Third part of our interview with Jay McBain, who leads Forrester's research and advisory for global channels, alliances, and partnerships. Part 3 of 3.
It's now clear how partnerships work in the tech industry. Going back to your argument that every company becomes a tech company, how do you see this ripples across other industries?
I'll answer in two ways. Yes, every company is becoming a tech company and I follow this, because I'm fascinated by it. You've got a forklift company, and there couldn't be anything more boring than forklifts, if you think about it they only do one thing - lift stuff. So you've got a forklift company now that has put in an Internet of Things sensor that senses where that machine is, what it's doing, how its running, but how much it's lifting. It shares that data with the construction crew, and the foreman and the architect in real-time. They're transforming the way they build, based on this data, among other pieces of data that they're getting. So this forklift company has changed the way that it works with customers now. They sit down and say "I used to sell this to you by the day, I used to sell it by the job site, etc., but I'm going to sell it to you by weight and we're going to be completely aligned, because you need to lift stuff and I sell something that lifts stuff. And what we're going to do is we're going to work together on the same customer journey, we're going to have the same outcome, the better you can lift and the better you can optimize that device is the better for us as well. And so we're going to work that way." So this forklift company now is setting up agreements with AWS and Google and Microsoft and they're thinking through the construction industry tech stack, just a 1000 companies competing in that tech stack, and how they integrate with all these thousand dashboards and everything else. And the millions of people in the construction industry are now looking at this as a key decision criterion. So that's them becoming a tech company.
On the other side of it, they have an ecosystem outside of tech. So when you buy forklifts on the job site, there's a number of things you go through as a customer, and I'm just going to make this up because I'm not much of an expert, but you could go to Home Depot and rent one of their forklifts. But the argument is that's more of a consumer forklift, you're going to want an industrial grade forklift. There's probably half a dozen companies that build them, a few distributors in your town and you're going to have some sort of contractual agreement but when you go through your first 68 percent of your [customer] journey to get a forklift, wherever you are in this whole picture, there's an ecosystem of influencers: "Well I would get this model not that model. I would get this brand, not this brand... and on peer networks and on social.... I mean everyone has opinion on everything. So who are those people through that first part of the journey, because that forklift manufacturer doesn't get into that 68% usually, but what are they reading, where do they go, and who are the super connectors that they listen to through that first part of the journey. Who's given the keynote at their big event, who's on the front cover of their magazine, who runs the podcast, who are all these people? For that forklift manufacturer those hundred super connectors are potential ecosystem partners, non-transacting, but heavy influencers. I would love to pay money to incent them to mention my name on their platform. I would love to give them some market development funds to go and spread the word, because they are the most connected people and the most people our buyers listen to. I would love - this is the "Kim Kardashian model"- I would love them to do an Instagram post with my forklift [joke]. But the fact is, these people are now your ecosystem. It's not just signing up Home Depot or whoever is going to be your local reseller, it's my journey, my customers changed and how am I going to influence the influencer? How am I going to influence my customer and drop my name seven times during that first 68%. So when they make vendor selection, 61% of the time not talking to anyone, they're going to make my decision. That's the new ecosystem approach.
It's a convergence basically what you've said, convergence of service economy, technology, influencers, and the new buyer journey.
And everyone is joining on this customer journey. The other thing is the journey never ends. So this forklift manufacturer now is on a subscription model - you pay per month, you pay for job, you pay per weight. Whatever it is, it's a subscription model, that's recurrent. So the customer journey just doesn't end when that building is built. They move into their next building, they move into the next... The people that rent forklifts are people that do this often. So they'll get into some subscription mode for this, and who helps retain that customer, who helps renew them, who helps upsell and cross-sell them on a bigger better forklift - are the people downstream who are now your partners. Your product needs to be installed, and implemented, and integrated. If it's a technology it needs to be secured, especially for IoT. It needs to be governed and compliant, it needs to have some sort of business continuity, who manages all this data. I could walk through dozens of examples of downstream opportunity for partners to go take advantage of it. And you, and every company out there by the way in every industry has an economic value For every dollar they sell in of their product that they make, there is X amount of dollars. I mentioned Salesforce was $4 and 14 cents, but that forklift manufacturer has an economic value there for other ecosystem partners to go grab. It comes at a certain margin, there's a certain demand for those services and all those other things that that forklift manufacturer can help their partners understand in the ecosystem. "You should do this this and this, because it is this margin and there's this much demand. So you should be the integration partners for forklifts on construction sites, and then as a business owner that's great for me, because you've done the work of telling me where I should take my business next. It's a fascinating story about a forklift manufacturer.
