Partner Programs: Time for An Overhaul

Two weeks ago, Magento made some major announcements related to a new, enterprise-focused product and a new partner program. Full disclosure: I have been involved in the formation, and launch of Magento’s new partner program. Now that it is launched and we are transitioning existing partners and recruiting new ones, I thought it would be interesting and insightful to provide a behind-the-scenes view into the challenges we faced and why a new partner program was critical to our future success.

For those who may not be familiar with Magento, I believe it’s the leading open source e-commerce solution today. Two key data points: Magento has generated over 750,000 downloads in just over a year and has an active community that exceeds 85,000 participants.

When we disclosed that a new partner program was coming, I am sure many partners wondered why the change and “what’s wrong with the one we have?”

With over 100 partners helping to drive awareness and success with customers, it would have been easy to believe that everything was fine. The reality, though, was that it was not a sustainable and healthy model for either Magento or its partners and more importantly there was huge opportunity that we were not effectively tapping into.

With the release of the Enterprise Edition product, the market and our customers’ needs would quickly become more complex and challenging. We needed to have a better strategy and model that would scale with the growth that we were expecting. So what were the needs we were trying to address?

The previous partner program had four levels with varying degrees of benefits but it was difficult to distinguish between the levels and for partners to differentiate themselves in the market.

All partners received similar visibility and recognition as a partner on the Magento website regardless of their size , ability, or commitment to Magento. This visibility was extremely valuable to partners because Magento was creating lots of customer demand that flowed to partners and created service revenue opportunities for them. The problem was that this made it difficult for partners who were really investing in Magento to realize a proper ROI, it was hard for customers to select the right partner to meet their needs, and it was hard for us to know which partners to invest in.

Win-Win Scenario?

The new partner program needed to do a better job of linking the benefits of being a partner with the commitment and investment that partners were willing and able to make.  More importantly, there needed to be meaningful distinction between the partner levels so that they differed not by what marketing programs they qualified for but by their experience, market position and reputation, technical competency, sales coverage, ability to create new demand, and by the markets and customers they served.

To do this, we needed to create a partner profile that helped us understand what the different partner levels looked like and make it simple for us and for partners to determine where they naturally fit.

For instance we expect that at least half of our partners prefer a casual (no commitment) relationship with Magento that provides them with access to technical information, collaboration with the community, and other insights that support their business.  On the other hand we expect 20% of our partners to want a very close and strategic relationship that requires commitment and investment on both sides and is primarily focused on the bigger opportunities. We needed to do a better job of serving the needs of both ends of the spectrum and do it in a way that made sense from a return on investment perspective.

f we could do a better job defining and differentiating between the partner levels our partners would benefit, our customers would benefit and more importantly, we could do a better job of focusing and serving the needs of each .

The challenges we faced are not unique. In fact they apply to almost every software vendor. Over the next few weeks, I’ll continue to share insights around the issues we faced and how we went about addressing them.