Maidsfield Blog - Partnering and Business Development

The bottom line in all things business, is delivering effectively, delivering and exceeding the ultimate customers’ expectations. Learning what works can be highly expensive when we have to backtrack and go again in a different route. Strategic Partnerships can deliver great success when it works, it can be enormously frustrating, disappointing and expensive when it doesn’t.

A key part of what we do in Maidsfield Associates is to focus on matching our clients’ business objectives to suitable partners in the chosen target markets. As defined in Maidsfield’s Corporate Partnering Process we review seven criteria in evaluating partner-fit and develop an understanding of the potential partners business to see how they could work together with our client to meet the market opportunities.

So many Strategic Partnerships fail because of the most obvious of reasons, in hindsight:

1. The partner’s sales people sold their own product before yours, because it was easier to sell, they met their targets easier and made more commissions not focussing on selling your product.

2. The partner company’s management hadn’t taken on board the full opportunity to grow a new business area and wasn’t fully committed. Things slowly died away and eventually people faced reality.

3. The partnering plan didn’t go much further than a good idea and good story press release. It helped the profile of your business in your existing proven markets and possibly your investors but it didn’t produce revenue.

4. Your partnership was based on an initial opportunity identified by the partner, and that’s great, but it was not their core business area and they simple seized an opportunity that presented itself. They were ill equipped or not interested in pushing further. So be aware of your investment time in once-off opportunities with partner companies that approach you.

5. There was too much effort in getting the partner up to speed in selling your solution and their expectations of your pre-sales department were excessive. They probably wanted you to do all the work and they get the sale. They weren’t doing their share. You expected them to start selling immediately and transfer the cash to you on a monthly basis. The expectations on both sides were just not right from the start.

The real cost in getting it wrong is opportunity cost. Basically the lost time and opportunities in the time spent working on something that doesn’t produce. You need to gain an understanding of the target market through a “Market EcoSystem and Trends” summary analysis, identify your potentials, rank your targets, make your decisions and then follow up.

Watch out for part 2 with what it means to get Strategic Partnerships right.

What type of partnerships suit a Software-as-a-Service (SaaS) business?

End-users would always love to pay on a drip-feed-as-value-gained basis. It eliminates risk and spreads much of the costs over the value period. SaaS preaches this message. There are many advantages to SaaS businesses, but years on we’re still learning to balance the business’ cash requirements and customer charge models. There are many variant hybrid models floating between monthly subscription and a full upfront perpetual licence fee.

How do you get a reseller channel working on a SaaS model?

SaaS businesses are different in how they sell? If your business model is purely monthly subscription based and no setup fee then how to you incentify your sales people? ‘Traditionally’ you would pay your sales person’s commission on new business once the cash had been received. Sales people operate best in an instant gratification model. They win, they get rewarded, they get happy, then go sell more. They are ‘coin-operated’ sales people.

Many resellers, system integrators and independent software vendors still operate on full licence fees paid upfront basis to incentify their sales engine. SaaS businesses don’t generate cash to enabled paying lump-sum commissions on a cash-received based.

Consider a Sales Person’s Choice: When a sales person has an option of selling a product with full commission upfront and or one with a drip-feed commission over 3 years, which is he going to choose?

What should you consider when selling your SaaS software through resellers?
Assume they are a suitable partner with access to your target market and have the necessary skills to resell your offering)

1) Business Model Differences
Does the reseller currently sell or has sold SaaS offerings?

2) Sales People Incentives
Are their sales people currently incentified in lump sums on a cash receipts basis? How will your product sell in this mix? What do the sales people think?

3) Agility / Pace of Change
SaaS model is associated with highly scalable growth, will your partner still be suitable to work with you through many iterations of change. How fast can they educate their sales people? How fast can they respond to the market?

4) Culture / Customer Focus
When you’re concerned about keeping or losing customers of your SaaS system on a monthly basis, you are deliberately highly responsive to customer needs. How will this work through a reseller?

5) Legacy, History and Tradition
It’s hard to change mindsets. When people and businesses are used to operating in a particular way, don’t expect instant change. When a reseller or a sales person is starting to sell their first SaaS offering, the differences will take time to get used to.

So how do people made it work?

I know of one company who changed the charge model to include a setup fee, just so they could incentify their sales channel?

Another, their offering added value and helped sell another product with an initial licence fee and thus gave the sales person an added bonus drip feed commission over many months into the future?

How do you incentify your sales people in your SaaS business?
How do you overcome the channel effectiveness challenges in partnering your SaaS business?

Can any company at any stage successfully secure and sell through corporate partners?

