How a PRM Can Change Your Channel Partner Strategy (Partnernomics Podcast with Dr. Mark Brigman)

Listen to the podcast. Original title: "How a PRM Can Change Your World" Aired on December 15, 2020.

What is a PRM (partner relationship management)?

For those who aren’t channel partnership professionals, or who don’t work in areas that commonly use PRM, Dr. Mark Brigman asks, starting from the ground floor, “what is a PRM?”  

Paul Bird: A PRM is essentially a tool. It's one of several tools that anyone that sells through third parties or through external stakeholders has at their disposal.

It's an important part because it allows for external stakeholders, channel partners, or strategic partners to self-serve. There is this self-service expectation in life, that as consumers, for anyone that we do business with, we can go log into their site, be able to check our purchases and be able to see the individual transactions that we've done or information specific to us.

PRM takes that same concept and brings it to scale. You can have an environment where a partner has a place to go, they can see everything, and get access to all the resources they need, in order to conduct business for any particular vendor.  

On the other side, there's the vendor. This is an evolution when it comes to their channel program. It's taking things from emails and spreadsheets, things being done very manually, and adding a level of automation. This can be everything throughout the entire partner lifecycle. From the first day they're onboarded, as they go through and get familiar, maybe trained and certified, to the tactical side, where you're looking at all of the activities within a sale. From the initial registration or distribution of an opportunity, all the way through to closure, and then even pre and post-sales support.  

"It's there for the vendor to optimize a lot of the manual tasks that they would typically have to do in managing a partner network."

How does a PRM interact with a CRM?

Mark asks, “how do PRMs interact with or interface with a CRM?” We are all familiar with CRMs, but “what is the difference?” He explained, some clients even say “we have a CRM, we could probably do some more developments and add on a couple modules to have that functionality.” How are PRMs and CRMs similar? How are they different? How can they work together?  

Paul Bird: A CRM is customer relationship management, as it was initially founded. The idea behind a CRM is that you have all of your customers, partners, anyone that you do business with; all of that data in the CRM system. It has now become a system of record. Your single source of truth, one place to go. You'll hear people say that if it's not in the CRM, it never happened, it doesn't exist.

PRM is essentially a tool for being able to manage relationships with your partners. Part of that is data and part of that is content like training and sales and marketing collateral.

The challenge is that if you adopt a PRM, that is a silo, it’s completely isolated from your CRM system. Now you've got two separate records, you no longer have a single source of truth or a system of record. The expectation is that the PRM will integrate and connect seamlessly to your CRM or ‘single source of truth’.

It comes down to wanting to have one location where all of your customer and partner data is. That's going to be your CRM system, your Salesforce, your Microsoft Dynamics, or whatever else you're using. A PRM is simply an extension of that. This allows for you to have a gateway for your partners to be able to go and interact with content and data that you're sharing with them. Ultimately, this is all being passed back to that system of record, to keep it up to date. So you have a single place to go to get the most accurate, up to date information.

When to utilize PRM?

Whenever you are connecting with clients and answering questions and they've never used a PRM before, what are your thoughts? Mark asks. What are your recommendations on when a company will know that they're ready to utilize a PRM for the first time?  

Paul Bird: It comes to the maturity of the partner program, and the bandwidth of the people that are managing and running that program. If you have a small program (five or six partners), you have bandwidth during the day, and you really don't have any intention to scale, then you can probably keep doing things the way that you are.  

However, if you have intentions to grow your program, if you have 15-20 partners and you find that things are falling through the cracks; you have to constantly provide updated collateral, no one has the most accurate information, and you realize you’re headcount is going to have to grow significantly if you want to scale the program. Now you're ready to start looking to see if a PRM can benefit you.

"It's going to take all of the administrative tasks, all of the tasks that are repetitive, that take away from growing the program and having that program flourish, and bring it into a system of automation, the PRM."

That's going to make life a lot easier and now you can grow at scale, leveraging the PRM technology.  

How to prepare to implement a PRM

“Within our organization we're wanting to bring on a PRM within the next few months,” Mark says. What's some groundwork that companies should do in order to be ready to go through the implementation process and start to use a PRM?  

Paul Bird: The first thing to do is find one that integrates with the CRM system you’re using. Whether it's Salesforce or Dynamics or Pipedrive, or one of the 300 CRM systems out there. You want to make sure that there is a platform that you can integrate with because you want to have that single source of truth.  

The second is, what are the needs for the program? Is it just a matter of needing a repository for all the sales and marketing collateral so partners can go and get the most up to date information? Or do you need more advanced features? Do you need to be able to train partners, have them certified, put them through learning paths, make sure they recertify? Now you're getting into the more broad and more complex PRMs that are available, but then it goes even further.  

Maybe you want to have rewards and incentives, or you want to be able to integrate this with other backend systems that you have or payment processing systems that are available on the market in order to do things like storing credit card information, auto-rebilling charges, ect. Now the set of available PRMs that have full end-to-end capabilities become a significantly smaller group.  

How does integration with a PRM system work?

What does an integration look like with a typical, top tier PRM like Magentrix? What should these partnering professionals or executives expect? Or what will they likely experience from an integration and an implementation perspective?  

Paul Bird: From a Magentrix perspective, our integrations are with Microsoft Dynamics, Salesforce and HubSpot. The expectation is that this should be a deep integration; they should be able to access everything. That is, all data in that environment, including anything that you've done custom or third parties that you've attached to it.  

"It needs to be easy. For example, our Salesforce integration is a single link. It takes about five minutes to connect Magentrix to your Salesforce environment. You can leverage all the time and effort that you've spent configuring Salesforce to set up your PRM."

Then there's the rest of the integrations. There are a number of tools that make life easier. For example, Magentrix published an integration earlier this year with Zapier. Zapier’s tagline you're happier with Zapier really does apply because there are +2000 applications within the Zapier marketplace that Magentrix can now integrate with without any code and you don't need a developer.  

Yet, sometimes companies have built something specific. They have created their own application, they're using something that maybe is not available within the Zapier marketplace and they need another way to do it. This is where Magentrix as a platform offers multiple options, everything from being able to do single sign-on into that platform, so they don't have to log in or have a second set of credentials, or being able to open up our API. We have a full development environment where we can connect to third party platforms to deliver that experience back to the user.  

It comes down to: what are their expectations for the PRM, how advanced their program is, and what are the benefits of the automation that we can bring to make life easier and ultimately make the business more profitable?

How can PRM help minimize channel conflict?

Mark notes, “it's my experience that every company that does channel sales, one of their biggest pain points is channel conflict.” How can a PRM help you minimize channel conflict?  

Paul: I've seen both sides. I've seen people that are so focused on channel partnerships because they want to preserve the relationship and the trust factor. At the same time, I've seen people encourage channel conflict.  

"Preventing channel conflict comes down to having a clean connection to your CRM system."

So when a partner is registering a new opportunity, they're automatically going to be linked to that opportunity inside of the CRM system. When partner two comes along, and tries to register the opportunity, you can do one of two things. You can reject the registration, and let the partner know this has already been registered. Or alternatively, you can accept it and notify the channel sales manager or account manager that there is now a second individual bidding on an opportunity.  

This depends on the type of offering you have. For example, at least in the Toronto area, most large agreements or, specifically government contracts, have to go out for bid. You need a minimum of three people returning the bid. You can't just appoint a channel partner and have them try to single source it because that falls against the way that things have to happen. In this case, you need to be able to manage the conflict, at least by knowing which partners are involved in the deal.  

Some of the strategies that people put in place for reducing channel conflict is if you're the first one, and you register the deal, you get a level of protection on the pricing side, so you can't be outbid. Then, at the same time, there are vendors that want to be able to select the best partner for an opportunity.  

This is where the flexibility of a PRM comes in. It lets you determine what you want to do when you get a second person coming into an opportunity. Do you want to stop them and say ‘partner number two, you can't access this record?’ Do you give them a level of exclusivity for 30/60/90 days, whatever the typical sales cycle is? Or do you accept that a second, third partner, or a fourth partner is also involved in this opportunity and make the channel account manager or sales manager aware that there are now multiple people bidding on the same deal? They can action it accordingly.  

How can PRMs help execute your strategy?

“Within our organization, we have a strategy around channel and we want to successfully execute this,” says Mark. How can PRMs be positioned to help execute that strategy well?  

Paul Bird:

"The most important piece of the puzzle is a great channel strategy. Having that in place, being ready, and knowing how you want to approach channel, is probably the biggest key to success with a PRM or without a PRM."

How do you take that high level strategy and turn it into tactical execution? You need to look at your strategy and say, what if this revolves around content? From a content perspective, which, we've all heard the term content is king, you want to make sure that you've got great content in order to have that strategy deliver. Then you also want to ask, how can you enrich the user experience for the partner, so they can be served that direct content at the time they're going to need it the most.  

This is where you can start looking at the strategy, apply it to the PRM, and make it as easy as possible for the partner to do business with us. Make sure they are getting a white glove treatment, that they feel like a VIP and not simply an extension of the sales team. You can take that strategy and add elements into the portal to encourage behavior, bringing them the information when they need it. Overall, just maintain mindshare and the all-important wallet share that you need with your channel partners.  

