Adopting a Best Practice of Consumer Marketers Helps B2B Technology Vendors Drive Revenue, Loyalty and Growth
The go-to-market plan of many providers often includes a significant investment in indirect sales channel partners to reach more customers. However, Gartner, Inc. says that many providers execute a single communications plan across all of their partners, missing out on opportunities to cultivate and maximize loyalty and the real revenue potential of their partners.
“This is a scenario that has high stakes, especially when the competition to capture a majority of a partner’s revenue and mindshare continues to heat up, “said Tiffani Bova, research vice president at Gartner. “Partners might tolerate such lack of familiarity in the short term, but over longer periods of time, they might choose to take their business elsewhere and align with another vendor.”
Consumer marketers figured this out years ago, pioneering what is commonly referred today as One-to-One marketing. On Amazon.com, for example, customers receive personal communications and a custom home page tailored around their buying history. Today, just about every savvy online retailer has adopted this practice, aided by collaborative filtering which shows customers what others with similar tastes and similar buying patterns are acquiring.
To help technology providers ease into custom communications, Gartner recommends a communications plan to help organize and prioritize the communications tools and initiatives needed to deliver the right information to the right people in the partners at the right time. A plan helps to establish priorities, achieve control, and determine particular activities set against a timeline.
“Custom communications is typically a part of an expensive partner relationship management (PRM) solution,” said Bova. “However, some smaller to midsize technology providers don’t have the time, resources and funds to acquire PRM, or they aren’t quite ready. Gartner developed an alternate solution for these types of vendors that helps them garner the benefits of custom communications without the significant investment of PRM.”
Gartner believes that revenue performance is an appropriate method for categorization of partners for the purpose of communications, specifically share of wallet (SOW). SOW is the percentage of the partner’s revenue that goes toward the vendor’s brand. For example, if a vendor currently makes up $500,000 of a partner’s $1 million revenue pie, the vendor earned 50 percent share of their total wallet.
Gartner recommends putting priority on partners with the highest SOW, however, those with low wallet share yet high revenue contribution, or partners enrolled in “grow a market” programs should be managed as exceptions.
As with any exercise of this type, the hardest part is gathering the data. “Channel managers should be able to ascertain a partner’s past sales data. If their partners are public companies, then total revenue will be a matter of public record. However, the public filings most likely will not break revenue down by product category, maybe only by product and services. If they are not, you can ask them to provide you the information during business planning sessions or executive briefings,” said Bova. “You will have to use your best judgment based on your resources (sales, marketing, partner account manager etc) knowledge of the provider to estimate what their future growth potential is. After building your spreadsheet, you will want to score each partner in some way in order to categorize them appropriately.”
Once partners have been segmented, communications should be tailored that recognizes and appreciates what the partner is contributing today. Partners rarely respond to boilerplate communications marketing that does not recognize their sales history or do not map to their future buying intentions. A plan typically covers a 12-month period and the design is usually a team effort, led by marketing communications with input from channel management, channel marketing and product marketing.
“Even if you’re not ready for full PRM, you can still benefit from developing a partner communications strategy that recognizes partners as individuals versus general members of a larger, almost faceless community managed by existing tools,” said Bova. “If tailored communications, online and offline is not something you’re doing today, you need to start – and start now. Recognizing your most valuable partners in your communications is one of the most cost effective retention activities you can undertake.”
Additional information is available in the Gartner report “Marketing Essentials: How to Communicate With Channel Partners to Drive Higher Levels of Performance.” The report is available on Gartner’s website at http://www.gartner.com/resId=1264614.
Gartner, Inc. (NYSE: IT), is the world's leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.
Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We're trusted as an objective resource and critical partner by more than 12,000 organizations in more than 100 countries—across all major functions, in every industry and enterprise size.
To learn more about how we help decision makers fuel the future of business, visit www.gartner.com.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.