With the right commitment from both sides, the partnership can of course produce revenue, but will it be profitable given the amount of time and energy needed to produce the results?

A successful profitable partnership needs to be based on a reasonably compelling offer for both parties. When you seek partners you should be ready, somewhat.

An ideal scenario is outlined by the 10 points
1. You have a product that is proven with strong referenceable customers
2. You have defined marketing and sales process that works in your existing markets
3. You have good marketing and sales materials, including website that really supports the sales process
4. You are operating in a proven business space with growing market opportunities
5. You have a clear Value Proposition and Competitive Advantage that wins customers
6. You’re business success is not dependent on a small number of people
7. You have defined charging model across consulting, product, options, implementation and annual maintenance
8. You have a product and services development roadmap responding to or leading market requirements
9. You have defined clear responsibilities and revenue splits for a real mutual beneficial relationship with a partners
10. You are committed to a Corporate Partnering approach to the market and are realistic in your expectations

So how does your company score in meeting these requirements?

If you score high in all these, in full spirit, then you’re likely ready and a Hearty Congratulations, as these 10 points are a big achievement for any company.

The good news is that you don’t need to have all 10 fully defined and proven to be successful. This is more like a weighted scoring system rather than one requiring a full score in each. Like everything else, being very strong in some areas can make up for being weak in others.

I know early stage companies who have a very compelling offering easy to explain with experienced management, they are likely very ready to partner.

I know established companies who have a very complex offering and where it is difficult to explain and this more difficult to sell. More difficult to sell means much more difficult to get a partner to sell successfully.

Remember, partnering into a market should be taken as seriously as establishing an in-market office, just much more cost effective.

The Internationalisation Partnership - Partners In EXCELLENCE, B2BTraining and Maidsfield Associates

Cork, Ireland – August 7th 2009 – Maidsfield Associates, a business development and sales-side partnering consulting company for the Irish technology sector has entered into a three-way partnership with Beyond the Boardroom, an Ireland based Sales Leaderships, Consulting and Training company and Partners In EXCELLENCE, a US based sales, partnering and globalisation consulting and service business.

The focus of the partnership is to help Irish Technology companies accelerate the results they achieve through their Internationalisation efforts. The partnership brings together experience and track record in helping companies successfully expand globally. Leveraging the capabilities to access new regions, markets, develop new channels and alliances; this partnership will help Irish Technologies improve the results they achieve in competing in a global market.

Whether your organisation is seeking to go international or already trading abroad the internationalisation partnership can assist you to ensure you achieve the highest levels of performance and the best results possible.

Together, Maidsfield, Beyond the Boardroom and Partners In EXCELLENCE have helped Irish and other organizations achieve tremendous results in Internationalising. Organizations like Qumas, InnerWorkings, Decare Systems Ireland, Helix Health, Dolphin Software, IBM, HP, Canon, Motorola, Ericsson, Dassault Systemes, NCR, and others.

“I’m very excited about the impact this partnership can have on helping Irish Technology companies Internationalise. A key growth strategy for these companies, is globalisation. Together, we bring both a track record, experiences, and resources that can accelerate the results companies achieve, while significantly reducing risk in these programs.“- David A Brock, President of Partners In EXCELLENCE

“The future of Irish business lies in our ability to deliver internationally. This unique initiative is about giving Irish Tech companies the tools to overcome the challenges and pitfalls of the International business landscape. Our aim will be to deliver results, quicker and more effectively than has previously been seen.”, - Niall Devitt, Managing Partner of Beyond the Boardroom

“I’ve experienced first hand the challenges of internationalising Irish Technology companies. In expanding the capabilities and international reach of working with such good people as in David’s and Niall’s organisations, is about delivering faster and more effective results for the international success of Irish Technology Companies. ”, - Donagh Kiernan, Managing Partner of Maidsfield Associates

About Maidsfield Associates
Maidsfield Associates is a business development consulting company providing services to established internationally focussed technology companies. Maidsfield helps its clients meet their growth aspirations through delivering consulting services in Sales-side Corporate Partnerships and Strategic Business Development. Maidsfield clients include with internationally focussed technology companies in Dublin, Limerick and Cork.

Maidsfield’s founder, Donagh Kiernan has 20 years experience in working in, owning, driving and delivering results with international focussed Irish technology companies. In 2007/2008 Donagh was selected by Enterprise Ireland as one of 32 Irish business leaders to participate in a year long “Leadership for Growth Programme” for globally focussed business leaders delivered by the prestigious Stanford University in California. He is an active contributor to Irish Technology industry development organisations through it@cork, NSC Campus, Irish Software Association, CIT Alumni and on Enterprise Ireland initiatives.

