Advice on Growing a Human Resource Software Business Funnel


The Advice contained in this we buy houses for cash connecticut article is based on fifteen years of human resource software industry experience including ten as a HOUR OR SO software business partner for several HOUR OR SO software vendors.

A value added business partner, Guest Posting a. okay. a. VAR or business partner, is an independent business that sells, accessories and supports other vendors’ software applications including HRIS and HRMS applications. The software vendor directly pays the VAR, BP or Business Partner a portion of each deal they sell. The advantage to the software vendor of having VAR’s or having a funnel, as it is sometimes referred to, is the software vendors add numerous organizations that will sell and support their application and they pay the VAR nothing unless they close business. Actually, the VARs often pay the software vendors to participate in the service. Another advantage to the vendor is if they have a large enough funnel they gain a local support base across the country, or internationally, for their application. Given the benefits, Almost certainly just about every HOUR OR SO software company wants to do a better job creating a funnel.

A number of HOUR OR SO software vendors have asked me questions about setting up a partnership funnel so i thought I would take this chance to offer my two cents on the subject. Permit me to be very frank, I have never setup an HRIS funnel. I am only offering advice based on what I have seen while earning a living for others, what I have noticed in the industry over the past fifteen years, and what I believe it would take to entice current value added resellers to offer your products.

Let me provide a warning. I have seen many HOUR OR SO software, HRIS, and HRMS vendors attempt to set up a funnel and I have seen almost all fail. Most love the idea of setting up a funnel and see the advantages of doing so, but don’t put in the effort and money to make the concept work. The strategies I construct in this article may be far more aggressive than what you are willing to take to setup a funnel but I find myself many of my suggestions, if followed, would greatly increase the potential for setting up a successful funnel. With one of these suggestions, I looked at what it would have taken to interest my firm into selling a new system. I can tell you for certain that if a vendor had contacted my firm and offered some or all of the suggestions I have offered here, they would have gotten my attention.

I worked for a manager many years ago that laughed and said the secrets to funnel management are to show value and gain mind share. If you can show that the BP will either make more sales or earn more on each one by offering your product, you will be successful with a funnel management program. Mind share, as i use the term, means getting to the front of systems the partners can market. Let’s say, for example, I am selling X HRIS product and making X amount of dollars per sale. If you can offer the BP a plan or product that will increase their income per sale and their overall number of sales, you will have an easy time showing value and gaining the VAR’s mind share. This, anytime you can, should be the main objective.

Why is now a great time to grow an HOUR OR SO software, HRIS, or HRMS BP funnel?

  1. With a decreasing economy, many resellers are, or will be, looking for additional products or product groups to offer prospects and their clients to supplement their heading downward revenues. If you have a solution it does not require a tremendous up front investment and will be offering additional income, you will have no issue finding BP’s to offer your system. Now as part of your, it will be important to show how investing in your system can increase their revenue.
  2. A large hand-full of HRIS BP’s who have established a model where they offer a number of systems within the same market. This concept makes sense because not one system is going to fulfill the needs of all prospects. Offering a handful of products allows a BP firm to do something as a consultant and present the product that provides the nearest match to the prospect’s needs. There is no reason for an associate to lose a deal to a managed solution or one with an integrated payroll option when they can easily create a partnership with another HRIS application to treat that require. I have heard a lot of buzz about this model in the industry. There are a few HRIS partners who are having great success with this model. A great many others will be using and talking about it, as well.
  3. I am not going to mention any names, but one of the largest HRIS software companies with maybe the largest funnel is try really hard to reducing their outside funnel and bringing sales internal. Instead of giving leads to their funnel, they are now working most internal. This, in short, means a large lowering of income for one of the largest HOUR OR SO software BP networks in the HRIS and HRMS industry. Trust me when i tell you these partners are try really hard to looking to replace with lost income or looking for new opportunities. A number of these vendors have sold their businesses, closed up shop, or started taking up start up company. I have seen three partners disappear in Florida in just the past year. The time to begin a funnel is perfectly now.

