Jay McBain (Forrester) addressing the channel during EDGE 2017
Channel and alliance leaders are known to be good jugglers. With the average partner program containing over 90 distinct components, encouraging channel growth while mediating conflict is a complex undertaking.
Partner relationship management (PRM) connects the dots between partner planning, recruitment, on-boarding, enablement, incentives, co-selling, co-marketing, and management.
Due to the growing number and types of partners, managing a channel program today has become less of a linear approach and more on-demand with automated workflows, personalisation, customisation and scalability.
As brands increasingly use channels, partnerships, and alliances as a primary vehicle to reach customers, managing these relationships in a consistent, predictable, and productive way is critical.
Strong partner programs that serve indirect routes-to-market will differentiate companies in the next decade, and channel pros need the right technologies to support and scale them, providing personalisation, automation and self-service at every interaction point.
Attempting to satisfy the permutations and combinations in the modern channel with spreadsheets and personnel has become a competitive disadvantage for many brands.
PRM platforms continue to mature, with focus on business intelligence, automation, and template-based workflows. As I have mentioned in the past, sales and marketing leaders have been transforming themselves into predictable, data-driven business units.
The CRM stage started in the 1990s and accelerated quickly a decade later with integrated cloud offerings. The marketing automation stage began to grow exponentially around 2008 and has reached critical mass in its first decade.
With 75 per cent of world trade flowing indirectly, brands are starting to invest in their indirect channels, partnerships, and alliances at the same level.
The third stage in sales and marketing transformation will be anchored around effective partner relationship management and through-channel marketing automation (TCMA).
Enabling partners of all types to leverage a single portal with access to enablement, on-boarding, incentives, engagement, co-selling and co-marketing is critical to driving a winning customer experience and improved partner experience.
Those brands that can balance their direct and indirect execution while ensuring consistent customer expectations and experience are having outsized success in the market. We are seeing that quick-start templates, personalisation and advanced analytics are key differentiators in the PRM market.
As legacy technology becomes outdated and less effective, the ability to scale a partner program includes the use of more specialised templates, improved business logic and workflows, personalisation at the company and individual level, and analytics that drive the next best action.
Here is a glimpse of the global PRM market:
- Twenty-three vendors offer some level of PRM functionality, driving US$350 million in pure software revenue per year. Another US$500 million is estimated in related technology services, including installation, implementation, integration, security, compliance, and business continuity. This does not include through-channel-related concierge, integration and consulting.
- Forrester predicts the PRM software market to grow to US$679 million by 2023, at a compound annual growth rate of 14.2 per cent.
- An additional US$971 million will be generated by 2023 in downstream technology services in this ecosystem. The broader PRM services market includes hundreds of channel-specific consultants, thousands of sales and marketing firms, tens of thousands of marketing digital agencies, systems integrators (SIs), and a complimentary ISV ecosystem that is adjacent to these platforms.
- The total PRM ecosystem, including software and services, is US$850 million today and predicted to be US$1.65 billion by 2023.
- PRM is a horizontal solution serving indirect channels in all 27 industries. The top industries by revenue are technology/telco (34 per cent); manufacturing (23 per cent); insurance (nine per cent); retail/franchising (six per cent); finance (six per cent); healthcare (six per cent); hospitality (four per cent); automotive (two per cent) and “other” (eight per cent).
- Over 12 million end-users log into these systems, with the average deal size around US$51,130 for these 23 vendors.
- An estimated 1,633 employees are fully dedicated to PRM software development, with tens of thousands of others making money on services wrapped around it. According to LinkedIn, these vendors had 3.2 per cent employee growth last year and 21.2 per cent in the past two years.
- This is a mature industry, with the average PRM solution launching 10 years ago and mostly US-based. Only five companies were founded outside the US.
Forrester is seeing numerous changes happen within channels across every industry and region of the world. From demographic shifts to new buyers emboldening new types of channels, the need to manage a growing and diverse set of partners and alliances is critical to a brand’s success.
The PRM market is growing because more executive teams, as well as channel, marketing, and sales professionals, are recognising the impact of third-party influencers in getting to new buyers.
They are placing trust in PRM providers to act as strategic partners, allowing them to broaden their reach and influence the partner journey in new ways.
Jay McBain is principal analyst of global channels at Forrester, specialising in research and advisory for global channels, alliances, and partnerships.
