First, the different types of partnerships:

• One type, which I’ve been seeing a lot of lately, isn’t a true partnership.  It’s when someone tries to sell you something and they sugar-coat it as a “partnership.”  If it were truly a partnership, the company would be putting up their time, product/service, experience, effort, and/or money, while your company also takes some of these risks, in order for both to achieve increased revenue.  Instead, these “partnership opportunities” involve you putting up all the risk by purchasing their product/service, while they put up zero risk.  This faux proposal seems to me that the company doesn’t have enough faith in what they are selling to talk straight: “I want to partner with you” just sounds nicer than “I want to sell you something.” Granted, by buying what they’re selling, you may increase profitability for your customers, improving their ROI, and/or you may be lowering your overall costs, improving your ROI.  Call it a partnership if it makes you feel better, but I call it a sale.
• However, in the above example, should the selling company align their success to the performance of their client, i.e. they make money in a shared-reward revenue model, they could then call themselves a partner without me griping as much, as they would then have a vested interest in their client’s success.
• In the press release WPP and Omniture launch partnership to improve marketing ROI, a true type of partnership is highlighted.  The first company (Omniture) stands to gain significantly from the second (WPP) by offering its business clients greater ROI, and the second company (WPP) buys a significant amount of stock in the first (Omniture).  Thus, both take on risk and are equally committed for the partnership to work.  They then collaborate on sharing information, best practices and services to develop joint solutions for mutual clients.  In this situation, the companies share employees, with some from the first company (Omniture) going to work within the second’s offices (WPP), and training is conducted of the second company’s (WPP) employees in the first company’s (Omniture) products/services.  The second company’s (WPP) technologies, data, and products are integrated into the first company’s (Omniture) platform, thus the second company (WPP) can now deploy the first company’s (Omniture) solutions to clients with their add-ons.
• Even simpler, another type of partnership blends two or more company’s product/service offerings, with neither investing in the other, so together they can provide a greater solution to current clients, or reach a new or wider audience.  In this type of arrangement, partners are primarily finding a new way to market their products/services in a cooperative arrangement without changing what each are doing day-to-day.  The investment typically required in this case is to verify that the arrangement works and there is a market for it, as well as develop co-marketing materials.
• Another type of partnership is the Affiliate partnership, where one company simply refers business to a second company through their marketing efforts and receives a commission.  Affiliate partners typically will look for companies (Merchants) who are managing an Affiliate program, and apply to be their Affiliate through third party sites like Shareasale.com.
• There’s a special type of partnership that we’ve all heard about, the Sponsorship.  If one company can know enough about the other company’s demographic audience and can deliver it to them via a channel, such as an event, there may be an opportunity for a Sponsorship.  In BusyEvent’s Growing sponsorship revenue through brand partnership it is stated, “Real creativity is required…Simply placing logos on stuff isn’t going to fit into shrinking marketing budgets.  The emerging trend is to gather better data before, during and after the event so you have something tangible to show a brand to obtain their involvement in your event(s).  We use…reward-focused program[s] to know as much about a group of people as we can without anyone feeling manipulated.”
  • As an aside, the company that I work with, C.A. Walker, can assist with online surveys to segment audiences and measure emotional engagement to brands, intercepts during events for feedback, and “brand fit” studies to ensure the Sponsor and Brand are a good alignment that enhances the Sponsor’s image.
• The last type of partnership involves distribution, where two companies collaborate to sell and distribute the products/services of one of them.  This is also called a channel partnership.  There are various types of channel partner arrangements:
  • Partner sells products and/or services and deliver services.
  • Partner sells products and/or services but doesn’t deliver services.
  • Partner doesn’t sell products or services but delivers services.

