In my previous blog entries (Part I and Part II), I discussed our need at Magento (an open source ecommerce specialist) to create meaningful distinction between partner levels that would ultimately drive value for partners, customers and Magento. Now, let’s take a closer look at the effort.
To do this effectively, we had to understand what we wanted to accomplish with each partner level and we had to clearly define the value proposition that showed how each of us would benefit from the relationship. Once we knew what we wanted out of the relationship we could then build a profile that showed what each should look like and build out other elements of the partner program. Here is what we did.
What Do You Want From Partners?
With a new Enterprise Edition product reaching market, we needed partners capable of selling a higher value solution to a larger and more sophisticated type of customer. They needed to be experienced and comfortable delivering larger ecommerce projects and capable of selling a supported software solution. We had existing partners, but we needed to get to know many more that had experience with Websphere, ATG, MS Commerce, and Demandware.
On the other hand, our freely available open source product (the Community Edition) continued to be widely deployed and we needed partners interested in successfully delivering that to primarily smaller and mid market companies with more basic ecommerce needs. While there was no direct license revenue here, this was critical to expanding adoption of Magento and planting the seeds that would hopefully result in upsell opportunities to the Enterprise Edition. This also presented a challenge because while there was strategic value, there was little revenue so we needed to structure the relationship and partner benefits in such a way that our investment here made financial sense.
And finally, knowing that not every opportunity or partner fit neatly into these two ends of the spectrum, we needed something in the middle for partners who focused on both or were looking for a way to grow their business. So at it’s most basic form, we needed to structure partner program levels based on the product focus and the markets/customers that partners would pursue and serve.
Partner Levels Need to Mean Something
We decided to use meaningful names and descriptions that would describe our partner levels which would help prospective partners figure out where they naturally fit. This was important because with each increasing level, in addition to a particular product and customer focus, we would have stronger requirements and higher expectations so it was important that the fit was right. If there was misalignment neither of us would be successful. The goal was for partners to position themselves at the right level — not trying to become something they aren’t – and grow from there. Here are the three levels that we developed.
Enterprise Partners: are our most strategic and valuable partnerships and the ones we look to to focus and promote our Enterprise Edition product. They are established, experienced and target bigger projects with larger companies. They receive the highest visibility, benefits, backing and support but they are also the partners who we expect the most from in terms of revenue, demand generation, and technical competency.
Professional Partners are very important partnerships as they will focus on both the Enterprise and Community products. They are experienced in ecommerce, tend to be smaller firms focused on mid-size customers, but interested in elevating their business by pursuing larger projects and customers over time. They too receive good visibility, benefits, and support from us although not at the level of our Enterprise partners, and the revenue and competency expectations reflect a smaller commitment on both sides.
Community Partners are those who prefer to have a relaxed relationship free of specific revenue commitments or other expectations. They focus primarily on the Community Edition product and tend to sell to smaller customers or companies that have more basic ecommerce needs where the project budget doesn’t allow for the purchase of software. Due to the high number of partners at this level it is designed to be self service with most support coming from one-to-many methods such as a partner portal, webcasts, forums, and the community.
Once defined at a high level, we drilled considerably deeper into each partner level to create an ideal partner profile, defined specific commitments and benefits that each level would receive, and captured that in an agreement that was simple and easy to execute.
Does our approach sound reasonable and logical? I’m all ears.
Contributing blogger Scott Dahlgren is an independent consultant helping small and mid-size technology companies extract greater value from their partner and channel relationships. And he also runs marathons through the woods of Connecticut. Here are all of Scott’s blog entries. The VAR Guy is updated multiple times daily. Don’t miss a single post. Subscribe to his newsletter, RSS feed, Twitter feed and Resource Center.
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