The long-fought, spirited
debate regarding the difference between partner relationship management
(PRM) and customer relationship management (CRM) is increasing as more
enterprises rely on indirect channels to meet corporate revenue goals.
Investment firm Morgan Stanley predicts that 75 percent of companies’
gross revenues will come through the channel by 2007. With this shift
enterprises that invested significant resources deploying CRM systems
are struggling to determine if the solutions can be adapted to manage
partners as a different type of customer.

On the surface this may
appear plausible. Both systems are designed with processes for lead
distribution, opportunity management, and contracts. Yet the
differences between direct and indirect business processes are so
divergent it becomes readily apparent that one size does not fit all.

Comparing the difference between managing customer relationships
and partner relationships is similar to comparing the difference
between a bus and a plane. Both are designed to carry passengers from
one point to another. However, a bus is designed to travel on land, and
a plane is designed to travel through the air. Putting wings on a bus
will not make it fly.

CRM is fundamentally designed to manage
direct sales engagements between a sales representative and a buyer.
This mode revolves around collecting and sharing data throughout the
customer lifecycle. PRM, on the other hand, is designed to manage a
complex ecosystem comprising legally independent partner organizations.
This one-to-many model revolves around aligning business processes
across the entire value chain, from vendor, to partner, to customer.

In
a direct business model vendor sales managers work with their sales
representatives to manage accounts on a one-to-one basis with all the
respective proposal, negotiation, and closure processes. In an indirect
business model vendor channel managers work with multiple channel
partners and their respective sales reps, who in turn work with
multiple vendors to provide a collection of products as a solution to
the customer.

o Contract renewal management between three parties
(vendor, partner, and customer) is much different and more complex than
direct one-to-one contract relationships.

o Direct sales
processes for lead and opportunity management do not take advantage of
the leveraged-network effect of the channel.

o Compensation and
incentive programs work very differently with channel partners compared
with commission and bonus programs for direct sales.

o Sales training, technical training, and ongoing education require different approaches for indirect and direct sales teams.

Every
partner has its own way of doing business; processes between partner
and vendor are rarely aligned. This makes reporting and measuring
channel results virtually impossible. The entire process chain–from
vendor, to partner, to customer–needs to be aligned: CRM systems were
not inherently designed to manage this level of complexity. To truly
manage indirect business relationships, enterprises need a PRM system
to close the loop between all participants.

Is there really a difference
between CRM and PRM? Absolutely. Both CRM and PRM have their place, and
both business models–direct and indirect–require respective systems
to obtain peak performance.

Author: Axel Schultze

Sponsored Links

Subscribe to the post comments feeds or Leave a trackback