This company probably already hired their partnership or alliance manager. How would you advise them to learn about best practices of a partnerships? And what are the challenges and other characteristics of managing partnerships?
There's a couple of things and I write about this. I wrote a blog once, "So, you want to be a Channel Chief?" that's talking about their lives. The one challenge is 80% of companies..., I mentioned 75% of the world goes indirectly. So if I look across industry we've got pharmaceutical companies and banks and insurance companies and car dealers and I look at technology companies, but I look across all 27 industries, 80% of channels and dealers and agents and retailers, franchisees are siloed. They don't report into sales, they don't report into marketing, it's always and it could be 400 years now, they've always been their own little organization off to the side, that is basically a go-to-market department, but it has its own sales, marketing, finance operations of its own. So the chief of that, the Channel Chief has their own mini organization. Harvard Business Review wrote a nice piece that said "the best Channel Chiefs are actually looked more like CEOs". You don't want to take your direct selling VP, who's really good at their job and make him a Channel Chief - completely different skills. A good Channel Chief is juggling 90 parts of the program, conflict, trying to be a mediator and psychologist and there's a lot going on and they have direct reports across multi-disciplines - so it's looking like a CEO. Now with this new world, I'm telling you it's actually very challenging for them, because they're out on their own they don't get the investment, they don't have the skills. So non-transacting partners look more like affiliates, advocates, alliances and other types. When there's not a transaction, you need to attribute revenue to them somehow. Back to the Instagram post of Kim Kardashian - how do you attribute your sales to that? And it's the same difficult thing in B2B - it’s yeah, I've got this great influencer who has a great platform who's in early on that conversation, but how in my program do I measure their success? And if I'm going to invest money in them, that I talked about, incentivising them or doing marketing with them, I need now to attribute revenue because I have to go and report to the board how that works.
There's very few people in the channel today across industry that know anything about attribution, because they've now spent decades in resell channels. They know a lot about supply, distribution, wholesale, supply chain, how to make a re-sell channel gold-silver-bronze work. It's very linear and it's complicated, but most people get it after a long time doing this. When you introduce this whole new set, which could be a 100% or 80% of your new partners don't just come into this gold-silver-bronze model, they're now in this ecosystem. How do you measure it? How do you manage it? How do you report on it? How do you on-board them and find them and recruit them? How do you incentivise them and motivate them and drive loyalty? How do you co-sell and co-market? How do you do all these things? This is the key challenge they're having.
Where do people find you? I'm following you on LinkedIn, anywhere else?
I'm on every social network, you can follow me on LinkedIn, you can follow me on Twitter, you can follow me on Facebook if you want to see my kids and things like that. My blog on Forrester is a good thing to reference [in comments] and I share a lot of information. I tend to count everything. If you want to know who the 100 top super connectors in the channel globally are - I score it. I follow 5000 people to do this and I give you the top 100 by score. If you want to know who the top 100 women in the channel, events on women - I count it, I put it there. If you want to know who the 54 Channel magazines are or the 150 trade shows the 100 top channel consultants the 100 top LinkedIn groups. If you want to know any of this stuff - I publish it. So I keep a lot of lists and I don't keep anything private. If you want to go and just find out this I can save you a lot of research time. To start to figure out for yourself how to start designing your own ecosystem. Who are all the influencers of your customers that you need to influence to make sure that you're in that early part of the journey. And I try to help in that way.
I can definitely vouch that you're doing a great job and thank you for leading this ecosystem and channel globally into a new era.
Thank you so much