What causes a PRM to be unsuccessful?

“Paul, I know you've seen a lot of clients implement various solutions. Obviously some wildly successful, some probably didn't go so well.” What are the commonalities of times when it didn't go so well? What are some reasons, Mark asks. “Maybe things that fell apart on the execution side, maybe the strategy or not having a strategy.” What leads to the demise of not being able to effectively put a PRM in place?

Paul Bird: The number one reason why I see these types of initiatives fail is if there's an attitude of ‘build it, and they'll come.’ If you think you've got a PRM system, partners can go login and register deals and get access to content, so they're going to show up. This is a community and you need to be able to engage and enrich that community in order to get the most of it. Don’t think it’s the savior and you can just put up the PRM and all your troubles are over, it’s not the case.  

Second is content. You have to have current relevant content. You don't want content in the portal that is a year or two years old, or is no longer useful for the portal user. If the partner comes back to your PRM and there's nothing new, then that is also part of the recipe for failure.  

Third, you need to realize that the PRM, while it is benefiting the business, it's really there for the partner. Putting that partner-first attitude into the PRM really contributes to the success. If the attitude, from a partner's perspective, once they've logged in, is: this is complicated, they're asking for too much information, I have to jump through hoops, I can't find things, then that's essentially a recipe for failure when it comes to a PRM system.  

Success practices for partnership programs

What are some different success characteristics that you see with the most successful partnership programs? Mark explains, “specifically, what a lot of our clients will do is implement a certification program within their channel strategy and their partners are only able to sell different solutions if they are certified.” Is that a good strategy? Are there other approaches that companies take that you see as a success practice?  

Paul Bird: Training, certification, and having people re-up training in order to get to different discount levels, higher discount levels, opening access to certain products or services; we have seen that constantly being a major success factor for the most successful PRM programs.  

You also need to look at driving the behavior you want. First, coming back to the partner and realizing a channel partner is likely going to have multiple vendors in their portfolio. So how do you get their attention? You can do that by driving notifications on new things inside the portal. By being able to put in an incentive program, that's going to identify the behaviors you're looking for in order to get the partners engaged and even have them redeem points for gift cards or things like that.  

I was recently working with an HR firm, a software company, that is channel focused. They put in an incentive program for everything from deal registrations to qualified deal registrations, as well as incentives for course completion, deal closure, and engaging with content. After running Magentrix for one year,

"they saw more than a 200% increase in the amount of business coming in this year. In a year where we have seen the economy take a hit because of the pandemic."

They identified the behaviors they were looking for, notified the partners outside of the portal, made it easy and clear for them, and partners could get a Starbucks or an Amazon gift card for their effort. It’s amazing to see the results they get with that kind of competitive challenge for the channel partners.  

Direct sales metrics vs. partner metrics

From an executive's perspective, one that has just made the investment for a new PRM, Mark asks, “what kind of advice would you give him or her as to how they should score or manage or build dashboards for their direct sales team, as opposed to a channel partnering team? Should those metrics be different? How are those metrics different? What should we track? How is, specifically the partnering side different? And what are those metrics?”  

Paul Bird: The direct sales metrics are a lot easier to put together. There are additional sales metrics that you need for a channel program. From a direct sales perspective, we know all of the conversion points we need to maintain, monitor and measure in order for things to be successful. The audience, the conversion from the audience to customer rate, the average dollar per sale, which gives us our gross profit. There's four or five ways that you can influence that revenue cycle.  

From a partner's perspective, there are some added elements. Things like partner recruitment - how many new partners are you bringing into the program? And is that an important metric for an executive looking at a channel program? Some strategies when it comes to channel programs are: ‘I don't want everyone to sell my product, I want high quality specific individuals.’ So they will set a threshold on account coverage and new partner acquisition. The recruitment side is now a metric that needs to be tracked.  

Then you have to look at onboarding. When a partner comes into the portal, what's the time from the first day that they have signed their partner agreement until they're completely trained? Is that a process that you isolate, so they don't get access to the full PRM until they completed their initial set of training? Identifying these metrics are really key.  

Then there's the tactical metrics. How many new opportunities are you seeing being registered by partners and what does that represent versus the size of my partner community? One of the challenges and one of the things I hear all the time is that 80% of my partner business comes only from 20% of my channel.

"You need to identify which partners are high performers and which ones are low performers and either make sure that you engage the low performers to bring them up to the middle, or clean out the closet and get in some fresh people in order to grow."

