March 2011 Feature

How One Company Exceeds Revenue Expectations by Implementing an Effective Partner Segmentation Strategy

by Anna Johnson

Partner segmentation can be a powerful strategy to organize and grow your partner program. For channel marketers, segmenting can be an effective way to standardize how to engage with partners. And for partners, segmenting provides transparency and a roadmap to grow their offerings to meet the demands of the market.

However, segmenting your partner program need not be too fragmented or overly thought out. Designing your segmentation strategies should consider the go-to-market model for each of your partners (and the customers they attract), as well as the potential they offer as individual contributors. Channel marketers face a danger in making the model too complex, and the subtleties between each segment delivers diminishing returns with an extended effort to tailor programs to address the unique needs of each partner. Find the right balance between simplicity and complexity and soon your customers will be singing the praises of your partner program. And isn’t that what this exercise is all about?

To find out how one company does it, Channel Management Insights sat down with Dan Sibille, the Director of Americas Channels for Logitech’s LifeSize division to learn how a year-old partner program used segmentation as an important strategy to sell and deliver its high definition communication products to customers all over the world.

About LifeSize

LifeSize Communications was founded in 2003 as the first company to develop and deliver high definition video communication products, and was acquired by Logitech in 2009. The award-winning high definition video products are used in a variety of industries and settings including education, judicial, and healthcare. Since the acquisition, LifeSize has become one of the fastest growing divisions at Logitech, with over 15,000 customers and a network of channel partners reaching more than 80 countries. With sales exceeding expectations in 2010, Sibille attributes a big part of its growth to a new value-based partner program with segmentation as a key component.

The Challenge

By 2009, it was clear that LifeSize’s revenue-based channel program needed a facelift.  In order to meet the growing demand of high definition video products in countries around the world, LifeSize needed better ways to streamline the way customers purchased and adopted LifeSize video products. In addition to the growing demand for products, customers were expecting a new level of expertise during the buying and adoption process that the channel was ill-equipped to handle.

Many times corporations make the mistake of introducing segmentation as a way to manage the channel without taking into consideration the positive or negative effects it has on the customer buying experience. LifeSize’s approach to their channel program is a bit more novel. “The customer experience is always in the front of our mind when we’re making decisions about the channel,” says Sibille. “When we considered changes to our partner program it was because the customer and market necessitated the need for change. Our primary goal was to revamp our partner program to improve the customer buying experience and as a result everyone involved in the selling process would reap the financial benefits.”

The legacy partner program was an informal revenue-based program that provided discounts to participating partners and training. It was a one-size-fits-all program with no tiers, deal registration, certification, or access to MDF. Since one of the key challenges LifeSize needed to address was the demand for more experts during the buying and adoption process, it made sense to make certification a component of the new partner program. However, how to introduce certification became a little bit tricky. “Not all partners are the same and not all customers require the same amount of expertise,” says Sibille. “So making all partners go through the hoops of a comprehensive certification program didn’t make sense. That’s when we decided to implement a tiered program to deliver the different types of training and certification options.” By 2009, the outdated one-size-fits-all partner program was about to be transformed…

New Program

Within a few months, LifeSize launched its new partner program and introduced not one, not two, but three tiers to effectively engage all types of partners in April 2010. Some would argue that going from one-size-fits-all to a multi-tiered partner program adds complexity. “Not true,” says Sibille. “When we had the one-size-fits-all program, it was hard to know which partners needed the most support and which didn’t. With the new program in place we became much smarter in allocating just the right amount of support and investments at just the right time.” LifeSize kept things simple when they rolled out the program to existing partners by making the objectives and expectations clear at every level of the new tiered program. “That way, every partner knows what’s expected of him and they have a clear path to advance from one level to another,” concluded Sibille.

Depending on the investment a partner makes as well as the program level they choose, LifeSize meets the partner’s commitment with equal fervor by providing sales certifications, training, discounts on demo equipment, and MDF, to name just a few program components. Even at the base level (Registered Video Partner), achieving partner authorization ensures that every partner is able to position, sell, design, and install LifeSize solutions. This requirement not only helps partners to be successful no matter what tier they choose but also guarantees a better buying experience for every prospective LifeSize customer.

Why Go To the Pyramids When You Can See Diamonds?

When LifeSize architected the new partner program, their intention was to avoid the archetype pyramid where the top tier was reserved for just a few partners, the second tier was a bit larger in numbers than the top tier, and the lowest tier was reserved for the masses. Instead, it was important to aim for a tiered program that would reflect a diamond image where the largest population was in the middle tier, not the bottom tier.  “About 40% of our partners are in the middle tier (professional category) and almost 20% are qualified as experts. That leaves a little more than 40% as registered partners – our bottom tier. We haven’t achieved our perfect diamond yet but I’m encouraged we’ll get there soon because our professional partners are our fastest growing segment,” says Sibille optimistically.

Using the diamond analogy as a measurement tool ensures that the whole channel team is working towards the same goal in supporting partners at every level. It also encourages LifeSize to evaluate its partners and program levels on a quarterly basis to promote partners that are doing well, help partners who show signs of slipping, or purge the partners that have fallen off the radar. By conducting an evaluation every quarter, LifeSize ensures the bulk of their partners are best prepared to sell and support a variety of different prospects. Partners benefit because LifeSize is touching them several times during the year to make sure they have the support they need to be successful.

The Results Are In

Customers are already seeing the benefits of LifeSize’s young partner program. “Prior to implementation we used to see a big bottleneck during the sales cycle,” says Sibille. “It was apparent that our partners couldn’t handle the demand or answer the more complex technical questions about the products.” With the new partner program in place, more partners are signing up every day. Once on board, authorized partners are prepared more so than before to answer customer questions about the technology and services related to LifeSize’s growing product line. By segmenting the partner base, LifeSize is able to deliver just the right amount of support, certifications, and training to the partner depending on their level of commitment. “We don’t see the bottleneck anymore,” says Sibille. “Instead we see a seamless and improved sales flow between customer, partner, and corporate.” Not very many companies have the benefit of growing during an economic downturn, but by introducing a new partner program with segmentation as a key component, LifeSize is able to turn a spark into a flame.