How Online Communities Became Vital to Managing Partner Relationships

Until recently, it used to be sufficient to maintain an online microsite or portal to enable business partners to help themselves to information or tend processes between their respective organizations. However, what was state-of-the-art a decade ago with partner relationship management (PRM) software is now almost completely outdated in today’s fast-moving, complex, highly competitive, and organizationally interdependent operating environments.

Today, digital engagement between companies is shifting rapidly, with the objective to create more effective and efficient collaboration in the face of growing relationship overhead and market sophistication. What’s more, organizations that haven’t kept up with baseline partner capabilities now appear at significant risk. Current industry research from McKinsey has discovered, for instance, that only the firms that proactively and diligently pursue back-end operational improvements were able to maintain their historical margins. Supporting great partner relationships is a key part of this story.

Over the last ten years, external engagement with stakeholders has literally been revolutionized with the advent of social media and other important types of digital participation, such as the strategic use of online community. This has been felt the most profoundly with market-facing digital experience, with an ever-growing amount of engagement, B2B and otherwise, taking place in social channels. Underscoring this, the latest data shows that social has now pulled nearly even with e-mail for B2B engagement, the latter having long been the most significant channel for successfully working with business partners.

Communities and Partner Relationships Graphic

So, as with the recent evolution of corporate intranets, which used to be used mostly for information reference, the partner relationship software space has been adding capabilities for deeper and more meaningful engagement in recent years. The motivation for holding partners more closely than in the past is clear: The most recent Forrester Wave for PRM platforms notes that “partner loyalty is waning” and companies have to work significantly harder than in the past to create, maintain, and sustain effective relationships with their business partners.

Using Online Community To Operationally Improve Partnerships

While partner portals still need to have all the old capabilities as before, delivered via the latest digital touchpoints such as mobile, the issue has long been in realizing their full potential. As my colleague James Davidson recently pointed out, traditional portals still tend to underperform against expectations, despite several decades of industry investment in their functions and features.

Why is this? How can we get partner portals to provide the kind of quality engagement we need to maintain the strongest and most effective partnerships, while minimizing the overhead required to keep them healthy? Put simply, the business world has learned in recent years that for the best results, we must combine the technologies that we use to support transactions with the technologies we use to foster engagement. This allows improved engagement to directly drive transactional outcomes such as more new business prospects, higher sales, faster/better partner support, and lower related operational costs for partner services such as training and education, partner certification, content management, reward/loyalty programs, and so on.

By wrapping online community around partner relationship management services, a company can enable peer production at scale for all non-sensitive shared concerns. By socially enabling key elements of the partner relationship, companies can unleash the power of mass collaboration and crowdsourcing to enlist contributions en masse that — and here’s the magic — benefit everyone in the partner ecosystem. Examples include participatory knowledge bases, partner discussion forums, joint ideation/planning, competitive budgeting/funds management, and so on. Social features are applied where they make the most sense; proprietary features like deal registration don’t necessarily have to be exposed to the entire community.

The business value of community-powered partner management is real too: Top organizations like SAP, with their industry-leading SAP Community Network of both customers and business partners, have been using community-powered portals for over a decade now, famously leading to high performance outcomes for marketing, pre-sales, sales, operations, and support. SAP has reported a lead conversion improvement of 27% with a budget savings of 20% for their efforts in combining community and partner relationships.

Recently, we ourselves have been working closely with organizations such as Hitachi, Plex, Plus Relocation, and others to apply community to their partnership relationship challenges, winning the Partner Innovation Award for 2015 from Salesforce in the process. From this work so far, we’ve been able to discern several key insights:

  • The early experiments of combining PRM capabilities with community are just in their infancy. Just as social software has many benefits that organizations are only now starting to tap, the blending of PRM and online community is still nascent. The initial yet impressive benefits that early adopter organizations are seeing will likely deepen and improve significantly as the techniques evolve and improve.
  • Partners will actively help each other, taking much or even most of the load from the primary business. Just like with social customer care, most partners have a lot of incentive to mutually learn and help each other with hard-won knowledge and techniques. The hard data on how much partner support costs can be reduced is sobering: The data shows the communities can resolve support issues at 9% of the cost of traditional methods, yet most companies are notably underperforming in adopting these new techniques, often because they represent a very new way of working. Thus online communities plus partner engagement can literally lead to order of magnitude cost reductions. Because of the dramatic potential, community-based partner support is perhaps the primary business case.
  • Partner relationship management is a marathon, not a sprint. Companies looking to update or invest in partnership relationship resources only every few years are in for a surprise: Sustaining engagement — and thereby reaping the substantial transactional benefits including nearly 20% higher revenue from community members — requires real conversation and dialogue, including active community management. Gone are the days of a single point of investment in partnership management technologies, and companies should budget and plan for long-term efforts that continually evolve and have larger operational requirements.

The time appears ripe for a shake-up in the PRM space which, due to its more behind-closed-doors and exclusive nature, has been somewhat isolated until recently from the latest digital advances. However, as I’ve noted above, early pioneers are showing that there are significant additional benefits to be had if we combine new innovations in online engagement with our partner relationship management capabilities. To further strengthen this case, we are planning in 2016 to capture more rigorous data from those who have incorporated community with their partner management efforts. We hope to present this to the industry soon.

See How Communities Transform Partner Relationships in Manufacturing

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