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The partnership challenge

Thanks to reader and podcast listener Anthony E. for writing (and calling) in with this message. Anthony has a question about setting up a partnership marketing arrangement with someone who is acquiring clients but can’t provide all of the services they need.

He goes on to ask in more detail:

Jane’s already doing webinars and has access to an audience that I don’t have, but would like to have access to. We’ve both agreed that we have complementary skills. For instance, I can help with many of the mindset issues. Jane would then be helping clients with their sales process. So, how to structure any arrangements – whose clients are they?

I’ll expand on this in coming weeks in a full podcast episode, but the thrust of my point of view is that the referrer acquiring the clients is the one who has the leverage. For the purpose of this article, I’ll call the originator of the client relationship “channel owner,” and I’ll call the person seeking the referral “channel partner” since this type of arrangement is typically referred to as channel sales.

Channel owners have the acquisition channel: if your partner has the ability to drive client acquisition, you’ll always have relatively less leverage in whatever agreement you strike with them. Getting clients is typically a primary consideration and challenge for consultants, including the channel parter, otherwise they wouldn’t be seeking a partnership in the first place.

Channel owners have the social capital: the referrer has both the traffic source and the ability to convert, meaning they have obvious advantages in driving awareness and building trust. Perhaps it’s the trust that’s the most valuable asset here. Referrals can only happen once social capital is built, which is then conferred through referral – that’s why referrals are so effective. As a result, clients will most likely remain loyal to channel owners, not partners.

Owners are the ones making the referral: closely related to the last point, but slightly different in that the channel owner has de facto authority that partners don’t have based on the power dynamics of the relationship.

I’d challenge you to rethink “ownership” – for what purpose does a decision need to be made about ownership if there’s no overlap between your service offerings?

Based on the nature of the question, this sounds like a channel partnership. The key strategy to pursue with channel sales is to aggregate enough owners so you significantly de-risk your exposure to any single channel owner.

In other words, if the referrer here suddenly shuts off the referrals or loses her ability to bring in new clients in the first place, you’re screwed. On the other hand, if you’re able to aggregate enough referrers to diversify your lead generation through the lead generation efforts of others, you’re not only derisking your exposure to any single channel, you’re also increasing your negotiation power with every potential partner, as well as every existing partner.

If you don’t aggregate, you begin to look more like an employee or contractor, beholden to the whims of the referrer.