In the past week, I have had several people mention instances of where it is not possible to work with a partner because the margin of a product is being cut too many times and there just isn't enough margin to go around.  While I agree with the point, I think the issue may be more related to the value provided by each partner.

The way I see it, a partner makes margin on a deal for providing value.  For instance, if the partner provides marketing services, those marketing services have a cost and value associated with them.  The margin that a partner who provides marketing services should be enough to compensate that partner for the marketing services provided.  If the partner makes an unfair amount of return for the services provided, the entire balance of the deal doesn't work.  In some instances, partners may be compensated too much for the value they provide.  In other cases, it may be too little.

When a deal has many partners involved, it is presumably because each partner is providing specific value.  That value should be able to be quantified and measured and a specific dollar or percentage value applied against it.  Just because there are many partners doesn't mean that this same approach can't be used.

The problem often comes in when many partners are involved and really aren't doing anything of value for the opportunity.  Then, yes, the deal is being cut too many ways.  Channel managers should be careful to ensure that each partner involved in the opportunity is providing a specific value to the overall outcome.  Channel managers can then assign a value (percentage margin) to each partner.  Presumably, if each partner if providing the agreed on value, there is plenty of margin to go around, no matter how many partners are involved.

What is your view?

William Vanderbilt

+1 630 343 6261

WVanderbilt@InnovativeLearningChannels.com