A points-based partner program is daunting but the benefits are worth it.
If you are looking to engage a wide variety of partner types (consultants, agencies, systems integrators, software vendors, cloud solution providers, managed service providers), consider shifting from a legacy levels-based program (silver, gold, platinum) to a partner program that recognizes and rewards partners for their activities throughout the customer success lifecycle. But how does it work and why is it worth the effort? I’m so glad you asked.
How does it work?
Think in terms of frequent flyer programs or Starbucks points. The more you fly United Airlines or spend money on the United credit card, the more frequent flyer points and perks you get. Similarly, Starbucks incentivizes customers by offering double-star days or adding bonus points for trying new menu items. In a points-based partner program, partners earn points for activities that are of value to you and/or the customer. If they do something you value, they earn points for that activity. Points add up to partner benefits.
Your program could offer points at any of the 28 touchpoints along the customer lifecycle. Or to keep things simple, establish five primary ways partners earn points. Work backwards from where you want partners to focus and do the most activities. Do you want them to manage the customer transaction? Offer a lot of points for closing the deal and procuring the purchase order. Do you want partners to generate leads? Provide the bulk of the points for demand generation activities.
Why is it worth it?
In a nutshell, flexibility. Many technology companies such as VMware and Rubrik are gravitating towards points-based partner programs because of the flexibility these models offer themselves and the partners.
Points programs are a solution to how to support, manage, drive, influence and engage an ecosystem of partners which have a variety of business models and a variety of cares and concerns. As your ecosystem expands, conventional programs don’t meet the business needs of partners. Traditionally, every partner must meet the same level of performance, which often includes a high number of resources technically certified, and a significant amount of revenue produced, to reach a program level or tier (Gold for example). When the partner reaches the Gold level, they receive the benefits aligned with that program level, many of which they might not need or want.
Partners may not want to invest in technical training because they may not implement the technology solution. For example, if their business model is consulting and advice, they don't want to go through your technical certification. And they don't care about discount or resell margins because they're not reselling. In a points-based model, partners earn points for what they are doing in the customer lifecycle – be that influencing, selling, implementing, training, managing and/or ensuring customer success.
These redesigned partner programs are not just motivating, predictable and understandable for partners, they are also flexible for vendors. In a points-based program, vendors can adjust where they assign points to put more emphasis on a portion of the customer journey, or a type of partner, or a specific product or market. As a vendor, you’re rewarding valued partner performance. You can say, “if you're selling or referring our SaaS product instead of our old perpetual license product, you'll get more points.”
It ain’t easy.
Sound great right?! You’re ready to shift over! Not so fast. There are some challenges with points programs. First of all, change is tough. As partnering professionals, we’ve all been working to slowly evolve partner programs along a similar path over the past several decades. Your internal people (i.e., your boss) as well as your partners are used to the traditional Silver, Gold, Platinum partner programs. People like what they know. It’s particularly challenging for the sales teams to wrap their minds around a points program.
Also, partners want consistency and predictability. Your partners are investing money and resources developing a relationship with your company, learning your technology, and building a business model around servicing customers who consume your technology. When you announce changes to how they engage with your company, you introduce uncertainty and risk to their business model. You’ll need to provide LOTS of notice and a VERY clear transition path. Communicate 80% more than you think you should.
And lastly, you’ll need tools for tracking and reporting points earned and used. You will also need systems (well, data) to predict what resources you’ll need based on the partner business models within your ecosystem. Will 50% or 80% of the partners spend their points on additional discounted support services? Please, please don’t discount the complexity of the partner management systems. We’ve seen several companies fail in their ability to effectively launch and manage a points model because they had bad systems.
Honestly, MANY of the systems aren't ready for this. Most PRM solutions are lagging in their ability to track points earned. There are systems that measure attribution and loyalty programs that have been used outside IT channels for years. While we’re starting to see these leveraged in our industry, the typical PRM players are lagging in functionality for managing points programs.
Start small, but get started.
Even though we’ve tried our best to scare you with the challenges of launching a points-based partner program, we recommend you start the transition. It’s a worthy effort. Start with a few activities partners can earn points for – possibly only tied to marketing development funds or incentives. Then grow that into a next phase program mixing points and traditional program levels – where points earned add up to program levels. Take it slow and evolve into the full Monty of a points program where points are earned and spent in alignment with the partners unique business model.
Need help planning the transition to a points-based program? Or convincing your bosses of the benefits? Contact me – I'm happy to chat. Find ways to embrace new partnering models and adapting your program to be it's most productive self.
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.
