. Again the target market can be too large to start all over. This is where prioritization will play a critical role. I will put this prioritization under three buckets - Territory, Offerings and Selling Force.

Territory:
Identify the low hanging fruits. This is applicable even for second bucket. For example if your products are all in English and you plan to sell in Japan or China, you will not be successful unless you localize your software. Local language based products and also customer support are paramount. 

Offerings:
For example, if you are offering premium products or services, it may be good to start with few large strategic accounts instead of the small and micro segment. If you have a bundle of products start with the simplest ones, which are inexpensive, easy to use and have low payback period for customers. 

Selling Force:
A decision to make is whether will you sell by yourself or through channel partners. Both have their pros and cons and nothing generic can be advised. I will talk about this in detail in my next post.

Few quick wins are very important to get the necessary traction. These will serve as good customer references in your new engagements. So get your priorities right.

Alliance Building: Selling To Various Stakeholders

As business development managers we all look out for potential business partners. In this pursuit we do enough research about the prospective partner, look out for relevant contacts and finally the discussions begin. If both the organizations have already done enough research and see the value addition then the marriage is easy and straight forward. There will be enough advocates or champions for each other on both the sides. But there are equal chances of it being a one sided interest. There can be two categories under this one sided affair - a. Did not hear about you earlier, but I am open for discussion b. Very high entry barriers for various reasons. This article focuses on the former.

Any business relation involves and affects multiple stake holders - CXO's, Sales teams, Technical support teams etc. Getting a buy in from each of them to kick start the relation is not easy. Reason is very simple. Different kinds of job functions have different KPI's, hence have different priorities. What excites a sales guy may not be of interest to a technical architect. Sadly but rightly, unless there is a consensus on the value add a relation can fetch, the decision maker doesn't get motivated enough to sign the relation. So developing new business alliances is not an easy task. It is paramount for the Alliances Manager to use the hard earned opportunity to discuss (sell) in the best possible way.
You may be very confident that your products will add a lot of value to the prospective partner. But how will the partners feel the same? How to effectively bridge this gap? Any organization is a bunch of individuals with personal and collective interests. Hence positioning the offerings in a right manner which will make them feel empowered is very critical.

• A sales person will have quotas to achieve. So when you are trying to convince sales teams show them how your offerings can help them achieve their quotas quickly. Understanding their quota mix can be very handy
• A technical architect may have challenges in building solutions and completing projects. Show how your offerings can enable him do it easily and quickly unlike his previous methods.Best way is to very crisply present the key differences between the 'As-is' process and  the 'To-be' process
• For senior management cost reduction, ways to enhance revenues and business expansion are always on top of the mind. Share some examples on how your offerings can beat competition, gain customer loyalty etc. Stories from other geographies and partnerships will prove invaluable

To be successful in this attempt enough home work needs to be done. Prepare and carry short and crisp material which will interest each of these various stakeholders, cite some metrics from similar relation else where. All of this should point towards one obvious yet golden parameter - Dollars earned or saved.

Despite all of this, if success still eludes then one quality which can surely help in long term is PERSISTENCE. Keep the relation warm as much as possible through simple things like courtesy calls, webinar invites, informal chats. Never know when the ice breaks!

Happy First Few Customers Are Important Not The Processes

Most commonly found words in the mission statement of any organization are – ‘Keeping customers first’, ‘Happy customers’, ‘Round the clock customer support’ etc. But do they really mean it? Can they afford doing it? Then why pretend being one?  There could be several reasons for this tendency. But in the context of new business development the key to success is – ‘Happy first few customers’. It leaves the second best way far behind. Stay away from promises that cannot be fulfilled.

Your first customer had several reasons not to buy from you – no local reference customer to talk to, no local customer support team, no product localization etc. But still they have taken a risk and shown faith in you and your offerings. You should do everything reasonable to keep them happy, even at an extra cost. You would soon realize that it was an extraordinary investment.

But very often multinational companies expanding businesses in new markets forget this fundamental truth. They allow processes erode the precious trust the first customers and partners have shown in you. They start applying the same processes which brought them success in other regions. Of course they might be very much applicable in new regions as well.  But don’t be in a hurry. First hear out from all the key stake holders in the region - Customers, Partners and Competitors.

There is absolutely no doubt that well defined processes play a paramount role in the growth story. But take a pause and think for a moment. The processes you are proud of are a result of several years of hard work. They have evolved over a period of time after many iterations. They are bound to change in future. So how can you expect processes in new regions to be evolved so soon?

You definitely need to have few guiding rules to start a new business. Else you would be just wandering aimlessly. But these rules should be elastic enough to accommodate the feedback from the market forces. So there is no harm in tweaking these guiding rules for the sake of the first few customers of course within reasonable limits and setting right expectations. This communication should come in from the senior leadership team. Else the inter-team coordination required at the ground level to support new customers will not happen often leading to frustrations.

It is much easier to understand and implement this if we understand each other’s needs. Customer in actual terms means an individual or a group of individuals. In a professional set up, everyone has a goal to achieve, job to keep and a boss to impress. So why not help each other excel in our jobs. Help the customer with an extra new requirement beyond your defined process with an agreement that he or she would speak in your next road show. A deal or two from this show will potential generate 2x-10x revenues for you. Sales team does a new sale, Support team gets a reference and Customer his ROI.

Most of this is applicable even for not-new businesses. But with established brand awareness and a bunch of new customers they have higher margin for error. Not for new businesses who just started off.

New Business: Direct Sales or Channel Partners?

There are only two ways to sell - Sell directly via in house sales force or sell indirectly via channel partners. Organizations choose channel sales for the only important reason - wider coverage and local support with less overhead costs. Auto makers, consumer product firms, software gaints and many more organizations have seen extraordinary successful in channel sales. 

If it was so simple, then common sense says sell indirectly. In reality it is not so. The decision to sell directly or indirectly is like maximizing an objective function after considering a variety of parameters like organization's size, brand value, market size, value of the offerings. In fact for a organization to be successful in indirect sales it should score high on majority of these parameters. This will make it very easy to recruit new partners. In fact organizations will line up to be your resellers. All the examples cited above - Microsoft, SAP, Coca Cola etc. fall into this category.

Focus of my discussion here is for new businesses. Hence considering the examples of these giants in current state as a yard stick is a crime. Do you think it was so easy for them when they started new? Definitely not.

A small and new company will find it difficult to recruit good partners. Especially the existing big players will be very skeptical in joining hands. After all every shrewd businessman wants to invest  resources on money making ventures. So this company may want to go to small players. Yes this may actually work out well, but as I said in my article - Factors Contributing to Successful Business Alliances - the vision and success factors of the relation should be frankly and sincerely discussed. One important element which is commonly missed in these discussions is what customers prefer? In my experience I have seen that the CXO's of few large accounts seldom trust the small players. In fact in most cases the small players just play the role of contractors doing some outsourced work at low cost. In these circumstances, do you think customers will buy from these small players? I dont think so. Hence as a Channel Manager you end up investing lot of energy and time in training and planning but not a dollar is earned.

What is the way forward in such a precarious situation? One approach which I strongly recommend is selling directly atleast in those territories where you are physically present, in a better time zone difference and where language is not a barrier. Get some new customers on board quickly who can serve as good references for not only direct sales but also in building partner network. The biggies will then lend an ear or two to know about your offerings.

A new business development is quite similar to building a startup. Every investment you make has to be substantiated with results or potential revenues. Start with one or two people in direct sales who not only sell and but also look for potential partners. Relying on only channel partners will be a grave mistake.