Tweet

Creating the Partnership: The First Step to Jump-Starting Revenue

Guest post by: Sarah Gerdes

Article Overview: Creating the partnership is the first step to realize the benefits of an alliance. However, penetrating and entering the maze of a target partner organization can be time consuming, costly and full of risk if not done properly. According BMG’s polls of 450 CEOs, 1999, CEOs of start-ups are spending 30% of their time on establishing partnerships. Average ROI is only $35K. It takes 6 meetings before a substantive conversation and 12-18 months on average from first call to realize revenue. This article identifies the partner development cycle, along with techniques to accelerate the partnership creation. Whether you are at the start of the partner development cycle, or are half way through, this article contains a summary of the techniques and tools to attain a partnership.

Creating the Partnership: The First Step to Jump-Starting Revenue

Creating the Partnership
Before you pick-up the phone and call a Potential Partner Organization (PPO) you must have a partner plan prepared. This plan should include: partner objectives, your value proposition, tactical approach, partnership timeframes and resources required (see the previous article, Identifying and Validating the Right Partner, for more details).

For the harried, on-the-run entrepreneur or small business owner, a partnership is typically created with one of five different organizations. This article defines the group, the best way to pitch the decision maker, and the pros and cons associated with each particular organization.

On-line Partner Group

Most large companies have on-line partner group established with one main goal in mind: capture as many (new) partners (like your organization) as possible. All you need to do is to go to a web site, fill out information and keep it updated. It is also free! What are the benefits for you? You will most likely receive marketing and sales information, freebees, and, most important, referrals and internal searches. On-line partner groups are the first place product manager will look when he or she needs to make a “build versus buy” decision, or select a firm for corporate marketing purposes (you can be selected to participate in promotional events or meetings with analysts).

This is a low cost and high volume inventorying mechanism for the partner and no cost first step for you. When are the appropriate times to join these groups?
• Your firm is just getting started and has little or no money
• Need technical information and want to get published on list-serves
• Firm desire visibility

Off-line Partner Group

After you have established yourself by registering with the on-line partner group, you might be invited to join the off-line group. This will likely cost money, but you will receive more benefits. How much money you will spend and what you will get in return largely depends on your partner category.

Depending on your partner category, you will able to:
• Join promotions or product kick-off events
• Participate in PR and advertising events (regional, local and national)
• Be invited to executive briefing sessions
• Be part of first to market joint efforts
• Get a dedicated point of contact inside of the partner group

Keep in mind that despite promises from a partner group that you will have an opportunity to discuss your product/technology with product groups and will get an introduction to the right folks at the right time, the reality is that very often a partner group has only few people that manage thousands of partners. For example, one F50 organization wanted to increase amount of partners it registered from 3000 to 15000 in one year but lacked the budget to add staff to manage the increased partner load. You may guess how personal these relationships can be had for tier one and tier two partners.

Product Groups

Product groups are probably the most important group to pitch. The product managers’ goal in life is to drive revenue for a product line, define feature sets, work with the development team on new products and identify the holes in current/future products. If an organization can’t build something internally, the product manager within the product group will be the one tasked with filling these product gaps through partnerships. If your product/technology is great, than you may expect some or all of these outcomes happened: joint development, joint venture, licensing, distribution, investments and even maybe an acquisition.

So, by any means, pitching the product group is must. Unfortunately product managers are very busy. At Fortune 50 companies, product managers typically receive over 400 e-mails and 100 voice mails per day. You must have not only a great product and value proposition but also the patience and persistence of a saint.

Navigating the Maze of a product group

To locate the appropriate person inside of the potential partner you need to be creative and try different approaches:
Direct
• Go to company’s web site. Often you will find an extensive list of senior managers (e.g. Microsoft).
• If it doesn’t work, subscribe to Hoovers on-line (www.hoovers.com). You will have excess to a good list of company’s officers.
• Search through press releases for the product group and find the Product Manager.
Back door
• Go to the web site and send e-mail with a product question. Some CRM solutions go straight to the PM and you will get a direct response. Sneaky.
• Contact sales rep in the field with a complex technical question. He will not able to answer so he will pass it on the product person, who will follow up with you directly.
• Contact PR person and ask for the names. Make sure to frame into strategic partnership context. If this person was helpful, don’t forget to thank him!

How to get response

After you have identified the appropriate person the next step is to get this person respond to you:
• Don’t rely on just email or voice mail. Try both.
• Do try PMs and BMs between 9-11 pm on Sunday. There is a good chance you will get response in 10 minutes.
• Be patient. It can take you several months to a year to get a response.
• Be persistent. Leave one voice mail/e-mail per week.

Conclusion: product groups are difficult to penetrate and will take a lot of time. But
• They have more money.
• They have more influence on the bigger issues such as investment and acquisitions as well as executive exposure.

