As mentioned in Part I of this article, the two elements of an effective sales partner program beside the revenue commitment are:
- A plausible categorization of the partners into the various partner levels
- Attractive program-specific benefits for the partners
Probably 90% of all partner programs offer the three partner levels Silver, Gold, and Platinum. So, if you design a new program, you can be a bit more creative in naming the partner levels. Sometimes it can make sense to have more than three levels, but that really depends on how fragmented your partner base is. I think it should never be more than five, because then it will begin to be confusing for the partner.
In most partner programs, the partner categorization is done based on the performance of the partner (usually revenue they make for you) but in my opinion it is more effective to categorize based on the partner potential. Of course, linking partner benefits to their actual results is a strong incentive to perform well. On the other hand, partners with large potential should be more attracted to your partner program than partners that are already in the program. An outlook to gain large benefits at some point in the future when business with your solution is still uncertain, is often not very attractive for potential partners. Besides, partners with large potential are often aware of their capabilities and simply expect to be treated accordingly from the beginning. The criteria for assessing a partner’s potential can be linked to their installed base, for example the number of existing customers, website visitors, number of stores, etc.
Be accurate with designing the bands of the partner levels. There should not be much overlap, the levels should be a real-world reflection of typical partner segments and it should be very easy and transparent for each partner to understand their categorization into the individual partner level.
Now, let’s look at designing the program benefits. The most common benefit is a price discount. Such discount can be quite easily assigned to the various partner levels. The price discount should enable an attractive margin for the partner and should consider that better performing partners might have higher sales costs per unit (COGS = Costs Of Goods Sold). So, higher revenue should not be punished with lower margins by the program.
A bit more difficult is to decide on additional benefits for each level. Such additional benefits should include the following elements:
1. Generosity:
Offer more things that you usually charge for. This can include for example training sessions, professional services, printed manuals, marketing material, etc.
2. Enabling:
This may sound counter-intuitive but to offer more education and tools to enable the better performing partner to be even more successful can be specifically rewarding for strong partners. Since they have already made some investments into selling your product and apparently acquired some skills, such partners can benefit above average from additional enabling efforts. Also, especially marketing support can be more effective with partners that already built up a brand as a seller for your products. Enabling tools can include marketing material and training as well as individual account management and in-depth performance analysis together with benchmarking against other partners.
3. Flexibility:
Allow more room for customization and individual adaptation for the higher partner levels. This is often greatly appreciated since it enables a stronger differentiation and even more competitiveness for the strong performing partners. Also, since in many cases the stronger partner are also larger companies, their processes and IT landscape might be more individual and actually require more customization. Beside customization of the product or integration with other systems or processes, also more flexibility regarding the terms and conditions can be a big benefit and an incentive to be categorized in a higher partner level.
Once you have designed your partner levels and the benefits, it cannot do any harm to verify it with some partners and ask for feedback, both before you have introduced it in the market and after.
© Stephan Hesslich
