Mastering Partnerships: CRM vs. PRM

4 min read

Feb 22, 2024 9:30:32 AM

In the past few months, about 10% of the individuals I've crossed paths with have been diving into partnerships within their CRM system. Interestingly, some are a bit cautious about venturing into a dedicated partnership management system – concerns include costs, implementation challenges, and other objections that may not necessarily hold water. In this article, let's delve into the ways you can maximize your CRM for partnerships and pinpoint when a more customized solution might be the perfect fit for your needs. Join me on this journey!

What are CRM and PRM systems?

Understanding why CRM and PRM systems are often compared is key. At its core, they handle similar data (companies/leads) in comparable ways (pipeline/list). Picture PRM as the evolved form of a CRM system, finely tuned for the unique demands of partnerships. Let's dive in from the beginning.

A CRM (Customer Relationship Management) system is your go-to tool for storing leads/clients/customers. It's the compass guiding their journey from marketing leads through prospecting, qualification, to later deal stages. Primarily used by sales/marketing teams, it often boasts features like mailing, quote generation, and advanced analytics. Crucially, it's the keeper of all communication, tracking emails or phone calls.

On the other side of the coin, a PRM (Partner Relationship Management) system shares similarities but zooms in on the specific needs of a partner network. It not only grants partners access to the system for managing their info/leads but also boasts a distinct architecture tailored to handle various partner types/tiers. A standout feature is its robust commission management, facilitating payouts based on the revenue partners bring in.

Benefits of using a CRM system as a partner management tool

While I generally advise against relying solely on a CRM system for partnerships instead of a dedicated PRM solution, there are situations where it might make sense. Let's explore these scenarios:

Ease of Implementation - The most common reason for choosing a CRM system for partnerships is… the fact that it already is being used by other people in the company. Companies often kick off their journey with leads and customers, deferring partner-specific tools until later stages. Partner Managers, in their quest to grow partnerships, may opt for familiarity, using Excel or the existing CRM used by the sales team. This approach provides a foundational toolkit for effective partnership management – a partner repository, connection to leads, and tracking lead stages. Adding advanced analytics further equips Partner Managers during monthly meetings to assess partner performance and deal comparisons.
Partner Recruitment - CRM systems, aligning with the stages of a prospect, can seamlessly adapt for partner recruitment. Utilizing pipeline features, companies can designate stages for potential partners, creating an organized structure. Automation, a valuable bonus, steps in to tweak details as a potential partner advances. Task lists assigned to specific partners become handy tools for Partner Managers to ensure promises are delivered and progress is tracked.
Lead Submission - Some CRM systems offer external forms for partners to submit leads, with the possibility of creating dedicated landing pages. While convenient, there's a drawback – partners often can't directly access and modify data, which might be a limitation depending on the collaboration dynamics. Occasionally, the option exists, but it's not a widespread practice.

In essence, while a CRM system might not be the perfect standalone solution for partnerships, it can serve as a valuable starting point, offering familiar ground and essential features. The key lies in understanding when to leverage its strengths and when to consider a more specialized approach.

Drawbacks of using a CRM system to manage your partnerships

As I stated before, a CRM is not necessarily meant to be used with partners. Because of this, it can have significant limitations. It can (and often is) used at the beginning but isn’t really a good option when you are scaling your partnership.

1. Organizational Structure: When collaborating with partners, the structural needs differ significantly. Partners come with diverse types, tiers, and commissions, which can be based on leads or deals, one-time or recurring payments tied to invoices. Some extend to geographical divisions or segmented categories (if you want to know more about this topic, please read this article), making it challenging to efficiently manage within a tool not tailored for such complexity.

2. Access by Partners: The primary argument for opting for a Partner Relationship Management (PRM) solution lies in the access it grants partners. In a PRM system, partners enjoy autonomy over their accounts, altering data, adding leads, and managing statuses independently. As your network scales, relying solely on a Partner Manager becomes impractical. While certain CRM systems offer partner access, it poses two significant challenges:

It can become quite costly, as the pricing for CRM solutions is often user-based. If you have 100 partners, each with 3 users, that’s 300 accounts you would have to pay for on top of your own team (!). Even though PRM systems can sometimes cost quite a lot (I’ve seen offers from competitors for 20k+ USD/month), if you consider the scale of the network, it still offers a much better Total Cost of Ownership. Just look at the example of Salesforce - they charge $10 per login or $25 per user/month - at the scale listed above, we are talking about $7500/month, whereas the average price for a PRM system would fall somewhere between $2500-$5000/month.
The CRM contains your most critical data. Your customers, their invoices, all the communication, your marketing contacts, etc - giving access to such a tool to external partners can be a very risky process. I am not just talking about potential data breaches but simple human error. For example, assigning the wrong kind of access to one of the partners.

3. Commission Management: CRM systems may include commission handling features, but they fall short in addressing the complexities of partnership dynamics. Managing partner payouts based on varied rules, types, or tier-specific negotiations, especially those with elastic components over time, exceeds the capabilities of most CRM platforms.

4. Partner-Specific Features: While CRM systems are stalwarts in daily operations, they primarily cater to sales teams. The extensive features they offer may not align seamlessly with partnership needs. In contrast, a dedicated PRM tool comes equipped with specialized features – partner onboarding, training modules, MDF (Market Development Fund) management, partner goals, and potentially co-marketing tools. These features empower you to efficiently scale, automate processes, and extract measurable value from your partnerships.

To summarize, using a CRM system to handle partnerships can be an option, but it often resembles using a bicycle when you should be using a car. You can still get to where you are going, but it will take longer, it will be less secure, and definitely less comfortable, especially if you are planning to go far.