Corporate Development Group

If your company is looking for investments or wants to be acquired, than the Corporate Development group is your target. Again, be creative, patient and persistent. Large organizations like Intel get 500 pitches per day from M&A firms, F2000 firm receives 100 per day and a mid-size firm with $120M in revenue receives 60 calls per week.

All pitches lands on associate’s desk and if value proposition is good enough, associate will pass it to the director (overall, less than 10 % make it to the decision maker). If director is impressed, he will pass your papers to the product group for the review. If product group determined that your idea or product is unique, they will send it back to the director for future consideration. Only 2 % of original proposals make it to the negotiation phase. If you are have been rejected, don’t expect to be contacted with an explanation why.

When you have successfully navigated the maze and confirmed your partner is interested in your company, you will be ready to take the next step--– negotiating and closing the agreement with your partner.

More information on this topic can be found in Chapter 7 of Navigating the Partnership Maze: Creating Alliances that Work (McGraw-Hill 2002).

*Originally published in Software Association of Oregon Magazine.

Related Articles
  Accountability Partnerships Series Conclusion
  Writing a Partnership Agreement for Joint Ventures
  Which Company Structure is Right for You?
  How To Make Business Partnerships That Work
  Partnerships - Some of the basics

Article Tags:



Related Forum Posts
Re: Your choice between... - I will take the $100,000 and double it on it becomes millions before I spend it. Though I am crazy about information, yet I would rather take the money and turn it into a million before I spend a dime out of it. I will do it in 4 steps. Step 1 turn $100,000 to $200,000 Step 2 turn $200,000 to $400,000 Step 3 turn $400,000 to $800,000 Step 4 turn $800,000 to $1600,000. After getting the goal of step 4, I will spend the $600,000 on myself then continue to double the millions again. I could then by the book for $1,000,000
Step by step approach - Here's what I would do; Step 1 - Observe Wal-Mart’s target customers, what does Wal-Mart offer them? How long do they stay? Discover what it is that they might want or need that Wal-Mart doesn't offer, and then write those ideas down. Some ideas to get you started are - A cafe or fast food venue, something for the kids to do while the parents shop, etc Step 2 - Take that list, and weigh up the pros and cons of each idea, and then select the best one for you. Don't worry about not using all the space. Step 3 - Start the best business for you, and then release the other ideas to the general market and sublet the rest of the space to those who could fill some of the niches you've come up with, plus any they can come up with. If money isn't a factor then developing the building to suit multiple small leases may be a better option, as it's a diversified income, which is potentially more stable than one big income stream.
Need a book recommendation for writing better - I'm always looking for ways to improve my writing skills, so I was just wondering if anyone could recommend a good copywriting or copyediting book? I was actually thinking of reading "The Copywriter's Handbook : A Step-by-Step Guide to Writing Copy That Sells" by Robert W Bly [u:w3cg00nn]OR[/u:w3cg00nn] "The Copyeditor's Handbook: A Guide for Book Publishing and Corporate Communications" by Amy Einsohn. Would anyone know if these books are any good? Thanks
Re: Video conference system for families living in different cou - 1) How much will someone pay for the service? 2.1) What costs are involved on the business end? 2.2) What percent on top of that do you think you deserve as profit? 3) How many people will sign up for the service? These three will give you a rough estimate of the value of your idea. use the equation below with respect to the questions above to figure out the value of your idea. ((1 - (2.1 + 2.2)) X 3) You have alread identified major problems for your idea -- you have competition that is free! Computers are easy to hook to televisions, and it is becoming easier at very fast rate. (For free stuff other than skype, look up NetMeeting if you have Windows XP.) The video conferencing systems do a poor job of creating the feel of a physical presence. Even high dollar systems with dedicated internet bandwidth and extremely nice tracking video cameras do a poor job, especially for long distance runs. I have the experienced the disappointing performance of some of these systems on our campus. Video can not recreate the connection felt when in the same room with another person. Step 1, Quickly and roughly calculate the cost of the system you propose. Step 2, Compare that with what you think someone will pay and the cost of your current compeition. Step 3, Go / No-Go.
hiring an employee - You may want to consider contracting out instead of actually hiring. Some factors to think about if you hire someone as an employee and you put them on payroll you will be required to pay CPP and EI, as well as deducting CPP, EI and Taxes from their paycheck and remitting them to Revenue Canada. So you will need to 1. Register with Revenue Canada so you can make the remittenances 2. make sure you keep really good track of these deductions 3. it you don't have the time to do payroll you may need to hire a bookkeeper. or you could contract out the hours that you would need an assistant. The would be able to work from their space or your office. There is another option that you might want to consider some of the community centers offers training programs for new immigrants or anyone wish to change professions some of these programs require that they offer their services for 6 or 8 weeks (no charge to the employer). If you need someone short term this may help you and provide extra training for someone else. Microskills is one of the Community Centers that offer such programs. they train customer service personal, bookkeepers.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Executives and Elevators Perfecting That Pitch

Stress: What Causes It and How To Deal With It

Leading from Authenticity is a Beautiful Thing

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.