The following is recommended in a true partner support program to increase and measure partnership profitability (from 2009 TSW Support Partner Program Best Practices – note: the PDF opened for me after downloading but not in my browser):

• Have at least four trained support staff per product, with recognized certifications and specific partner training.
• Offer 24x7x365 support for partners, with case tracking and reporting.
• Conduct initial and ongoing partner audits, with quarterly reviews.
• Conduct third-party quarterly customer satisfaction surveys, which is part of the partner’s overall scorecard tied to their income agreement.  Customer satisfaction is as critical in acquiring and retaining partners, as it is customers.
  • As an aside, if you need assistance administering customer or partner satisfaction surveys, C.A. Walker also provides this service.
• Create automated reporting of necessary metrics, reports and partner scorecards.
• Offer Web-enabled tools for partners to provide customers, and a partner portal.
• Put in place appropriate metrics, such as:
  • Quarter over quarter and year over year, revenue, net profit margin, return on assets and return on equity (new accounts established).
  • Track customer satisfaction measures over time.
  • Track partner satisfaction measures over time.
  • Track customer renewal/repeat purchase behaviors.
  • Establish and track cost per case and case resolution times (i.e. customer complaints) per million of total revenue.
  • Measures of product quality and reliability improvements (i.e. customer complaint case deflection).
  • Measures of ease of doing business with partners.

Companies have great opportunities in this economy to develop new partnerships that will enhance their market position.  So get out there and make some noise!

So what is channel development?  Channel development is about creating partnerships upline and downline that bring greater influence, strength and sales to those participating.  Channel marketing is creating propositions to potential partners, marketing to them, and then motivating/incentivizing them.  Channel Marketing Partners are typically vendors, manufacturers, distributors, resellers and retailers, working in cooperation.  They start with a deep understanding of their specific target market. They identify the customer’s business issues and develop an approach to addressing those issues, cooperatively building programs from the ground up. They then assemble the necessary pieces and package them into a solution. The goal is to get customers to buy into the total vision of the Channel Partners.

Designing a system that can manage the complex relationships in channels is no small feat.   In 2004,  CRM Today said that most PRM (partner relationship management) tools out there were like “putting wings on a bus.”  They tried to re-purpose the CRM and it simply did not work.   They share why:

“CRM is fundamentally designed to manage direct sales engagements between a sales representative and a buyer. This mode revolves around collecting and sharing data throughout the customer lifecycle.  PRM, on the other hand, is designed to manage a complex ecosystem comprising legally independent partner organizations. This one-to-many model revolves around aligning business processes across the entire value chain, from vendor, to partner, to customer.”

Today, there are a number of PRM options that are much more sophisticated and designed from the ground up to work for channel managers.  And somewhere along the way, PRM became TPM (trade promotion management) and the term “trade funds” became used for co-op marketing.

A 2008 study by the Consumer Goods Technology group finds that “While only 52 percent of companies in 2008 evaluated trade spending, more and more companies are attempting to implement trade promotion management (TPM) applications to improve TPM analysis in 2009.”  The reason that more companies haven’t taken on a TPM application is due to their complexity and cost.

Oh, and did I mention cost?  NewsFactor suggests that “Because trade promotion spending can reach 20% or more of sales, a very minimal percentage of improvement [from a TPM] can justify an entire project without reaching too far.”

They then go on to detail ways to lower the cost:  Roll it out slowly and to those who can benefit most, first. Get sales buy-in and usage early in the process. Use an SaaS.  Build real metrics. Eliminate your desire to build unique processes into the system.  Talk with other companies (i.e. software vendor user groups and references) who have implemented a TPM and learn from them. Don’t wait until it’s too late and you make mistakes.

“Many growing CP manufacturers can quickly get inundated with unexpected deductions or make poor decisions about promotions due to a lack of centralized visibility. Many growing manufacturers start facing challenges associated with managing trade promotions when they reach a dozen or more SKUs, or when they start negotiating with their first national retailer, or when they surpass the $10M mark in sales.”

Here are several offerings by TPM vendors to get you started:

• Purplewire’s ChannelSUITE
• Adesso Solutions’  TradeAdvantage™
  
• The Synetics Group’s TPM
• The MEI TPM
• The SAP TPM
  

The Channel Champion recently attended a TPMA conference (trade promotion marketing association) and found that the key metrics to evaluating channel effectiveness are:

• Budget to spend
• Net incremental sales
• ROI – consumption or shipment based
• ROI – variable and fixed margin
• Incremental spend

Add to that list those NewsFactor recommended:

• Promotion effectiveness
• Lift improvements
• Reductions in stock-outs.

As an aside, the company that I work with, C.A. Walker, can support marketing’s efforts in channel development in the following ways:

• Profile partners to identify new contract opportunities
• Measure partner “brand fit,” awareness, satisfaction, usage
• Test partner communications, incentives and promotions

I look forward to learning more about channel marketing developments and sharing them with you here.

trade promotion management (TPM)