As we go through looking at the average sales cycle between new partner registration and partner closure, these are additional metrics that they're going to want to be able to track.  

In summary, the direct sales metrics are very easy for you to be able to establish. There's four or five different key points you need to see. From a channel perspective, you have to look at the onboarding of new partners, the efficiency of those partners through the cycle, the way that they consume and interact with content, and then ultimately, if you have underperforming partners, the off-boarding process, so you can make sure that you've got a vibrant community.  

Partner recruiting

What are some of the different ways we can get as efficient as possible when it comes to recruiting partners? What are some of the success practices you’ve seen, “so that we have the highest probability of grabbing that 20% that's going to bring 80% of our revenue,” asks Mark.  

Paul Bird: We can take a page out of the direct sales and marketing book. Where you have to have an ideal partner profile. You have to understand the traits of that in order to identify which people are going to survive best in our ecosystem. From that point, you can take those key elements - maybe it is geography, size, number of years in business, specialty - and the search begins. Now you are essentially doing demand generation to recruit new partners.  

What's wonderful is there's a number of new technologies that have been available over the last year or two that have emerged that allow us to do this. There are now automation tools that allow you to connect your LinkedIn profile and be able to give you a source of people that match your criteria either by location, company size, the amount of time they've been in business, things like that. You can now automate the prospecting process where you're connecting with them on LinkedIn and sending them a series of messages. Very much like we used to do, or still do with drip email sequences.  

Unfortunately, with email, there's so much noise that bringing this to a professional environment like LinkedIn allows us to connect with those people in a better fashion.

"Leveraging emerging technologies that allow us to connect with a well defined group of people in new and creative ways is one of the best ways to get your program kick started, because you can do it, not only targeted, but at scale."

Partnership agreements

Mark noted, a lot of clients that we work with, especially as they're launching new programs, “it's about throwing a big net and putting as many hooks in the water as possible.” Do you see it as a success practice to have a referral agreement in place, some sort of a minimum commitment, a minimum performance level, in order for them to remain a partner? How do we manage that? How do we address that? How should we construct our partnering program from that perspective?  

Paul Bird: You want to make sure that the partner has got some skin in the game. Being able to have every company representing your product, you've flooded the market, but you've also spent a tremendous amount of resources training and enabling and engaging partners that are never going to to be profitable. So establish at the onset of the partnership things like: what does it take to remain a partner.  

In referral partner programs, this is net new business. Is it measured monthly, quarterly or annually in order for you to continue to get the percentage that's being shared with you. If it is more of a longer term sales cycle, something you want to establish at the beginning is a minimum level of certifications for you to access the environment, to sell the product, and a minimum level of certifications for discount levels.  

Going beyond that, to maintain and flourish these partnerships long term there should be quarterly business reviews. Being able to understand the business, look at what was achieved in the past, and then strategically, what you can do together in the future.

"When you're engaged with your partners, those partners know that you're focused on growing their business, and in return, they're going to be focused on helping you grow yours."

That is the sweet spot of where you need to be in order to have a successful program.  

Also, continuously engage. Customer and partner engagement throughout the sales cycle is key - not only setting the expectations at the start, but all the way through the relationship. Not just every three months you show up and look at what the partner did last quarter and maybe give them some development funds or things like that. You've got to be with them every single day because you're a team. Even though you're treating them like VIPs, because they are the most important part of our process, you want to make sure that it is an ongoing conversation, not just one or two touch points a year.  

In agreement, Mark says “so many times these partnership programs and partners in general they're, at best, reactively managed but you really need to have a true program, a disciplined program, and you have to proactively manage the partners and manage success. That is how you will get accomplishments and achievements.”  

How long does it take to see results from a partner program?

If an executive is thinking about launching a partnering strategy, how long should he or she expect to put this program in place, stand it up, and achieve some resemblance of an ROI that they're getting from their direct sales approach, Mark asks. Let's say it's a software company, what is the minimum/maximum time that they should expect to give in order to get some results?  

Paul Bird: It varies by the organization. Somebody that has a very long sales cycle, their ROI is going to be longer than somebody that's very transactional and is trying to get things happening and rolling with several transactions. The key measurement you're looking at is what are your number of average transactions per year. Looking at, if this is a single transaction, once a year, then the return is going to be a little bit longer, as opposed to having two transactions a week, then you're going to see the uptake a little bit better.  

Based on your channel strategy, your ROI for a partner program is likely going to be one to one and a half sales cycles. If your average sale cycle is 90 days, I would start to look for ROI at the four to five month mark. If you have an 18 month sales cycle, then it could be significantly longer, maybe a year or two or longer before you would see significant ROI.

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