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Increasing Profitability For Your Partner Business

- November 22, 2016 - 0 Comments

Wow! A goldmine of information was shared at Partner Summit earlier this month.  I’ve been reviewing some of the content on SalesConnect and have really been impressed by the level of transparency about Cisco’s direction and how partners can make the most of working with us.

I was particularly struck by some of the details shared by Marc Surplus and Sandra Flinders in their impact session around how our most profitable partners perform.  Improving the bottom line means more money for both investment and reward, for business owners, their managers and all employees.  So here are my five key takeaways on how you can create a more profitable business:

  • A balanced portfolio –it’s no longer enough to be a successful reseller, you need your revenues to be split evenly across three strands because the margins, particularly in Professional Consulting Services, are significantly higher:
    1. Cisco products and software
    2. Cisco-related professional consulting services
    3. Cisco-related support services, cloud services and managed services

So if your business does not fit the profile of 30-40% of revenue coming from each of these three strands, you need to look at how you can up-weight sales in the underperforming streams.

  • Lead with Security – Security has a better profit percentage and generates the most Services revenue and the most add-on revenue (products and services). We’ve seen a lot of security breaches recently in the media and keeping secure is something that keeps CEOs awake at night.  Cisco has the widest and best range of services for before, during and after a breach.  Even better, in these days of a shift of budget towards the line of business, Security is still very much the preserve of our traditional IT buyers. It’s a relatively easier, more profitable architecture – so why not lead with Security too?
  • Learn to sell to the line of business buyer – while Security plays well in support of corporate IT customers, and these customers are still very important influencers, IT investments are increasingly being initiated from other departments. To capture this spend you need to invest in training your sales teams to move their approach away from the technical sell and towards achieving business outcomes. Our most profitable partners are achieving nearly 50% of their sales from aggressively targeting line-of-business buyers.  How close is your business to achieving a 50/50 split?
  • Capture recurring revenues – influenced by new technologies and educated line-of-business buyers, there is less interest overall from customers in large capital sales. Our most profitable partners are achieving at least 40% of their Cisco practice revenues from cloud, support, software licenses and other recurring sales. Like training your sales teams to focus on selling business outcomes, you also need to help them re-frame their thinking from capex to opex revenues.  This may also require you to look at how you pay your sales people.  In this new, digitized world, the ability to spot and close opex-based sales that result in recurring revenues is critical to your long-term viability as a business.
  • (Land), Adopt, Expand, Renew – historically the focus has been on landing new sales, but there is more profit in selling professional services, support services, software, consulting services and security throughout the customer’s business and the lifecycle of hardware.

The overall theme across all of these is that you need to ensure your organization is orientated beyond merely selling hardware, not only for profitability now but for the long term health of your partner business.  This may be hard for more established firms to achieve – believe me, Cisco recognizes that challenge for itself.  That’s why, for Partner Plus members, we have introduced a 1% bonus on both your midmarket products AND services sales on top of the regular incentive when you meet or exceed your quarterly targets.  Use this to further invest in upskilling your sales people and systems engineers to leverage product sales and identify a plethora of possible services and software opportunities.

So the key to the future is a balanced portfolio – how well is your business performing? Please let me know in the comment section below.

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