Software Executive Magazine

February/March 2018

Software Executive magazine helps software executives grow their businesses by showcasing the business best practices of our readers, executives from established and innovative software companies.

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Marketing reach is a key. Let's say the partner has an in-house marketing database containing 3,000 compa- nies with over 13,000 contacts, and they actively mail to this list with less than a 1 percent bounce-back rate. Now the partner is able to potentially reach 80 percent of the TAM, which is very compelling. If the partner suc- cessfully passes the "Four C's" test, then you may need only one partner to successfully reach this market seg- ment. In cases where a partner already has a dedicated marketing team, you can tap into that resource pool, introduce their messaging, and extend market reach that way. Plus, if a partner can spearhead the campaign effort, you'll benefit from a transfer of marketing costs. Not only that, but when the partner can build and ex- ecute campaigns independently, you'll see enhanced value through successful marketing initiatives marked by the partner's deep understanding of how to message solutions to their customer base. WHAT ARE YOUR TARGET MARKET SEGMENTS? ARE THEY HELPING YOU REACH YOUR NEW CUSTOMERS OR BUYERS? Companies can look at coverage through many lens- es — by industry, by solution, or by partner business model — which can create several market segments and potentially confusing intersections. The question then transitions from "How many partners do I have?" to "How many partners do I have per segment?" While the goal is to increase coverage, companies need to be wary of too much coverage or overdistribution. Once an organization has joined forces with several chan- nel partners in the same market segment, it needs to manage intercompetition. In terms of both market and geography, a little competition can be healthy, but it's important to find a balance. Another factor to understand is the partner's business model and where each partner plays in the marketing, sales, and delivery cycles. Some partners provide advi- sory services, others focus on delivery and implemen- tation services, and the new breed of partners provides ongoing cloud or managed services to their clients. The most valuable partners will help you uncover new op- portunities for their solutions and assist with market- ing, sales, and delivery. Organizations that ask prospective partners these five questions will increase their chances of finding chan- nel partners to help exceed their sales goals. Of course, coverage is just one dimension of the "Four C's" crite- ria, and the best partner will satisfy all four categories (commitment, competence, coverage, and capital). With a focus on resources, reach, and return on value, software companies will be better prepared to tackle entry into the channel and experience the sales results needed to win in the market. S wasting its time and money. The one exception when size doesn't matter is when a partner can bring some- thing unique to a company. For example, if a partner brings differentiated value, then the company may be more willing to help augment their sales coverage. HOW MANY CUSTOMERS DO YOU HAVE? WHAT PERCENTAGE OF YOUR CUSTOMERS ARE ACTIVE VS. DORMANT? To estimate ROI, measure a partner's current market reach. In other words, how much of the potential mar- ket opportunity can be realistically tapped through this channel partner right now? To answer this question, first determine the size of the market. This provides context for the total available market (TAM). Say the market is composed of 5,000 potential customers — ask the potential partner: "Within that market, how many customers are you dealing with today?" This helps to determine how many of those 5,000 prospects the part- ner has relationships with today. You may find the part- ner has done business with 20 percent of the market. Another important question to ask is: "Of those 1,000 customers, how many are you actively working with?" To consider a customer as active, the partner needs to show established levels of frequency and intimacy. Ac- tive customer coverage is of high value to companies because it indicates the actual reach a partner prospect brings to the table. You may find there is an even small- er pot of prospects that the partner is actively engaging. This can be shown by how many times a year they do business together. Through these questions, you may find the potential partner is boasting about its high customer reach. If the partner isn't actively engaging key prospects, then it's working with a much smaller slice of the market than it's claiming to — and therefore, it isn't positioned to de- liver the results you expect. DO YOU HAVE A DEDICATED MARKETING TEAM? WHAT IS THE MARKETING REACH AND ACTIVITY? You also need to look at potential partners' marketing teams, rather than just the sales teams. To measure their marketing reach, ask these questions: ▶ Do you have a marketing database in-house? ▶ How many companies or contacts exist within the database? ▶ When is the last time you mailed to them? ▶ When you do mail/what is the bounce-back rate? ▶ Are you touching this market in another way (trade shows, etc.)? ▶ Are you buying lists or trying to syndicate and build content? 41 SOFTWAREEXECUTIVEMAG.COM OCTOBER/NOVEMBER 2017

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