Originally published on ClickZ
The partnership economy is booming as more companies grasp the opportunity to grow their revenue while rising above the noise of traditional sales and marketing. Partnerships are now hotter than paid search, and on average, high-maturity partnership programs contribute 28% of overall revenue, according to Invest in Partnerships to Drive Growth and Competitive Advantage.
This marks a considerable evolution from the well-established affiliate model. Over time, enterprises saw the value in applying a traditional affiliate framework and cost-per-acquisition (CPA) model to other kinds of relationships. As traditional affiliates became more transactional, newer, “nontraditional” partnerships began delivering additional value, leading to deep, robust relationships between originating brand and partner.
In other words, the concept has reached a point where the primary model is indeed a partnership where both companies receive value by working together, as opposed to one where a partner is confined to a marketing program and compensated for being the last click before a conversion. Even the CPA model has shifted as companies discover new ways to work together and compensate one another for the value they create.
Welcome to the world of partnerships
This evolution in partnerships has created a flourishing Partnership EconomyTM, bringing new opportunities for companies to align themselves with influencers, mobile apps, media houses, other strategic B2B relationships, charitable causes, and many other avenues, along with the traditional content and affiliate partnerships.
The shift to this new era requires management strategies that are dramatically different from the concept of “partner marketing.” These new forms of partnerships have complete, unique life cycles that go well beyond the purview of marketing and its associated practices, like media buying. To fully succeed in the partnership space, enterprises need to think beyond “partner marketing” so that they have the tools and solutions to manage these life cycles efficiently and effectively.
Farewell to partner marketing
“Partner marketing” was the category name that the affiliate space embraced amid the rise of nontraditional partners outside of affiliate. In fact, in some of the most mature programs, what was once considered “nontraditional” now constitutes the majority of partnerships, signaling that they are the new normal.
Regardless, the rise of this economy has created a need for new ways of thinking, showing that the concept of “partner marketing” is flawed because:
- “Partner marketing” does its practitioners an injustice — the range of activities they orchestrate goes well beyond traditional marketing activities. Partnership professionals need to develop and hone skill sets around a range of activities that span across sales, enablement, finance, legal, business development, and operations.
- The term “partner marketing” insinuates that it is a subcategory of marketing — just another marketing channel similar to paid search, display, email, TV, and print. But “partnerships” is not even really marketing at all. “Partnerships” is its own channel, one that is potentially larger than paid search. According to Wolfgang Digital’s 2019 KPI report, the average retailer generates about 20% of its revenue from paid search, but partnerships are driving more than 30% of overall revenue for some companies. For organizations that have achieved a high level of partnership maturity, revenue driven from the partnership channel can rival that of the entire sales or marketing channels.
- Perhaps most importantly, the nature of the customer journey has changed. A striking number of millennials (84%) distrust advertising — usually one of the largest expenditures of a marketing department. Pushing brand messages to a consumer just isn’t as effective anymore, and it shouldn’t be the way the partnership channel is run. A consumer may hear about a product from a friend’s recommendation. They may do Google searches and read articles from media sources they respect. They may trust a recommendation from a trusted social influencer when considering the pros and cons of the product. The millennials we mentioned? They are 247% more likely to be influenced by blogs or social networking sites, according to Jeff Fromm and Christie Garton’s book, Marketing to Millennials.
Managing partnerships is not traditional marketing: it may build awareness through ambassador partnerships, educate through content partnerships and facilitate consumer consideration through their influencer partnerships. Running a partnership channel through traditional push-based marketing techniques simply won’t work with today’s savvy consumer who prefers to pull information by doing their own research.
How to manage partners in this new economy
Effectively managing these new partner types requires a paradigm shift in three distinct ways:
1. Organizational structure
Historically, organizations have assigned different teams to handle the relationships that are now categorized as partnerships. The business development, social, PR, acquisition, and affiliate teams may all touch some aspect of the wider partnership world, resulting in tightly defined siloes that make it much harder to get a complete view of a partnership program’s contributions, successes, or shortcomings.
These separate teams manage their relationships manually and rarely share a unified process, leading to confusion, poor internal communication, and possibly even damaged relationships with the partners. In time, these problems will kill any attempts at scale and stymie the potential of the partnerships to spur growth.
Partnerships provide much more value for a company when they are organized and managed by a central, growth-oriented team. This allows for easier management, via standardized processes and automated technology, as well as a clear view into how partnerships are actually driving growth. The reason that high-maturity programs can say that partnerships contribute 28% of revenue or more is because they have a unified view into how their partnerships are attracting new customers and influencing conversions. That’s only possible with unified management.
2. Transcend beyond marketing
Partnerships touch so many aspects of a business that confining them to the marketing department limits their potential. Don’t get us wrong – collaboration with the marketing team is still essential to a partnership team’s success, but partnership professionals should recognize that effective partnership management must transcend marketing to include every facet of a business that a partner touches, including sales management, learning and enablement, business development, operations, finance, and legal.
The partnership team is, after all, responsible for managing the entire partner life cycle, from inception (when they’re discovering and recruiting all sorts of partners) to close (when they’re engaging, monitoring, and optimizing their relationship with each partner).
3. Shift mental mindsets
Partnerships need to break away from the traditional marketing mindset of pushing brand messaging to skeptical audiences. Google has made it remarkably easy for consumers to form all sorts of new, trusted relationships with other companies, groups, individual subject matter experts, and media sources. A single company cannot have its message appear everywhere, resonating with everyone, in the ever-growing complex expanse of the digital world, but forming effective partnerships allow them to carry an outsized digital footprint that facilitates the consumer journey through touchpoints they trust. To run an effective partnership channel, partnership leaders need to form relationships with all sorts of trusted advocates far beyond the walls of their organization — partners that can more effectively address the informational and emotional needs of different niches and micro-segments of consumers at every moment of their diverse journeys.
Hello, partnership automation
So what’s the best path forward? The new paradigm of partnerships isn’t built around rewarding whomever delivers the last click before a conversion, but around introducing, influencing, or persuading a customer. And to be clear, this isn’t an ad — this is a person or business that puts themselves behind a product or service that they believe in, and then recommends to their customers or audience to do business. These different actions mean that success is measured through other metrics and touchpoints that help facilitate conversions.
The resulting new life cycles require contracts that offer participation bonuses, tracking that handles new metrics like customer lifetime value or verified app installs (what Impact has termed as a CPI+ model™ or rewarding partners who drive a mobile post-install conversion event), and an engagement strategy that maintains active partner participation and productivity. Implementing and managing these steps across hundreds of partners of various kinds can feel daunting.
Good news — there’s a lifeline
Fear not, there are solutions. Partnership automation is software that automates the discovery and recruitment, contracting and payout, tracking, engagement, protection and monitoring, and optimization stages of different types of partnership life cycles. With it, a business can much more easily scale its partnership programs.
Fully leveraging the partnership opportunity and rising above the noise of traditional advertising and sales requires enterprises to fully devote themselves to a new de-siloed, cross-functional set of responsibilities, where partnerships transcend marketing.
While unification under a single “partnerships” umbrella should be considered the gold standard for a successful program, companies that can’t immediately re-organize can take a step in the right direction by unifying processes, setting up collaborative mechanisms, and getting their different teams to use the same platform.
Partnership automation solutions allow businesses to do this, streamlining partnership life cycle management across all varieties of partnerships, including affiliates, influencers, strategic B2B partnerships, and others. This speeds up their maturity curve, and puts these companies on the fast track to revenue growth through the wide variety of partnerships that are now available to them.