Partnerships and channel sales offer e-commerce vendors a way to grow their B2B sales and become more competitive at a time when online retail is growing rapidly. This is especially true for businesses that are ready to expand geographically but don’t have the internal resources to cover an entire market or territory on their own.
As ClearSale has expanded its international profile over the past decade, we’ve successfully established partnerships and channel alliances in multiple markets. Here’s what we’ve learned about how to create partnerships that work.
Decide if your business is ready to build partnerships
First, for a partnership or channel sales deal to benefit both parties, each side has to do some research and self-evaluation before connecting with others. Consider these elements.
What do you offer?
You know what your business offers to your clients. How can you benefit potential partners? Look for vendors with a gap you can close.
For example, a package tracking app may offer its merchant clients reduced customer service contacts and higher customer satisfaction. A company that specializes in helping merchants select the right shipping carrier and rates for each order might want to partner with the package tracking app to offer a more complete solution.
Is your business well-established in one country or one vertical within online retail? You may make a valuable partner to vendors who are looking to build a presence there and want to win over customers who don’t yet know their brand.
What do you need?
Are you hoping to expand overseas or add new verticals to your customer portfolio? Be specific as you outline these needs so you can focus on appropriate partners. For example, your business may have no trouble landing small clients in a new region, but enterprise clients may hesitate because you’re new to their market. By partnering with an established company that these target clients already work with—or are at least familiar with—your brand gets the halo of trustworthiness that comes from having an in-market organization vouch for you.
What’s the referral culture in your market?
Referrals can be a good way to meet prospective partners, but not every referral will be right for you. Referrals may be as simple as a mention in conversation or as serious as an in-person introduction. And the level of trust that goes into making that referral or being referred, while always important, varies somewhat by culture.
For example, in the U.S., people tend to make referrals when they have confidence that the person whom they’re recommending can do the job and will reflect well on them personally. I’ve found that in Mexico, however, referrers often go a step further by offering to go with you to meet the potential partner in person. Sometimes they even expect to take part in your negotiations with them. The face-to-face aspect of referrals is so highly valued that prospective Mexican partners may not want to meet with you unless you have a colleague in the country who can vouch for you and make the introduction.
Knowing the local referral culture can help you avoid missteps and missed opportunities. And although you may be tempted to cast a wide referral net, the more importance your contacts place on making careful referrals, the more value you can place on those recommendations. Personal referrals also indicate that the referrer thinks highly of you and your business, so work to maintain that good opinion—it’s one of the keys to meeting more prospective partners and allies.
Distinguish between partnerships and channel alliances
For many e-commerce related businesses, partnerships have two strategic payoffs in addition to added value. One of those is improving brand recognition. The second is generating new leads through direct or indirect contact with new business opportunities.
For example, a partnership between a fraud prevention service and a company that handles chargeback disputes for merchants can save customers the need to vet and integrate two solution providers. And each partner’s customer base becomes a potential customer for the other partner. Partnerships are evaluated by number and quality of leads they generate, and the resulting conversion rate of deals closed.
Channel sales, which we refer to internally at ClearSale as alliances, also generate business for the parties involved. The difference is that instead of courting each other’s customers as in a partnership, one ally resells the other’s branded services or presents those services as a white label offering for their own customers. This kind of alliance is measured by the percentage of gross merchandise revenue that it delivers.
Know your partners
We’ve talked about making sure your company is ready to be a good partner. After you’ve done your homework—clarifying your value proposition, building and earning trust, evaluating which kinds of partners and allies your company needs—you’re almost ready to pitch the partnership idea to prospective allies.
First, think about what potential partners bring to the table. You need a clear idea of their values and culture, as well as their products and customer base. As Harvard Business School professor and author Rosabeth Moss Kanter explained in her 15 steps for successful strategic alliances, it’s important to “seek compatibility in values” and bring more people on both sides into the partnership to “help everyone win.”
Meet more people on their team. See how they interact and solve problems. Take note of how they communicate with you. Business history is filled with partnerships that fizzled out because one party valued the relationship more than the other or because the partnership wasn’t integrated into both companies’ cultures.
When you’re both ready to set up a partnership, establish clear expectations and responsibilities, but don’t leave everything to the attorneys. Keep the interpersonal connections and goals front and center. Also, consider your prospective partner’s cultural norms around when to put the agreement in writing. For example, while in the U.S., presenting a written proposal or contract as soon as the signing party communicates interest is common, requesting or presenting a written agreement too early in the discussion can be interpreted by Mexican companies as a lack of trust.
Nurture your partnerships
Partnerships are like any other kind of relationship—you have to maintain the connection to keep it strong over time. When your partner program is just starting out, you may be able to have one person in charge of recruiting new partners and nurturing existing partners. However, as your partner base expands, assigning the recruiting and nurturing roles to separate people may be a better way to foster growth and connection.
When you appoint someone to manage your current partners, they can take care of the customer experience touches that a busy partner recruiter may not have time to focus on. For example, a partner manager or director can regularly check in with your partners, share information about new products and initiatives, and find out what their current challenges are.
This emphasis on partner experience can have a major impact on the size and relevance of your partnerships. That’s in part because partners that you stay in touch with regularly will feel more valued. It’s also because as the people behind the partnership get to know each other better, they’re more likely to generate ideas for collaborative activities like co-hosted webinars, co-branded offers and other initiatives that benefit both parties.
Ready to partner
The keys to successful partnership are simple, although they can be easily overlooked in the excitement of making a deal. Know your strengths, know what you need, know your prospective partners well and be prepared to invest time in the relationship over the long term. E-commerce vendors who take the time to work through each of these steps can establish partnerships and channel alliances that drive growth and deliver competitive gains.