In my neck of the woods (I live in Australia), Telstra is one of the providers that is frequently called out as leading the charge in delivering digital services. A quick look at their website reveals a plethora of choices for consumer and business customers alike – from video-on-demand and TV anywhere to M2M tracking solutions and Telehealth services. As Digital Service Providers go, they’re right up there.
But they’re not providing these services and solutions alone. As Telstra are doing, many CSPs are sourcing digital services from partners. After all, they can't bring them all to market from internal sources, and partnering is probably the quickest and easiest way to work with a third party (compared say with M&A or even joint ventures).
We're finding that as CSPs enter into more partnerships, they're encountering a number of unexpected challenges…
As the number and type of partners, services and agreements increases, the numbers begin to multiply and things start to get a little out of control. Partner management and settlement go from being straightforward operations to taking more and more time, attention and money.
Once a spreadsheet or in-house-developed system would have been quite enough to address partner needs for being paid their share of earned revenue, but the size and complexity of the challenge is stretching these solutions to breaking point.
Building a successful partner ecosystem requires fresh thinking around revenue sharing and partner management. There are two aspects to this.
Firstly, capitalise on the opportunity to incent partners to join, or to get exclusive access to great partner offerings, through preferential revenue sharing agreements. Here are my thoughts on the top ways to leverage settlements to attract and retain the right partners:
- Offer an increased share of the revenue earned for a limited period of time
- Guarantee minimum payments, regardless of the quantity of the product sold
- Provide tiered revenue share, so that the partner gets a bigger cut, and more of their offering is sold
- Aid in-app purchases and micro-payments
- Ensure accurate division of the revenue gained from bundles between the various suppliers of the bundle components
- Settle with partners more frequently – smaller partners in particular will appreciate the cash flow
- Provide aggregated sales data to partners – they highly value the ability to know the types of customer that are buying their product
On the other side of the coin, CSPs need to assure their own revenue. Again, I offer my thoughts on managing partners and settling with them to maximize profitability:
- Ensure that the partner is paid only when the end customer has paid
- Related to this, manage partial payments so that partners receive their share – but no more, if a customer has only paid part of the bill
- Implement strong credit management processes and systems – new partners may be unknown quantities, and smaller than the traditional ‘carrier-grade’ partners CSPs are used to
- Provide self-care to keep down partner management costs – and increase partner satisfaction
To address these complexities, many CSPs are finding that they are either extending their existing traditional interconnect billing systems with new capabilities (where they can) or are investing in a new system to manage the sophisticated demands of a new type of partner. As the digital ecosystem expands, so do settlement needs, and an investment in addressing these needs will pay dividends.
For more on managing partnerships in today's highly connected world, visit our Partner Management Resources: