In a market ecosystem where Instagram influencers are a new norm in advertising, and where corporate sponsorships are diversifying throughout the digital ether, businesses’ vast network of strategic B2B partnerships is getting even bigger, and more complex.
Negotiating and fulfilling contracts, determining the effectiveness of partners, and, not least of all, paying those partners properly is a process full of ambiguity and a lack of automation.
Michael Head, general manager, partnership cloud at Impact, says the demographics of B2B partnership programs is in flux, driven by a pullback of the reselling model in favor of customer referrals that allow a company to retain ownership of and insight into customer data. The trend, he told PYMNTS in a recent interview, has rendered many legacy B2B partnership tools obsolete, and is introducing a new wave of friction.
From Discovery To Payment
Those hurdles emerge from the very beginning of the partnership journey, with businesses lacking sufficient digital channels through which they can discover and initiate collaborations. But beyond partner discovery, Head highlighted partner payouts as one of the biggest challenges in this space today.
One reason is because there is a lack of clarity and automation in the way businesses measure the effectiveness of a business partner.
He pointed to one example of a Software-as-a-Service (SaaS) firm using partners to drive new customer acquisition.
“A partner brings in a prospect who pokes around the website, but decides to do more research,” he said. “However, later on, they end up clicking on one of the SaaS company’s paid search ads, [which] takes them to the SaaS company’s website, and they request a demo. In this case, paid search ends up getting the credit, even though the partner was instrumental in driving the conversion.”
According to Head, many businesses are frustrated that they are unable to adequately measure the value that that partner brought to the table. As a result, understanding whether a contract is in compliance, and how to compensate that payer, can be a maze of complexity and uncertainty.
Further, as partnership programs grow larger, organizations must ensure their legal and finance departments are involved in every step of progress a partnership takes.
Slashing The AP Ambiguity
With the webs of B2B partners, including social media influencers, corporate affiliates, ambassadors, sponsors and beyond ever growing, the volumes of invoices and payments flowing through accounts payable (AP) surge. As those partnerships expand across borders, the added difficulty of managing foreign currency conversions and mitigating FX risk can quickly overwhelm AP departments.
But a modern B2B partnership landscape is also adding disruption to the way businesses value a collaboration.
“The challenge lies within the way you handle payments to these partnerships,” said Head. “For example, how you invoice an individual influencer versus how you invoice an SMB can be vastly different.”
Rather than managing individual payments, however, Head pointed to the opportunity for automated technology to enable standardized processes that can bring efficiency to the payments process. Further, lump sum payments can be support streamlined operations.
“One lump sum can cover payments for months, and all the input that’s needed in ensuring the account stays full,” Head added. “Bottom line, micro payments just aren’t sustainable as you scale out true, long-tail partnerships.”
Driving Automation, Cutting Risk
Post-payment, businesses are also facing headwinds in how they assess ROI on those partnership investments, as well as how they continue to manage those partner contracts, generate and send performance reports, and submit 1099 forms to each partner. A lack of automation is preventing many businesses from expanding partnership programs that stand to offer an important generation of revenue.
By embracing automation, organizations can not only gain a clearer view into the effectiveness of their partners, but can support partner loyalty and satisfaction to maintain the revenue bumps they yield.
Technology and automation will continue to grow in importance as the complexities and risks associated with a changing B2B partnership landscape expand.
Cyber risks, for example, continue to present a threat to corporates working with unfamiliar partners.
“Cybercrime remains a prevalent issue within the B2B ecosystem as phishing, extortion, and wire transfer fraud continue to plague B2B transactions,” warned Head. “Bad actors are constantly looking for angles to exploit, and there are no exceptions when it comes to B2B partnerships.”
He pointed to common scams of existing partners recycling or fabricating leads, or taking credit for traffic driven by something else, as some of most common ways partners can introduce risk to a company’s operations, with negative financial implications.
But as automation steps further into the ecosystem, there is less room for error and ambiguity in ensuring partnership contracts are adhered to, partner effectiveness is accurately calculated, and processes like payments are optimized. PRM (partner relationship management) and CRM (customer relationship management) technologies can support digitization of the process and boost efficiency, too.
“For referral and non-transactional partnerships,” said Head, “end-to-end partnership automation is the name of the game.”