How to Know Which Partners to Invest In


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Recently a client asked me: “How do we know which partners/ distributors to invest in?” The question was a result of declining sales, and the need to refocus selling efforts. Indirect sales and dealers is a bit of a different game. Keen oversight and analysis is necessary to keep both parties fresh and productive. It soon became clear that my client needed an objective way to review their partnerships. Too often there’s a tendency to view the partnerships in light of past sales. While this provides value, this weight shouldn’t be as great as other key indicators.

Determine Partner Value

In order to help you determine which partners to invest in, we’ve developed the Partner Attractiveness Tool. This measures your partners across a number of different criteria, including:

  • Current Partner Growth
  • Future Partner Growth
  • Potential Profit
  • Service Offerings
  • Relationship Dynamics
  • And more

 Partner Attractiveness Tool

Here’s a concrete example. One key indicator of a valued partner is their relationship to the end-user. Do they have more customers who are primed to buy? In some cases, this indicator either isn’t considered by CEOs, or is undervalued. This article isn’t meant to prescribe fault. It’s meant to show that there is no easy answer to the valuation process. It is truly unique to each business and certainly not industry specific. This is where the Partner Attractiveness Tool comes into play. Proper usage can provide much value to your organization.

Partner Investments

With indirect selling channels, it’s tempting to leave the partners to their own devices. Heck, you’ve got warm bodies selling your products or services. Many CEOs think that it’s better to have this than no partner at all.

Surprisingly, this may not be true. There are costs to your organization in this relationship. Perhaps there are other partners that may come at a lower cost. Others may produce a higher return. It’s also possible that you aren’t investing enough in some of your current partners. A little extra investment, or partner engagement, can go a long way to improving sales. Objectively evaluating partners makes resource allocation investment much easier. For instance, some of these resource investments may be:

 Co-op Dollars

  • Time, personnel and intellectual support
  • Advertising and Marketing Alignment
  • Product Training and Enablement Efforts
  • SPIFFs, Discount Multipliers and other incentives 
  • Joint Sales Calls

Many times, these investments pay off for you (and them). However, there are certainly times when they don’t. This is where the Partner Attractiveness Tool can lend a hand. Are these investments necessary? Are they paying off for you today? Will they still be paying off for you in 2-3 years? After filling out all the criteria in the Tool, these answers become apparent. You’ll be able to pinpoint the strongest potential partners. This will allow you to decide which partners it might be wise to invest in. It also helps uncover those that might need to be reconsidered.

Partner Attractiveness Tool – Next Steps

With this Tool, it’s very possible that you uncover some insight you didn’t anticipate. There may be partners who were staples that no longer pull their weight. There also may be new/small partners that show the potential for a promising future. Perhaps there’s a diamond in the rough. The Partner Attractiveness Tool helps you discover this where otherwise you’d be left with guesswork.

 Partner Attractiveness Tool

Once you’ve graded these partners, your course of action becomes clearer. Now you can objectively proceed with one of the following steps:

1)      Investing – See the bullet points above. There are tons of ways you can invest in a promising partner. If you’ve discovered a profitable relationship, do all that you can to improve it! These are the partners who will help you build the future of your company. Don’t sell them (or yourself) short.

2)      Re-engaging – There may be some partners who aren’t performing as they once were. However, you may not be willing to give up on that relationship yet. That’s certainly understandable. In this event, I’d recommend trying to re-engage with these partners. A great example of a way to do this is through a Mutual Scorecarding Process. In this process, you grade the partner on a variety of criteria. Similarly, they grade you. In this way, you both uncover ways to improve the relationship (as well as the bottom line.)

3)      Terminating – This is the unfortunate side of the Partner Attractiveness Tool. You’re going to uncover some partners who aren’t performing as well. They may be new, or may be a partner you’ve had for years. Either way, the Tool will give you an unbiased score of their performance. If the relationship isn’t sustainable, it may be time to seek out other options.

Decisions like this in business aren’t the easy ones.  As a result, you need an objective analysis to help you through.  Try using the Partner Attractiveness ToolIt will help remove subjectivity and provide clarity.

Republished with author's permission from original post.

Joel McCabe
Joel McCabe serves as a Senior Consultant at Sales Benchmark Index (SBI), a sales and marketing consultancy focused exclusively on helping B2B companies exceed their revenue targets.


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