About Beyond the Boardroom
Beyond the Boardroom is a leading Irish business development consultancy, working in the areas of sales leadership, sales management consulting and sales excellence programs.

Niall Devitt is the founder. He is a member of Top Sales Experts International team and the founder of Sales Leadership Ireland. His blog on sales know how is one of the mostly widely read sales resources on the net.

About Partners In EXCELLENCE:
Partners In EXCELLENCE is a global consulting company, focused on helping its clients achieve the highest level of results and performance in Sales, Marketing, New Product Introduction, and Globalisation. The firm is known for its pragmatic approach to driving significant growth and profitability for its clients.

Definition: Missionary selling = having to sell the concept and then having to sell your solution and your company. Usually creating a new market or selling a revolutionary or disruptive solution.

Technology visionaries see how it should be. They see the blatant inefficiencies, stupidity and  wasted money. They create fantastic solutions from leading edge technologies that can change how we work and live, whether the market is ready or not. The visionaries, with great energy and enthusiasm, start preaching “the changing world” and how things should be and thus their solutions are introduced to the market.

“People NEED to change”
“Businesses NEED to adopt new ways to compete and stop the wastage”

But people won’t change until the market tells them to do so and not just because there are efficiencies to be gained. There is risk in change and there are vested interests in not changing. When a market begins to decline, innovative solutions come to play from existing market players or from new entrants.

When an industry’s players are making money in the current industry structure how do you get in with a disruptive offering?

Geoffrey A Moore has written much on this. A great author. Great books. I’m currently reading and highly recommend “Dealing with Darwin”. It was recommended to me by a client, Kevin O’Leary, CEO of Qumas.

I’ve seen this, experienced it and learnt the hard way. When you sell the visionary sell, it’s very hard work to get things moving. The visionary becomes an evangelist with unwavering belief converting a number of strategic thinkers in senior positions in key target client companies. The business can become a sequence of paid pilots and trials rollouts or projects to demonstrate the value to their operating teams. But slow to grow to full scale projects.

How do you get over the hump of “just too many vested interests keeping things as they are”?
“The market will change, it only makes sense!”,
…quoting a great Irish technology business leader “But will they starve in the meantime?”.

You see this visionary thinking within university research projects, and rightly so. They are projecting years ahead on how things should or will be done and providing solutions to meet this need, not taking the challenges in the current market structure into account. If it takes five years to change the industry, what’s going to feed us in the meantime?

So how can visionaries get to the market and build a business to reap the rewards of their efforts; like eating an elephant, bit-by-bit and not a whole elephant on a plate.

Firstly, how do you know if you’re visionary selling?
1) You have no direct competitors. Others are likely solving the business need very differently and maybe even labour intensively
2) It’s a regular discussion on the various ways to communicate ‘what it is’ and every sales presentation may be different (making very difficult to learn what works)
3) If you had market success, some businesses types would be no longer needed in the marketplace
4) The passionate visionary tends towards seeking appreciation for the creation or idea from like-minded people and finds it difficult to talk to the tough decision makers
5) The visionary takes it personally, when its suggested we focus on solving more mediocre problems and not the revolutionary sell

So what do you do?

1) Don’t give up on your vision
But don’t be so firm on every detail. Think about what you want but don’t get caught up in the detail of how you will get it. Lets work that out on a step-by-step real world basis.

2) Sell at an operational level and get faster decisions
Change the language and consider the needs at at operational level and how these needs may change over the years. Unless you have loads of investment, stop trying to stomp all over the structure of the industry and work within the current structures to start the change.

3) Sell what the customer wants today
Consider the baby-steps towards the vision. Breakdown the value in your solution and offer it bit-by-bit in easy to swallow low-risk chunks of success for your client.

4) Make it easy to buy. Make it easy to say yes.
Low pain, low risk, easy to get started, clear value proposition, no great dissenting voices…

5) The greatest competitor of the full vision maybe a great partner in the bit-by-bit approach
Can you help the other solution providers move towards the vision? These are the companies that are operating successfully in the market. They have the relationships and have the money. Do you have an offering for them that can improve their business without threatening to take away their lunch?

6) Build slowly by nurturing good beta customer relationships
Bit-by-bit, step-by-step, crawl-then-walk-then run. When you’re clients say you have something then go talk to 10 potential clients, with the same message. Learn, change and progress from there.

7) Learn from leaders
Remember how Google started; slowly, offering something of value and low-risk from the start.
Remember WebVan; crazy, huge investment and changing the world.
Remember how Amazon started; slowly, low investment and learning with every sale.

8 ) Work with good advisors and find a strong industry partner to help commercialise your idea

9) Read Geoff Moore’s books