How do you know if it’s time to retire a channel partner or dealer? In a recent blog I provided guidance on knowing which partners to invest in. This is great knowledge to have. However, there is a flipside to every coin. While it’s important to know where to invest, it’s also important to know where not to invest. That’s the topic that I’ll discuss today.
Terminating partner relationships isn’t easy or pleasant. However it’s a hard fact in channel management. Generally speaking, we enter into most relationships with the hope of mutually beneficial results. Oftentimes, this hope is realized. Unfortunately, it’s rarely realized forever. Most relationships come to an end. As a result, there are definite cycles to watch for and manage.
Are your partners missing the number? Download the Channel Partner Scorecard to quickly evaluate if a partner is trending in a positive or negative direction. Use the insight gained to objectively evaluate your partners and determine next steps.
Steve Steinhilber, VP of Alliances at Cisco, provides a helpful construct for partner relationships in his book Strategic Alliances. According to Steinhilber, there are 6 common elements of partner alliances.
- Evaluating a strategy and potential partners
- Forming the relationship
- Incubating the partnership
- Operating the alliance
- Transitioning to the next level
- Retiring the alliance when it no longer meets mutual goals
This article deals mainly with the last item on Steve’s list.
So, when do you know if it’s time to end a partner relationship? No one wants to waste time or money on a floundering partnership. There are 5 key elements you should consider with your partner relationships. I’ve included a question with each to frame your thoughts and nudge you in the right direction. They are:
- Marketing Capability – Can they market our products/services and generate leads?
- Sales Capability – Are they able to actually sell and close opportunities?
- Account Relationships – Can they bring us business with their existing relationships?
- Coverage – Do they expand our reach without creating channel conflict? Are they bringing us business we couldn’t otherwise gain ourselves?
- Mind Share – If we invest in them, will we be top-of-mind when they are with customers?
In some cases, the answers to these questions will be negative. If the majority are negative, it’s likely the score in the Channel Partner Scorecard will be too. You should confirm these suspicions by utilizing the Tool before making any decisions. If you must make a termination, the next step is to develop an exit plan for your partner.
Strategize with your team on the most effective way to orchestrate the discussion. Your plan should incorporate a SWOT analysis to ensure you’ve considered all potential outcomes.
An extremely important piece to settle is the Communication Plan. It’s important to know what the message is, and who will present it (channel manager or corporate executive). Be sure to communicate to all internal and external stakeholders . This could include team members, management, joint customers, vendors and the exiting partner.
Terminating relationships isn’t fun for anyone. Not for the partner, nor for the party doing the terminating. That’s why it must be handled objectively, systematically, and thoughtfully. The Channel Partner Scorecard, and the process I described above, will help assure this.
Quoting Steinhilber again, he says: “Make parting professional.” You never know how relationships will change or opportunities develop. An opportunity may present itself down the road for you to work together again. The way you exit a relationship or partnership speaks volumes to customers and other partners. When in doubt, take the high road and leave on agreeable terms whenever possible.