BY ADOPTING multiple-partner strategies, organisations have been able to successfully grow their market share and have seen improvements in their bottom lines as a result of effective partner solutions and partner management capabilities.

The key to profitable growth lies in building value-based relationships across the entire principal-partner ecosystem.

The interdependence of partners and principals is a complex arrangement. On the face of it, the relationship looks simple - revenue targets, rebates, incentives and marketing dollars. But as the relationship gets deeper and market coverage wider, this partner-principal arrangement becomes spiked with lots of variables.

Every company, be it a large MNC or regional small-and-medium business (SMB), feels the need to reduce partner-management and partner-marketing costs while improving performance.

Strategic directives from senior management to reduce costs affect the relationship between field teams and their partners. The challenge for field managers is to tread a fine line between sustaining the partner relationship with reduced support and delivering value demanded by the management.

The resulting complexities take their toll on both the partners and the principals as every available resource - people and marketing dollars - is stretched to its limit.

Newer companies want to add new partners to grow their business while big companies lament partner-latency and want to work towards reducing the need for a partner in the market.

Can such a situation be avoided? No. This interdependence grows to a point where neither party can walk away from the relationship without a significant impact on the business. Can such a situation be better managed? Yes, through value-based relationship management.

The principal-partner ecosystem

Value-based relationship management is definitely possible by establishing the key factors that influence partner-principal behaviour, specific to your business needs.

This helps everyone in the ecosystem to achieve effective resource allocation, people management and pricing strategies.

Take the example of Destructive Technologies, a fictitious Singapore-based company with global presence, challenged on two fronts:

* There is strong consumer demand but the company has a poor record in partner management. Its Western markets are not much affected since the majority of sales are through large-format retail outlets.

But with the exception of a few countries, the lack of such a retail format in Asia means the company is more dependent on partners and resellers to sell its products. Its partners, having experienced very little profit in selling this brand, have started to substitute other brands for it.

* Market share is under threat from more innovative product marketing by the competition. With strong competitors, this company feels the need for more partner-support, but legacy issues have left a bad taste in the mouths of the partners.

The company could manage the situation better by having a proper market- and partner-mapping strategy.

Mapping: A proper slicing and dicing of their geographical model could help the company customise its "route-to-market" policies and ensure it deals with market demand via the right partners fulfilling these demands. One-size-fits-all strategies never work.

Leveraging: Without mapping data, the company's leveraging power won't be strong, and will either incentivise too much or too little. They could be incentivising the wrong partners, or have missed out on incentivising the right partners.

Between taking a risk on an unknown partner with no track record and a known partner with a track record but which is very demanding, companies have little choice.

The company needs to align the demands of such partners with the overall route-to-market strategies and work towards mutually beneficial relationships.

In conclusion, companies need to create a complete management picture by aligning all processes and strategies under a single umbrella, which connects partner recruitment, partner operations, partner marketing, partner management and partner development teams.

This in turn will lead to an integrated model to align operational excellence with management excellence. With an aligned strategy, companies would be able to:

* Reduce cost by integrating channel marketing and channel operations

* Track ROIs on investment towards managing partners

* Strategise channel-mapping as a key requirement in channel plans; and

* Understand the importance of sales-partner-marketplace ecosystem alignment.

Article by Anand Swaminathan, the director of Training Edge International and partner of Blue & Gray. He has nearly two decades of channel and direct marketing experience and has worked for leading Fortune 500 companies. For more information, visit www.trainingedgeasia.com.