Enterprise Software

How to select a partner relationship management vendor

If you're sold on the idea that partner relationship management software will benefit your organization, what criteria do you consider when choosing a PRM vendor? This week's Analyst Views column spells it out.


With any software evaluation, it's important to first get a clear picture of your organization's needs before you decide on a vendor. You will need to interview three main constituents to help determine those needs when you’re selecting a partner relationship management (PRM) vendor:
  • Your channel manager/director (or whichever title your company uses—other possible titles include VPs or directors of sales or marketing)
  • The partners
  • The partners' customers (who should be your customers, too)

I cannot overemphasize the importance of getting input from the partners and their customers. Many well-intentioned PRM programs have failed because the company failed to identify the major pain points in the partner and customer community.

Partner relationship management series
Also see Jim Zimmermann's other recent articles on PRM:

Sorting out everyone’s needs
You'll probably be surprised by the seemingly opposing needs expressed by your channel manager and your partners. One key area of disagreement that often comes up is who will do the work if a PRM system is instituted. Your channel manager may be looking for a solution that will push more of the work and expense down to the partners, while the partners want the company to make their jobs easier and take more of the cost out of making a sale of the company's products.

The only way to resolve this area of contention is by selecting a PRM solution that requires each side to give a little in the interest of making life better for everyone, including the customers.

Since there is a possibility of conflict between your company and your partners, consider having an independent third-party company conduct the interviews of your partners and customers. Your partners may reveal information to a third party that they would feel uncomfortable saying directly to your company. Using a third party is also a good idea when you interview the partners' customers. Remember, some partners don't even want your company to know who their customers are. This problem is particularly acute in companies that sell through partners and through direct sales; partners are often suspicious that your direct sales team may steal their customers.

What kinds of questions you should ask
Now that you know whom you should speak with, here are some sample questions that you should ask your channel manager, partners, and your partners' customers to help determine your company's specific PRM requirements. Note that these are not exhaustive lists of questions; they're provided to give you a start on creating your own unique list of questions:

Questions for your channel manager
1. How many partner companies do you work with?
  • How many locations do they have?

  • 2. What is the makeup of the partner companies?
  • What is the number and type/job function of employees in each partner location?

  • 3. IT capabilities of the partner
    • Are partner's employees comfortable with technology?
    • Do they have access to computers at work?
    • Do they have access to the Internet at work? Is it broadband or dial-up access?
    • Do they ever need to work on their computers in a disconnected mode?

    4. What are the main problems you have when managing the partners?
    5. What are the challenges you face when trying to get them to sell your products?
    6. How many products do you sell through the partners?
    • How many new products per year?
    • How many product updates per year?
    • What is the average cost of the products?
    • Are the products simple to configure or are they complex products?

    7. What materials do you need to send out to the partners?
    • What kinds of materials?
    • Who needs to receive and act on the materials?
    • How often are the materials sent out?
    • How are they distributed now?
    • What does it cost to send the materials out? (If using printed materials, what is the cost of printing, storage, shipping, etc.?)

    8. Do you get input/feedback from your partners on a regular basis?
     

    Questions for your partners
    If your channel manager is not able to answer any of their questions with confidence, ask the partners directly.

    1. What are the main challenges you face when trying to sell the company's products?
    2. What can the company provide to make it easier to sell its products?
    3. Do you receive quality leads from the company?
    4. What other problems do you have when dealing with the company?
    • Contract issues?
    • Responsiveness to questions?
    • Speed of received information on new products, updates, issues?
    • Training?
    • Processing of orders?
    • Lack of selling tools?

    Questions for the partners' customers
    1. Why do you buy the company's products from a partner? (This question assumes your firm also sells direct.)
    2. Why do you buy from this partner?
    3. What are the best aspects of dealing with this partner for the company's products?
    4. What are the worst aspects of dealing with this partner for the company's products?
    5. How well do you think the partner represents the company's products?
    • Overall product knowledge?
    • Ability to position the company's products against competing products?
    • Timeliness of their delivery of information to you?

    How to act on the responses
    First try to determine how big your problem is. If you're fortunate, your partner relationships are healthy, and you'll only need to apply spot fixes. If this is the case, use the survey results to determine a number of high-value quick fixes that you'd like to implement. Then take a look at the "niche" vendors who might offer you the ability to buy individual applications that match those quick fixes. Niche players' applications are often simpler and less expensive to implement than the big players' PRM suites.

    If you find that your partner relationships require a major overhaul, it may be time to consider one of the pure-play or enterprise application vendors. These vendors usually offer a suite of PRM applications that can be implemented one at a time or in parallel to address a broad range of PRM concerns. Remember, though, that the pure-play and enterprise vendors' products are often more expensive to implement, and they may take longer to implement than some of the niche vendor applications.

    Your survey will also provide you with information on how many seats will be required to address all of your partners. Many of the vendors charge on a per-seat basis, and this can get quite expensive if you have large partner channels. In most cases, each person in a partner company who needs access to your PRM applications will need a seat, as will the partner support people within your company.

    A typical partner will probably have an owner, a manager, a sales manager, multiple sales reps, a service or support manager, support reps, administrative staff, etc. If you sell through direct channels too, each of your direct sales people and maybe even your customer support people will need seats. With even a modest number of partners and a couple of branch offices, you can quickly end up needing hundreds of seats. If the number of seats becomes an issue, you might want to look for a vendor who either doesn't charge on a per-seat basis or who has the lowest cost per seat.

    One last item: Make sure you check out the financial health of the vendors you're considering. Many of the PRM vendors have had a tough go of it over the last few years and several vendors have either closed their doors or have been acquired by other companies. Ask tough questions of the vendors and try to get the latest analyst's insights into whom they believe will still be around in a few years.

    Buyer’s market
    There are many other variables to consider when evaluating PRM products and vendors, but this information and insight should help you determine whether your firm needs a PRM system and how to get started on the evaluation process. One last word of advice: It’s a buyer's market right now, so make sure you prepare a detailed RFP, collect the responses, and then negotiate.

    For more information on PRM, visit the PRM Hot Topics section on the Analyst Views Web site.

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