Being the biggest customer is not enough anymore. Strategic partnerships can last for years — even decades. Effective management of these relationships lead to lower costs, faster time to market, and improved products and services.
Historically, being the biggest customer has meant leverage for the buyer and potential upsell opportunities for the vendor — but this is a double-edged sword and can actually imperil strategic partnerships. Financial incentive is a powerful tool, but it should not be the only one. Often, upping investment with a vendor purely to gain influence is costly and ultimately inefficient, and can easily lead to “nickeling and diming” as well. Soft influence is undoubtedly cheaper and arguably more effective in the long run: Buyers need to complement their financial backing with better communication, smarter metrics, aligned roadmaps, and inspired staff.
A sale is only a beginning: what IT vendors say about strategic partnerships
“Nothing happens until someone sells something” is an age-old business mantra. In the hypercompetitive world of B2B sales to technology leaders, however, the saying should be “nothing really happens until someone sells more.”
B2B sales rely heavily on cross-selling and upselling into existing accounts: Going deep is ultimately more profitable than simply going wide, in the long run. Vendors that sustain profitable growth paths are usually more disciplined in terms of adding value, articulating the benefits, and being a trusted advisor. It is therefore crucial that IT vendors learn how to elevate normal relationships to strategic partnerships.
What, then, do vendors look for in a strategic partnership? How do they identify strategic buyers?
Not surprisingly, long-term revenue generation and large work volume come first. “We have identified several clients we identify as strategic,” says R. Arun Kumar, former senior vice president, Application Services, Capgemini North America, who led a strategic deal pursuit team. (Kumar is now senior vice president, chief client officer at Sogeti USA, a Capgemini subsidiary.) “[With strategic accounts] we have had long-term relationships, [we] span multiple services, and [have] senior relationships at board and C-levels, driving our value creation to the next level.”
Strategic partnerships also make renewals and bidding on new projects easier. “In an RFP process,” Kumar adds, “if we are strategic partners we will usually have a view before RFPs come out.”
Jonathan Steinberg, vice president, Hybrid IT Services, CenturyLink, says he would like to see his company go through more deals where the clients do not go through RFP at all, “or [if the clients are going through RFPs] we can help scope their particular topics. If this happens, the RFP will have more strategic clarity, giving us some more insight to better help the client.”
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