“It’s Up to Us”: How Alliance Professionals Can Solve the Partner Compensation Conundrum

In the last few issues of our magazine, Strategic Alliance Quarterly, my ASAP colleague Jon Lavietes has taken readers on several trips into the wonderful world of tech partnering—a fluid, constantly changing realm where the business models, the ways in which companies recruit partners and get them up to speed, and perhaps most important, the means by which partners are compensated are all in a state of flux.

These forays have included “Self-Guided Tours in Partnerland” (Q3 2021), “What’s Happened to Partner Compensation?” (Q4 2021), and “Treating Your Partners Like Customers” (Q1 2022). Taken together, they paint a picture of a tech partnering scene that’s moving in multiple directions at supersonic—or maybe hyperscale—rates. It’s all happening so fast that even those who are right in the middle of it tend to admit that “everyone’s still trying to figure it out.”

That was certainly the case in a recent ASAP webinar as well. “Subscription Models Rock Tech Partnering and Expand the Customer Journey” featured two tech partnering insiders who have been monitoring the changes in their world and actively seeking to position their companies and clients—and alliance professionals in general—so as to benefit from what’s going on, and what’s coming.

With Lavietes moderating, panelists Lorin Coles, CEO and managing director of Alliancesphere, and Jared Quoyeser, US director of global and national system integrators at Intel, guided webinar viewers through the twists and turns of a journey that has been affected by subscription-based business models, everything-as-a-service (XaaS), and the shift in dominance from the original equipment manufacturers (OEMs) of yesteryear to today’s major cloud providers, or hyperscalers.

It’s a lot to take in, for sure.

You Tell Me That It’s Evolution

“I see it as super exciting,” said Quoyeser. “The evolution is moving super fast. These consumption models are going to continue to evolve. So what is the value proposition across the board?”

The answer to that question may look different for a company like Intel versus its many and diverse partners. And that’s where both Quoyeser and Coles argued that alliance management must step in and step up, bridging and facilitating what Quoyeser termed the “value exchange” between their companies and their partners.

Coles urged alliance professionals to first understand, and then support, their companies’ business models and internal functions—including product, services, customer success, marketing, and sales—and to help senior executives like CROs who are “deer in the headlights” figure out how to thrive and prosper in times of change.

“As alliance professionals, we have seen a lot of this change going on,” Coles said. “We have wanted to be integrated into corporate strategy and last-mile execution—to have alliances be ‘baked in’ versus ‘bolted on.’ There’s never been a better opportunity to integrate alliances into every aspect of the business. Alliance teams are sometimes too passive, waiting for someone else to tell them what to do. But they”—meaning senior leadership and heads of functions—“need us more than ever before.”

Tough Nuts and Blurry Lines

The reason “they” increasingly need “us” is that things are not so clear cut anymore. In a world of marketplaces and ecosystems and monthly subscriptions, where “at any moment a customer can leave, so you have to create the greatest possible customer—and partner—experience,” according to Coles, the “old ways” just won’t do, and companies—and their alliance teams—must get “very creative and smart.”

Among other things, understanding the different types of partners and what their business models entail has become a tougher nut to crack.

“It used to be easier to segment partners,” Quoyeser acknowledged. “The lines are blurry across the board.” Currently, he said, Intel segments its partners into three main types:

• Volume and velocity
• Incubation and transformation
• Mature relationships

Based on what those partners do, what impact they have on Intel, and how they make their money, he said, “How you engage is different. It’s been a very active discussion and feedback loop over the past few years.”

“The Cheese Has Moved”

“Value exchange is the key,” Coles emphasized. “We’re looking for those moments of truth between you and your partners, between you and the ecosystem. It’s about driving net new customers, and how to help customers use, not just renew, licenses, to align with customer success. To be frank, I’m not seeing enough of that being done in the industry.”

Of course, not everything will be coming up roses for all partners equally. Coles mentioned the recent announcement by Microsoft that it has created a new algorithm for how it treats and compensates partners, which changes the game, no doubt, and will reward some more than others.

“A lot of organizations’ intentions [with partners] are really good, but partners may perceive that they’re competing with them,” he said. “The cheese has moved, and the train has left the station.”

As the World Churns

Some of this movement certainly comes from the Microsofts of the world—as well as Google, AWS, Salesforce, et al.—and some of it stems from how Wall Street analysts look at companies in the tech space these days, closely scrutinizing both subscription renewal and reduction in customer churn.

“The market really wants this new approach, and customers do too,” said Coles. “It’s an open, hybrid, multicloud world. Certain partners are not going to like it [because] it will not benefit them. These are new things—this stuff did not exist five years ago. There will be backlash, but it’s all about the North Star of the customer.”

There’s probably no way to keep all partners happy or make all of them equally successful. And every company, from the biggest to the smallest, will have to find its footing and its niche or niches in an increasingly diverse, ecosystem world.

“I don’t think anyone has the answer,” said Quoyeser. The goal, he said, should be to identify and define “the sweet spot for value exchange, which is not always monetary.” That could mean gaining a partner’s subject matter expertise, he said, or access to a particular market.

“You have to engage with intent, and engage often, around value exchange,” he added. “It’s challenging times, but exciting times. It’s not having all the answers, but being intellectually curious. I see it as an opportunity, a glass half full. We’ve got to evolve moving forward.”

From Deer in the Headlights to Alliances in the Spotlight

Finally, Coles urged that alliance strategy be directly yoked to corporate strategy—and that alliance professionals take the giant leap forward to lead their organizations into this uncertain, fluid future.

“We need an economic model that makes sense,” he said. “It’s very robust and complex. It has to be integrated with your routes to market—all of this has to be integrated and worked on together. Alliance leadership needs to step up, play that leading role—you will be well received. I see it, but not as much as I’d like to. I’d like us to play a bigger role. Sales and HR don’t have the answers—they’re looking to us. Alliance managers need to connect the dots of partnering and tell the build-buy-partner story. Executives need to be ‘alliance educated.’

“I can’t think of a more exciting time to be in the tech space. But for different reasons, we don’t always step up. It’s up to us, nobody else. Alliance teams and leaders must boldly step up and lead [their] organizations, not wait. Understand the functional side of your business—product, sales, etc.—so you can help them succeed. At the end of the day, if you get lost, it’s all about the customer, and the value exchange. If you do that, I think we’re all going to have great careers, and a vibrant community.”