5 Misalignments That Cause Most Channel Partnerships to Fail
The Partner Directory page on an Independent Software Vendor’s (ISV’s)website can look very impressive. But, the truth is that up to 90% of those partnerships have not lived up to original expectations.
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I had the CEO of a global ISV proudly tell me, ”We have 1,000 partners.” “I don’t believe you for a minute”, I responded. I then bet him that he most likely had 10-15 that he would keep and another group that had promise but needed work. He smiled and almost embarrassingly agreed. All others could be thrown overboard simply to relieve the CAMs and Partner Ops team from the administrative burden and the cost of carrying them. That action would also help to adjust assumptions and goals for the channel.
I’ve seen firsthand the push and pull between ISVs and their Service Partners. When they thrive, it can be the catalyst for significant growth, innovation, and customer satisfaction. But when they fail, the consequences can be worse than having done nothing in the first place. After all, company growth targets are built on assumptions including channel revenue contribution and other channel metrics. Too often, misalignments that harm the partnership are less tied to product, services, or structure and more around soft skills. Think of those skills as the motor oil that makes the engine run smoothly rather than about the engine itself.
Here are five specific misalignments that are often at the root of the problem
1. Cultural Clash:
When ISVs and Service Partners explore a partnership, the importance of cultural compatibility can’t be overstated. Beyond the technical fit, questions as simple as “Do we like these people?” “Can we collaborate effectively?” and “Do we trust them?” matter - a lot. To ascertain a great cultural alignment, candid conversations are essential. Both parties should openly discuss their values, work ethos, and expectations as early in the partnership consideration phase as possible. Exploring what they admire in their best partners and what they dislike about their worst can provide valuable insights.
A great cultural alignment hinges on shared goals and values, transparent communication, and mutual respect. When both sides genuinely understand and appreciate each other’s strengths and quirks, it lays a solid foundation for a productive and enduring partnership. Cultural synergy fosters trust, enhances collaboration, and ultimately drives success in the complex and sometimes volatile world of ISV-Service Partner relationships.
2. Goals and Objectives Misalignment:
The heart of a successful partnership lies in and starts with aligning respective goals and expectations. Each side enters this collaboration with distinct objectives, metrics, and definitions for success. The divergence occurs when they neglect to explicitly define and share these goals and create a structured mutual plan to achieve them.
The Partner often focuses on metrics like lead generation, website traffic, conversion rates, and staff utilization. Meanwhile, the SaaS ISV zeroes in on metrics such as Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC), user adoption, and customer retention and expansion.
Often, each side is looking for leads from the other. Initial leads, deals, and projects provide the fuel to propel the partnership. An early deal is the spark that drives action but it’s important to collaborate on that first one or two to combine strengths and expertise and to help bond the combined team.
Without open, honest conversations and a clear roadmap for success, misalignment looms large. It’s like two ships passing in the night, missing the opportunity to collaborate toward a shared vision. In these cases, the partnership may struggle to reach its true potential.
3. Communication Gap:
Effective communication is the lifeblood of any successful ISV-Service Partner relationship. Unfortunately, it often remains a vulnerability. Misunderstandings, a lack of transparency, and information asymmetry frequently stem from poor communication channels and cadences. Without clear lines of communication, issues fester, opportunities are missed, trust erodes, and the tendency is for each side to blame the other. So, what can be done?
ISVs and Service Partners must prioritize transparent, frequent, and open dialogue. Establishing a dedicated communication protocol, regular cadence check-ins, and sharing insights, data, and performance metrics can bridge gaps and align objectives. Both parties should actively listen, offer feedback, and adapt to changing circumstances. By fostering a culture of clear and effective communication, these partnerships can thrive, maximizing their potential for success. Tools will help with the data and performance metrics but partnerships aren’t coin-operated. Human connections with open, honest, and candid communication will make the difference.
4. Lack of Empathy and Understanding:
Empathy, or the lack thereof, plays a pivotal role in the success or failure of ISV-Service Partner relationships. When ISVs fail to understand the challenges faced by Service Partners or dismiss their concerns, it can create a toxic environment. Service Partners need to be heard and valued. Don’t fall into the trap of treating them as mere extensions of your ISV business. An empathetic approach fosters goodwill, collaboration, and resilience in the face of adversity.
Ultimately, the role of empathy in channel partnerships is to transcend superficial trust and foster a deeper, more meaningful connection. It requires partners to invest time and effort in understanding one another, recognizing shared goals, and aligning actions accordingly. Through empathy, partners can build trust that is grounded in mutual respect, support, and a genuine desire for shared success.
5. Poor Enablement:
Lastly, inadequate enablement cripples Service Partners’ ability to effectively represent ISV products and solutions against their client’s needs. Without the necessary training, resources, planning, teaming, and support, Service Partners are left to fend for themselves. Sure, as I’ve said, leads, deals, and projects are the fuel that propels the partnership. But without proper enablement and alignment from the beginning, early anticipation and momentum are easily lost.
I’ve practiced a simultaneous enablement approach where functional counterparts start by getting to know one another through open discussion upfront following internal briefings profiling the partnership the the topline objectives. Determine their respective enablement objective(s) for the partnership and how they define success. This is a great way to establish trust and an empathetic tone early. Everyone still follows a product or business track so their enablement experience is relevant to them. The difference is that each team connects and plans with their respective counterpart early. Too often, partnerships devolve into a single-threaded chokepoint connection between the front-line reps.
Access to and orientation of the relevant areas of the Partner Portal and Partner Program are obvious early steps. Product and Business tracks can ensure they follow a progression that is most relevant to their role in the partnership - that’s the easy part. If they are in the sales/marketing part of the business, teach them how to identify an opportunity and raise their hand when they think they may have one. Have a clear but adaptable enablement roadmap.
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The failure of most channel partnerships often boils down to a few critical misalignments. New technology in PRM (Partner Relationship Management), CDM (Channel Data Management) and other areas help to inform better data-driven decisions and collaboration. But to thrive in this ever-evolving landscape, ISVs and Service Partners must recognize these pitfalls, address them head-on, and build relationships founded on shared values, aligned goals, open communication, empathy, and robust enablement programs. Avoiding these misalignments can be the key to transforming a troubled partnership into a flourishing one where both parties reap the rewards of real collaboration.
These are my top five. No doubt there are many others. What’s your experience?
