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Can PRM power B2B connectivity?

25th May 2007
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By Louise Druce, staff writer

Partner relationship management (PRM) is certainly not a new concept in the B2B world. But because its take up has remained relatively stagnant in recent years, it seems to have fallen off the business radar.

Even Gartner saw so little growth in the market it decided to stop tracking PRM in its own right and throw it in with the CRM lot. However, as Tiffani Bova, a research director with the analyst company points out, it would be foolish to dismiss its potential just yet.

“If you leverage the capabilities of the PRM tool you have the ability to segment your partners more effectively, which in turn can result in more appropriate communication with your partner. You know more about your partner – what are their certifications, what products they have been selling, how much they have been selling, what geography they cover and their market segments,” she argues.

“Take It recommends products to you based on what you’ve bought and suggests others you might like to buy. From a partner perspective, none of that happens. E-mails and newsletters [about products] are so impersonal. PRM allows you a much more intimate relationship with your partner.”

It’s a sentiment echoed by PRM expert Stephen Dent, founder of the Partnership Continuum, who believes it is very much an emerging field driven by a need to move the focus away from short-term transactions. “More companies are becoming aware of the power of connectivity and the need for more effective partnering relationships,” he says.

However, he points out: “Growing a B2B relationship into a partnership necessitates people connecting in ways that are often contradictory to the corporate cultures that exist in both organisations. Building an effective partnering relationship requires that people have the capability to understand each other’s vision and then help each other to move towards that vision.”

Defining the relationship

In a recent white paper, Oracle defined PRM as “a business strategy designed to automate and streamline business processes between brand owners and their partners, enabling them to work collaboratively to increase revenues, reduce partner channel costs, and improve customer satisfaction. An enterprise-wide global partner management software platform provides an environment in which the brand owner and partners within the partner network are able to communicate and collaborate in real time”.

It adds that although technology is critical to an effective PRM solution, a large portion of a successful initiative centres on designing, planning and developing a customer-centric strategy for collaborating with partners and implementing accompanying best practices and processes. These components contribute to the formation of a comprehensive PRM solution that is focused on improving the way a brand owner enables its partners in their customer interactions.

The reason PRM is often lumped together with CRM is because they can complement each other as a comprehensive customer strategy. But, as Dent explains, they really need to be viewed as separate entities. “CRM tends to focus on understanding customer buying patterns and increasing sales and customer loyalty. The understanding is based on data from previous transactional history with the business and from information around customer experience with a business,” he says.

"More companies are becoming aware of the power of connectivity and the need for more effective partnering relationships." Stephen Dent, founder of the Partnership Continuum

“PRM is a way of interacting with another business within a partnering relationship context. The relationship itself, and the mutually beneficial business objectives the organisations can accomplish together because of their partnering approach, is the focus of PRM. B2B partners are invested in creating a mutually successful outcome in their relationship. The stakes are often higher in PRM than CRM.”

Although most of the PRM examples Dent has seen mimic its CRM cousin, designed around collecting data on performance. “This methodology fails to take advantage of the relationship to enhance the strategic potential of both businesses,” he continues.

“When partners do meet face to face, the time is usually spent on solving issues and reviewing performance indexes. Very little time is spent on thinking about the future and how the partners wish to position themselves in the marketplace. Often, this is because they have focused on the transactional relationship and not on the strategic benefits of partnering. It is far easier for people to focus on transactions, and it takes less time and brainpower.”

The perfect couple

When PRM is successfully implemented, Dent sees expanded resources as a primary benefit. This isn’t in the traditional sense of increased manufacturing capabilities or distribution, for example, but rather information and knowledge. With open disclosure and trust between companies, the shared information and collaboration can lead to more innovation and creativity.

He is currently working with two large healthcare providers in the US that have formed a 10-year relationship. They had a contract in place but Dent says the relationship was not delivering on expectation fast enough. “When we delved deeper into the relationship it was amazing what each party did not understand about that partnership, even internally within the organisation,” he explains.

“Once we were able to clarify the objectives internally it became easier to build on the commonalities that each party brought to the relationship. Helping them create a mutual strategic framework was the first step. Once they understood and agreed the vision, mission and strategic directions of the relationship they were able to stop the conflict and focus on the objectives.”

Ultimately, Bova highlights, successful PRM boils down to the end result that every company strives for: improved customer satisfaction. Customers feel more comfortable knowing what they can buy and communication is more targeted to their needs, which brings about effective lifecycle management.

Making a connection

Of course, PRM isn’t without its downside. Bova admits that, in most cases, the volume of data organisations hold makes it difficult to access everything the PRM tools need to work effectively. Then there is the fact that the expense and huge undertaking to clean up all the records to make CRM more efficient or even an option puts PRM immediately on a back footing.

Also, says Dent, businesses need to understand that PRM isn’t just about technology, it’s about dealing with people. “The biggest pitfall I have witnessed is the inability of a business to move beyond a transactional relationship. When an organisation reduces its business partners to transactions it dehumanises those partners. When people feel dehumanised, they do not perform at their highest level,” he emphasises.

“The key to improving a B2B relationship is to spend time making human connections. Building mutual trust and agreeing on where both partners want the relationship to drive the business is critical. Enabling people to learn the interpersonal skills necessary to achieve this objective is crucial to success.”

"Go into PRM with the understanding that you have to be committed to gathering all the appropriate data and getting all the internal organisations to agree its importance." Tiffani Bova, research director, Gartner

Bova offers this advice to companies who may be considering implementing PRM: “Go into it with the understanding that you have to be committed to gathering all the appropriate data and getting all the internal organisations to agree its importance. Capture as much partner information as you can and use the tool to better segment, communicate and sell to your existing partner base.”

Dent recommends starting with identifying the nature of the partnership you are looking for and understanding its limitations. Next, companies need to understand their internal needs and how business partners are expected to satisfy them. They then need to make sure there is a cultural fit and that management structures, philosophies, decision-making styles around handling challenges and opportunities, communication mechanisms and reward structures are aligned to achieving objectives.

The last step is to create a mutual, strategic framework. Not only does this provide direction for the relationship but it also builds commitment between both parties to meet the agreed upon objectives.

The underlying foundation, however, is mutual trust in the partnership. “A crucial key to success is helping people to understand the importance of building and sustaining trust in the relationship,” Dent adds. “Information flow is based on trust. If you cannot build trusting relationships with your strategic partners, you may as well not have them.”

Read more features, practical case studies and white papers about B2B client relationships.

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