Note that this is a client for whom the SMB segment (yes I know it is not one monolithic segment) is key and selling through partners is very important. Also our client is a leader in understanding this segment and providing incentives for making their partners successful in selling to SMBs.

But over the years, in response to market and competitive pressures, their offering and programs had become so complex that it was unclear which of their partners were actually performing or even active. To add to this they had a multitude of contracts dating back to 2004 often with varying addendums and special commissions structures. It had become very unwieldy to manage the partners in an efficient, cost-effective manner. As a result, resources were constrained and even good partners suffered.

To help them, we conducted a detailed analysis – covering legal, operations, promotions, competitive, revenue and P&L factors – that was very revealing. Based on that we were able to make several recommendations about how they could optimize their program, make it operationally more manageable and more productive!

While I won’t share the specific recommendations we made to them, I do want to offer up some nuggets we learned as watch-outs in developing your channel:

1. Be sure to listen to Multi-Functional input: We found that programs are often developed and deployed without the proper inputs and this can result in unintended - and often bad - consequences. Legal, Operations, Channel marketing, Finance, Marketing (Promotions) and anyone else (even website managers who will enable any self-service online) who might touch partners should be invited to give their feedback to the proposed programs. What we learned was that you can circumvent many issues by doing this upfront. Don't reinvent the wheel. Someone in your organization already has one.

2. The evergreen KISS principle (Keep it Simple, Stupid): Incentives for performance should be easy to understand and uniform for all. While "kicker" rewards are tempting to offer, be sure to only institute them if you can offer something really powerful for a potent return. Offering kickers just for the sake of it only adds complexity. You will be surprised at how many partners prefer simplicity to meaningless rewards that take up mental "space".

3. Be Competitive – "holistically”: Ask what alternatives your partners have? What will they do if they do not choose to partner with you? How will that choice affect your competitive standing? Be competitive in your offering to tip the balance in your favor but look at the whole picture – not just the monetary offering. Is your company more or less stable from a partner's perspective? What's your credibility vs. your competition? What's been your history on partnering – real or perceived? Are there other strategic reasons (e.g., related offerings, geographical presence, strength of parent company?) why they might prefer to partner with you – or not?

4. Don’t think of Monetary Incentives as the end-all: It's true that partners are in it for the money but often they will forgo the last few dollars to partner with a player who makes their lives simple. So look at your whole offering, the whole experience you offer them (how complex are your contracts? how hard is it for them to sign up? get paid?) and make it attractive so that you're "easy/iest to do business with..."

5. Ensure Operations can support the program as it grows: Often companies make the offering very attractive so everyone wants to sign up - but then everyone cannot sign up because the company cannot support it. Automating repetitive tasks, enabling self-service and minimizing and planning for exception management are critical in these matters. As you develop the program and involve legal also involve the operational side of the company.

6. Ensure the Programs do not become a Millstone: Once the partner is inactive and/or non-performing what happens? One of our findings was that a large number of contracts could be interpreted to entail "evergreen" commission payments even after the partner was terminated. As a result a large number of partners were collecting very small checks forever – not efficient for our client or for the SMB partner. While we recommended a solution to ease this, the best way is that such eventualities should be avoided upfront.

7. Apply the 80-20 "prune" Rule – but smartly: As in all things we found that it was the top 10-20% of the partners that were delivering most of the value. However be sure to segment your partners by performance to see who is performing and who's not and try to understand why. A lot will be revealed by this segmentation. We found that the next 30% (below the top 10%) were not performing but collectively accounted for a huge portion of the business. They could not be terminated without careful consideration. With deeper analysis and further market research we recommended keeping them but modifying their contracts to reflect their business realities and the client's needs.

Any of this ring true? Write to us.