Assessing Vendor Partnerships
Big vendors need to focus on their legacy middle-office practices
One of the emerging themes TBR has encountered in its executive interviews is the concept of performance-based compensation. This construct has been discussed — usually termed outcome-based pricing — for close to a decade.
In the beginning, SIs told TBR the biggest resistance to these kinds of arrangements was middle management’s concern about the financial exposure of such agreements. However, as the SIs have established more automated workflows, the concept has come back under the banner of being performance based. Small firms wedded to legacy SaaS models might need to get more creative in aligning their commercial offers with the needs of larger SIs seeking to create market distinctiveness with such commercial innovations.
Small vendors have to consider approaching big vendors as if they seek investors
As TBR found during interviews with leaders of small SaaS vendors, some of their challenges have not shifted in decades and continue to revolve around the time commitment of their staff when seeking to establish and forge a relationship with a firm several hundred times larger.
Numerous interviews laid out a consistent blueprint for successful engagement with big vendors that consists of three major elements:
- Are you a strategic fit with the large vendor? If yes, then:
- How do you approach the large vendor for top-down attention within the firm?
- How do you initially engage the large organization for positive, bottom-up, word-of-mouth marketing inside the large vendor?
Assessing strategic fit
- What is the strategic focus of that large vendor, and does it align with your firm’s aspirations?
- What is the vendor’s revenue within the space?
- Is it a strategic growth segment where the vendor will see value in your offer?
- What is the large vendor’s current sales structure by customer size and by industry segment?
- How does the big vendor measure partner success and does its view of success align with your measure of partner success?
- What is the overall working relationship between the large alliance vendor and its smaller participants?
- General go-to-market motions
- Deal registration rigor
- Joint selling
- Commercial arrangements
- Marketplace access
- Technical and sales certification requirements
- Access to experts for guidance and for ad hoc training
- Electronic tool sets, documentation and self-paced training
- Large vendor tech stack
- Release cycles and release versions across the different partner classifications
- Underlying infrastructure technology and compatibility to your stack
- Response times and supportiveness of its technical personnel, especially for DevOps testing
- General go-to-market motions
Top-down attention grabbing
In almost prospectus fashion, small vendors should highlight known customer overlap and customers that may present an opportunity to the large vendor. This is where knowledge of the large vendor’s strategic focus comes into play. The top-down efforts also have to establish those critical contacts with big vendor decision makers who can provide the small vendor with guidance around navigating the organizational labyrinth to get things done operationally. Every corporation has a style and a preferred way of working. These senior leaders, if they are sold on the value proposition, essentially become the small vendor’s mentor or coach on how best to engage the broader organization.
Bottom-up or word-of-mouth marketing
Small vendors have two audiences to convince: development and sales. While selling is the obvious aspiration, the first move is often to understand the DevOps practices deployed by the large firm as well as prove the technical rigor of the application and the distinctiveness of the functional services the IP enables. Just as it is important to forge the executive connections, the development connections help prove value and mitigate technical challenges down the road by knowing who to contact when in need of assistance.
Sales engagement works best when the small vendor can essentially deliver some opportunities to the large vendor on a platter. Call this focusing on low-hanging fruit, but make sure the first opportunities engaging the large seller organization are highly qualified situations for your value proposition. Again, small vendors should outline several overlapping accounts to the large vendor and highlight the opportunity the small vendor can provide to the large vendor within those accounts.
One or two early wins become the internal promotional marketing pieces to prove value to the large vendor sellers. Saying no to certain opportunities helps to establish credibility as much as winning deals.
Planning and careful rollouts are critical to alliance success
Time and again in small vendor interviews, TBR heard that without strategic planning and measured rollout of the engagement small firms can dilute their own sales focus. In this way the large alliance can actually impede the small vendor’s progress rather than accelerate it. Commercial terms can hamstring deal progress, but poorly vetted sales opportunities can likewise drain small vendor market momentum.
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