It’s like in the Harry Potter books, where they refer to the main antagonist as “he-who-must-not-be-named.” As if just saying Voldemort out loud would conjure his presence. No one wants to say the word recession lest they make it a reality. Instead, I’ve heard “economic headwinds” and “a really tough market” with regularity. However, not calling it a recession doesn’t mean we don’t feel the effects of tighter budgets, pressure to produce revenue and a renewed focus on profitability. Rather than pretend it's not happening, or call it by another name, take a few steps to bolster your partnering efforts so you can withstand the storm.
Know your ROI
In a recent partnering executive roundtable, the topic of, ahem, ‘economic headwinds’ was on everyone’s mind. The partnering executives at large and small companies all voiced experiencing a significant shift from previous expectations. Before mid-2022, their leadership teams, private equity firms and/or venture capitalist were pushing growth at all costs. It was common, and acceptable, to spend $6 to make $1 in revenue. But things have changed. Instead of being applauded for just “doing the right things,” leadership teams are now expecting partnering activities to produce a measurable return. Don’t be caught flat-footed. Before anyone comes looking, make sure you have the data on the return for your partnering investments. Knowing the data will help you make better decisions, but it will also arm you against the question, “what are partners doing for us?”
Do more with less
One saving grace in a tough market is that everyone is looking for leverage. And how do you spell increased leverage? P-a-r-t-n-e-r. The roundtable participants expressed that effectively leveraging partners was even more important as the economy softens. The smaller vendors are feeling pressure to quickly open up channels and engage faster to hit revenue goals and most of the partner executives expect their partner sales to increase next year. More than half expect the increase to be over 10%. However, several executives are getting pressured to engage more marketplace partners as a cheaper alternative to solution providers. But you get what you pay for. Beware that marketplaces primarily fulfill and they don’t drive demand or increase customer success and retention (which are ultimately more important to revenue growth).
Although they are expecting revenues to increase, headcount will stay the same for most of the partnering executives with a third expecting a modest increase to align with the partner sales growth. They were all feeling the pressure to manage their fixed costs (ie. headcount) and “produce more with less,” the current battle cry for effectively leveraging partners. Even though headcount will likely remain the same, most of the partner executives indicated an increase in budget which could be leveraged to deploy automation solutions or hire contractors (hint).
Everyone is busy. Don’t expect to put out an “open for partners” sign and have people to flock to your program. It takes time and effort. The roundtable participants report their leadership teams expect faster results and herculean efforts such as a new partner program, a new portal and a robust partner pipeline in under three months. (Remind you of “extremely hardcore” a la Elon?) As you go into 2023 planning, create clear communications on what you can and can’t do with the headcount and resources available.
Don’t be afraid to make commitments that produce a return on partnering. Over two thirds of the partnering executives in our roundtable expect to make major changes in the partner programs in 2023. These changes centered around three themes: 1) creating a wider and more diverse ecosystem by attracting more different types of partners; 2) changing partner incentives to reward partners for more behaviors than solely resale; and 3) looking for creative ways to drive demand with partners.
We have great resources to help you achieve your goals in 2023, even in ‘economic headwinds.’ From trend reports, to partner program advice, to additional resources to meet your commitments – we are here to help.
For more information about all things partnering, check out our Resource Center. And if you're facing some "strong headwinds" and would like advice or help on partnering initiatives, please contact us – we're happy to chat.
Diane Krakora is CEO of PartnerPath with over two decades of experience defining the best practices and frameworks around how to develop and manage partnerships.