Evaluating Resale Partners: Key Criteria and Best Practices
As a leading provider of software solutions for the insurance industry, we offer valuable opportunities for partners to introduce our innovative products to their customer base and new prospects. This collaboration enables rapid expansion of sales and implementation capabilities. Partnering with us is a natural fit when organizational goals align, our solutions complement one another, and we are targeting the same market.
Many partnerships face challenges because one or more of the key attributes mentioned above are misaligned, or the chosen partnership model isn’t the most effective—even if it initially seemed like a promising fit.
Here are some strategies for managing reseller partnerships, where third-party partners sell your products to their customers and prospects. We’ll also cover approaches for referral partnerships, which focus on having partners generate introductions to potential customers.
In one partnership I managed, it took a relatively short time to get an initial “application partnership” with a core insurance system provider (policy, claims & billing) established. While this is not a referral or reseller partnership, it can be a solid starting point. An application partnership means the core system provider will add you to the partner section of their website where you can post information about your solution for customers to browse. It also allows you to promote the partnership in your marketing materials, which can help build credibility with prospects who are customers of the core system provider. Additionally, it gives you entrance to their customer conference as an exhibitor where you can showcase your goods – all sounds great.
The downside of an application partnership, however, is that it relies heavily on the assumption that customers of the core provider will discover your listing on the partner section of their customer site, browse your material, and proactively reach out. In reality, this rarely happens and while it’s not a total waste of time, it is not a particularly great way to generate new prospects.
After noticing a lack of customer contact after a few months, we leveraged executive connections to engage directly with the CEO of the core system partner. Through this discussion, we demonstrated the value of our solution, which led to transitioning into a reseller partnership. This new arrangement allowed the core system’s sales executives to sell our solution directly to their customers or include it in their upgrade proposals and RFPs for new prospects.
The reseller partnership was a game-changer, involving multiple teams across the organization, including legal, sales, marketing, services, support, finance, and technology. Together, we developed a comprehensive sales and marketing plan and integrated our solution with theirs. As the reseller, the core provider incorporated our solution to their product stack, customer agreements, and overall marketing efforts. Their sales staff actively promoted our solution to their customers, and our first sale through this partnership exceeded our typical deal size. Their deep understanding of the business allowed them to identify a larger initial user base than we typically would through our direct sales process.
Therefore, in a reseller partnership, having at least one C-level sponsor is crucial. They can rally stakeholders from various departments to collaborate with you, ensuring a comprehensive understanding of your solution and its integration into their operations. Teams across the company need to understand your solution, how it’s going to be sold, contracted, delivered, supported, and how the partnership will function more effectively. These items are generally outside the parameters of the typical “partner manager”, who is primarily more focused on ensuring compliance with the partner program’s requirements.
It's also essential to understand the dynamics of another common partnership model: the referral model. In this setup, the partner company receives a payment for introducing us to their customers or prospects, provided we successfully close the sale. Typically, this is a simple handoff process where the partner delivers the lead, and we take over the responsibility of completing the sale. While it may seem straightforward, in my experience, this model also comes with its own set of challenges, many of which can be easily addressed with the right approach.
Educating a partner's sales executives can often be challenging, as they tend to prioritize their own products, placing partner solutions lower on their list. Therefore, it’s important to provide training to these salespeople so they can easily identify potential leads, use a simple sales script to introduce your solution, and access a small set of presentation slides that can be adapted to their own sales decks. The key message to partner sales executives should be clear: their primary goal is to generate interest with a customer or a prospect – enough to warrant a more in-depth discovery call.
Once a lead is identified and passed on, the discovery call should include both the partner and the customer to ensure a smooth transition. From there, your company can run with the lead, but there may be times where engaging the partner can be beneficial. For example, a deep-dive integration session might be of greater value if both you and the partner collaborate with the customer. It’s also helpful to reconnect with the partner during the closing stage, as they may gather feedback from the customer on your performance or identify any concerns that you can address in your next meeting.
Choosing the right kind of partnership is crucial. Sometimes we dive into a full reseller partnership, but the partner doesn’t have the resources to engage fully. This often leads to the partnership fading, as it becomes too difficult for them to manage the sales process effectively. I’ve seen many instances where transitioning a partner from a reseller model to a referral model resulted in much greater success. This is largely due to the sales executives understanding that their only responsibility is to generate meetings, rather than handle the entire sales cycle. Conversely, partnerships can also move the other way – from referral to reseller – when the partner’s sales team has shown strong engagement, gains a solid understanding of the product, and customers are satisfied. In these cases, the partner is eager to drive more revenue by selling your product and assisting with ongoing maintenance through agreement renewals.
When evaluating partnerships, it’s also important to consider who the right partner is for your business. In the insurance space, as a solution provider like ourselves, it seems to make sense for us to partner with core system providers whose sales teams can position our solution as an easy add-on. However, some core system providers don’t effectively support this model, and educating stakeholders across the business can be an expensive and time-consuming process. In such cases, it might be more beneficial to partner with system integrators who already resell core systems and offer implementation services to insurers. These integrators can see significant value in adding your solution to their portfolio, as it can generate additional license and services revenue. Furthermore, your solutions may offer a quicker implementation and faster time-to-value for customers, delivering a "quick win" and showcasing benefits early in the broader project.
One thing to always consider is the importance of incentivizing the sales team to actively participate in the partner product sales process. A well-structured commission plan is a strong driver of activity, and sales of the partner product should contribute to the sales executive's overall annual revenue target. When a product is sold, the full value of the deal should count as attainment against a sales exec's target, and they should be paid the same commission rate as any other product. Although the partner's overall margin may decrease after paying the net value of the deal to the system provider, the product should be treated as a lower-margin offering.
In a reseller model, where the partner collects the full revenue, the partner should treat the product like any other offering to ensure full engagement from their sales team. In a referral scenario, it’s reasonable to recognize only the referral fee as revenue since it is usually a one-time, lower-value payment. However, it’s still essential to provide a meaningful commission to the sales executive. Keep in mind, the role of the sales executive is not to sell things just for the good of the company, it should bring financial value to them as well.
Ultimately, our goal is to deliver the best possible solution, implementation, and support to our customers. Our partners play a crucial role in this by facilitating introductions or, in some cases, directly selling our solutions alongside their services. Working with partners who have a deep understanding of their customers offers significant advantages, allowing for a more efficient and productive process for everyone involved. This collaboration not only enhances the customer experience, but also strengthens the partnership, creating a foundation for long-term success.
