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Five Strategies for Partnering with Larger Companies

Scot Wingo, President and CEO, ChannelAdvisor Corporation

When we started ChannelAdvisor five years ago, we knew we wanted to help retailers from small to large sell online via channels like eBay, Google, and Yahoo! As part of that, we also realized that our relationship with those 800-pound gorillas of e-commerce would be critical.

Over the years we've experimented. And we have the bumps and bruises to show from our experiences of being the little tiny mouse out there dancing with these big elephants. Instead of a long story of our experiences, which may or may not be readily applicable to other entrepreneurs' situations, I thought it would be useful to boil down some strategies we've found that have both worked well for us over the years and also are applicable to other industries than e-commerce.

Strategy One — Get to Know Your Elephant

Probably the smartest thing we've done over the years is rooted in common sense but hard to keep up with. We spend countless hours researching our various partners. For example, we track and follow everything that comes out about eBay. Stock analyst reports, quarterly reports, press releases, company town halls, conference calls with stock analysts, and customer meetings. If they have something, we have someone there.

This deep knowledge of the partner's business helps you on many levels:

  • Every large corporation has its own "lingo" — learn it, and use it when interacting with the partner. For example, eBay uses the term
  • GMV — Gross Merchandise Value — to represent the value of the transactions going through their marketplace. Imagine the impact of meeting a senior executive and stating: "We can help them with your declining growth in GMV. In fact we believe it's a core-auction problem having to do with a mix of conversion-rates and ASP." This may sound like Klingon to the average reader, but to someone inside eBay, we're both speaking Klingon.
  • Who else is partnered with the elephant? You maybe able to leverage a one to two degree separation for a connection.
  • What is the partners financial situation — is there an angle there you can play up? For example, "I noticed your sales in the United
  • Kingdom were lagging, and we are actually growing 80 percent y/y there; maybe we could help?"

At the end of the day, partnering can be very much like sales. The more armed with information you are going into a situation, the smarter you will be and more likely to seal the deal.

Strategy Two — Remember Your Customer

Frequently, when dancing with elephants, they like to throw their weight around as you can imagine. Occasionally you may find yourself in a situation where the partner wants X, but you know that Y is what the customer needs. X and Y in this example are of course diametrically opposed.

Whenever you find yourself in this situation it's easy to think that by doing X, you will garn favor with the Elephant and what can it hurt really? Heck, maybe the customer won't even know.

Wrong! No matter what the Elephant says, does, or promises, never put a partner in front of your customer. If you do, a) they will find out and b) you probably won't have a customer for long. Remember, the customer pays your paycheck and the partner may somehow be involved in there, but they aren't as important as the customer.

Strategy Three — Elephants Can Smother You

Sometimes you'll get an Elephant so interested in your business they will overrun you and smother you with their attention. Typically, Elephant companies have hundreds if not thousands of employees in all kinds of departments and groups that maybe interested in what the Mouse is up to (especially if you have a peanut — see Strategy Five).

The result is you could easily have twenty to thirty people from the partner totally swamping your smaller resources. To avoid this situation, you need to designate a gate keeper on both the Elephant and Mouse side of the equation. That gatekeeper shouldn't be afraid to say to the Elephant, "Hey E, we are super-busy right now and would love to send ten people out to meet you in Hawaii but just aren't able to. How about we schedule a Webinar instead?"

Sometimes a very interested Elephant's interest will actually go up the more restricted and controlled access to their Mouse is.

Strategy Four — Remember: You are a Mouse, They are an Elephant, Use That Fact to Your Advantage

Sure Elephants are big and can not only throw their weight around, but they can crush Mice under their massive weight. As a Mouse, you have a key one-word advantage that Elephants don't possess: speed. Once an Elephant is going it can't stop quickly, it can't turn quickly, but a Mouse sure can. Use your speed, agility, and overall limberness to stay out of the way of the Elephant.

For example, in one Mouse company I founded, we learned that the Elephant was going to release products that would overlap 30 to 50 percent with ours. Because we kept the Elephant close, we learned about this information a year in advance. By the time the Elephant came out with the competing offering, we were on to bigger and better things.

Strategy Five — When Dancing With Elephants, Get a Peanut ASAP

If you are in an industry with lots of Elephants like ChannelAdvisor is, you may find that the Elephants just really don't care about your company and its needs. You may find yourself saying: "Hey, Mr. Elephant, we really need X to work with you better." And the request falls on deaf ears. You probably won't get any calls back, or the worst-case-scenario, they will want you to pay to partner with them.

By a peanut, I mean within this Mouse/Elephant metaphor something that the Elephant finds desirable, or at a minimum something that's important to it in some way.

One valuable peanut we have found is customers. If you have either large customers the Elephant wants access to or you have deeper relationships with the Elephant's own customers; this becomes a very valuable asset in the eyes of the Elephant (and you know this because you understand the Elephant's business so well — see Strategy One). Other examples of Peanuts may be technologies, features, customer lists, vertical industries, or even locations.

Once you have a Peanut, then that becomes a strong bargaining chip. For example: "Mr. Elephant, I'd love to share this delicious Peanut with you, but I'd really like to be listed as a premium partner on your homepage."

Dance Mouse, Dance!

In summary, I hope these five strategies have given you some ideas on how to deal with any Elephants in your industry. Also, remember size is always relative. At ChannelAdvisor, we have over two hundred people now and frequently will partner with one to two person shops. In those scenarios, we're the Elephant and they are the Mice. However, we don't treat them as poorly as we've been treated by Elephants because we always live by the golden rule: do unto Mice as you would have Elephants do unto you.

© 2006 Scot Wingo. All rights reserved.

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