Following on from my last post on the importance of Product Partners and how they help software organisations increase revenue, I was asked what to do once you’ve identified a potential software partner.  How do you make that partnership work?

There are no hard and fast rules and every Product Partnership will be different.  However, here’s my checklist for getting a successful partnership off the ground:

1. Business Alignment

You need to define a strategic mutual vision of success for the parties involved outlining how each can leverage the strengths of the other.  You have to be brutal here though and include looking at how any partnership might adversely affect your business in the future.

2. Business Planning & Governance

A business plan that clearly states missions, objectives and revenue goals is essential, and must be reviewed at set time intervals to make sure this strategy remains relevant and in line with your company’s priorities.

 3. Contracts

Contracts should be put in place to agree the type of relationship, responsibilities, mutual risks, rewards, payments, service level agreements, branding guidelines and rules of engagement.

 4. Technical Interoperability

Customers need to feel confident about the commitment of both companies behind their joint solution, so you’ll need to work with your Partners to ensure and communicate that both products and/or services work seamlessly together.

5. Executive Engagement

Senior Executives within partner companies are key influencers so it is imperative they are on board with the partnership vision and regularly communicate the overall alliance goals.

6. Marketing

Strategic consistent communications, internally and externally, will need to be conveyed throughout the alliances. Your partnership should create a joint Value Proposition unique to customers which will be promoted through marketing content.

7. Sales & Compensation

When working with Partners, each party involved will need to determine who in the sales teams gets rewarded and how they get compensated.  Your sales teams need to be well-versed on the collaboration with a consistent message; they need to be equipped with the necessary tools to effectively verbalise and demonstrate the partnership.

For many software companies there is a real challenge in continuing to develop the software to keep pace with changes in their sector. To be successful you need a business strategy that makes sure you meet the needs of customers in your target market . . . and it’s here where Product Partners play a crucial role.

Product Partners are different to straightforward channel resellers who include your software in a portfolio of other solutions to sell to their target market. Instead, Product Partners have created software of their own which adds value to your existing solution. They can help you to offer a functionally-rich solution, create better revenue opportunities, position your company as the strongest supplier, and create new active and passive income streams.

There are four main different types of software Product Partner, all of which need to be carefully managed to make the business successful:

1.      Advocate partners – this is where you would recommend a partner product and company to your customers in return for remuneration, but would remain in control of the sale from proposal through to closing. It’s a low-touch partnership to add value to your solution.

2.      Strategic partners – these are high-value relationships between your company and the Partner, working together for common goals and revenue-share incentives and aligned around the same values and messaging.   This involves working in true collaboration and allows your business to position itself as a leading supplier in a given deal.

3.      Technical partners – partners who pay a fee to pass information between their product and your product, but their product does not feature within your portfolio. This can represent a separate but active revenue stream for your company.

4.      Referral partners – you would pass leads to Partner companies in exchange for commission remuneration, either per lead or per sale, and allow them to lead the sale through to closure. This is more of a passive income partnership where you are allowing partner companies to capitalize on your customer base in exchange for % revenue.

Whichever Product Partner strategy you go for (and it can easily be a combination of all four) it’s important to keep the main goal of any partnership in mind; both sides must get value from the relationship.

Many organisations would claim to be Customer-focused and, indeed, hold it up as their USP and a reason to do business with them. In truth, to say you’re focused on your customers should really come as standard. Keeping customers happy and giving them the products and services they need is basic business common sense.

However, being just Customer-focused is the old way of doing things; to be truly successful you need to start being Customer-centric – an entirely different approach.

Customer-focused organisations

Customer-focused organisations address customer needs as a way of addressing business goals. They look at how they can get more business by creating a product or service that is ‘better’ than the competitors (and in the software industry this often means ‘has more functionality’) or is cheaper than the competitors. The reasons for being Customer-focused are about maximising revenue and this often comes across as a bit self-serving.

Customer-centric organisations

Customer-centric organisations aren’t just responding to customer needs. They spend time properly understanding their needs and creating a strategy that brings long-term mutual benefits. And they do all of this while delivering a great product to the customer and creating an easy and positive experience for their customers to buy. The revenue which results from this approach is a result of the degree to which their customers have been satisfied.

Customer-focused organisations make decisions that superficially address customer expectations, driven by their desire for improved profit performance. Customer-centric organisations make meaningful changes in order to address their customer’s expectations.

And it’s the Customer-centric approach that results in increased engagement, support, loyalty – and essentially profits – from a happy, expanding customer base.

The product sells itself.  How many times have you been told this, or heard it from a manager, or even thought it yourself of the product you’ve created?  In saying this, the thinking is that the product is simply so good that once the customer sees how it works they will definitely buy it.

This is a dangerous phrase for two reasons.  Firstly, no matter how good your product is, if you as a business don’t spend the necessary time engaging with your clients and understanding what’s important to them they won’t even look at your product.  Secondly, even if your potential customer does spend some time looking at your product, they’re not going to buy it based on how it works, they’re going to make a buying decision based on what it does for them.  For example, people and businesses don’t choose to buy a piece of software based on how the buttons work, they buy it based on the fact that it improves outcomes, save time, or simplifies a difficult task.  The product doesn’t sell itself – it’s the business that sells the outcomes that using that product can achieve.

Sales strategy should not be about describing how the product works, but about communicating the value proposition – how the product is going to help your client – and you’ll find that getting this right will open the door to far more sales opportunities than a simple product overview.