Why companies fail when setting up a HRIS or HRMS funnel

  • No up front Plan – If you are going to approach an impartial business and ask them to invest time and resources into selling the job, you need to show that your firm has built a plan for adding a funnel. Within that plan, you need to demonstrate how your firm can increase the BP’s revenue. You need to show why selling your product is often more profitable than selling another. From a BP’s point of view, let me say that before I would invest into a company, I would want to see they may have a solid plan laid out to assist me with success with their system. If they can’t show this, there is no reason to proceed.
  • They pay weak hands – If the funnel is bringing you sales that you would not have had otherwise, all the money made from those sales is profit. Don’t be stingy with the BP pay. Paying what the other guys are paying is not enough. View it from a BP’s side. If i have product X, i always have sold for a decade and that I know inside and out and that I likely have highly qualified experienced execution experts to install, why must i sell your product Ymca for the same, or less, profit? You may feel you have the better product so, of course, they will sell your system over the other. No; they are likely going to sell the product that is in their safe place. You might have a system that addresses certain needs that the other does not. Perhaps your system is managed and the BP’s other products aren’t. In these instances, they will sell your product, but only when that specific need arises.

If this is your first attempt at creating a funnel and you want to succeed at it, you will have to pay more than the other guys. I have more tips on this later.

  • They don’t know which VAR market to sell their service to – For your HRIS solution, you have a target market. This might be based on industry, need, or size of organization. Have you determined what your VAR target market is? I outline this in more detail below but the goal should be to sign up firms that already have marketing efforts in place or existing clients to sell your system to. You are looking for firms that will prospect and close deals for your system. You are not looking for order takers with leads you hand off. Quality is going to be more important than quantity when it comes to adding a funnel.
  • Not considering their product as it relates to what the partner is currently selling – If you have a HRIS BP selling a system that provides more and them greater revenue than your product offers, you will struggle to win mind tell these partners. The BP will sell the machine they earn the greatest income from selling. If your product does not provide higher revenue than what they are currently selling, you won’t win mind share.
  • Not able to gain mind share – Once you have created a plan and signed on BP’s you need to motivate them to break outside of their safe place and sell your system. As i state above, offering them a product for a specific customer need is not your objective. You want them selling your product first and foremost, not only when a certain need arises.

This truth you must accept to develop a successful HRIS Funnel

VAR’s or BP’s will focus on selling the applications that
give them the greatest profit.

Important Questions about your future HRIS Funnel

As i have said before, creating a funnel is not an easy process. Within the HOUR OR SO software industry, I have actually seen only one company succeed with this model. To ensure success, you will have to show existing BP firms how working with your product will add more value than working with another. Before you start selling the funnel, you need to work out a ton of details. If you are going to approach a good asking them to buy selling your solution, you need to show that some effort has been put in the process. The plan you construct up front will determine your success or failure with the endeavor.

  • Determining your ideal HRIS VAR Market
    i The section third , one covers how much you will pay but as you will see, this section is more important. This may, in fact, define the entire way you setup a funnel. If you have been not successful in setting up a funnel in the past, this may explain a large the main reason. If your product does not meet a specific unmet need for an associate and/or pays considerably less than what they are currently offering, you are likely targeting the wrong VAR market and you will be doomed before it starts.

In my first example, let’s say you have a purchase only application with a very similar feature, price and product offering as what the HRIS VAR currently sells. If you can pay this vendor greater income on deals they close, you will easily gain their mind share by increasing their bottom line. If you are lucky to be in this case, you need to realize that your product offers a greater value to these partners than the system they currently sell. Your job will be easy. This is a great VAR market for you to target.

It’s a little more difficult if you have a product that provides less in functionality and sells for less. In this example, let’s assume the partner is providing an HOUR OR SO & Payroll application and that you provide a purchase HOUR OR SO only application which costs 20% less than what their current product sells for. In this example, you might actually pay a greater border but it’s probably, due to the price, the VAR will still make less overall on each deal. The other issue is that this partner, even if they sign up with your service, will have situations where the prospect, from perhaps a lead you created, has to have payroll. Your system does not meet this need so the partner will likely sell the machine that does from a lead you generated. Trust me; I have been in this exact situation many times before. If your system offers less functionality than what a partner currently sells and they make less off each deal, is it worth your time pursuing these partners?

If you provide a managed solution and wish to join up purchase only BP’s, you have a real challenge with showing greater value. The VAR may sell your system when the prospect demands a managed solution, but they won’t be pushing the concept. Actually, in this case, they will likely sell contrary to the managed concept. If a sales agent makes five times greater income by selling a purchase only system rather than a managed system and the prospect wants a managed solution, trust me, the VAR will do everything possible, within reason, to sell the outlook on the application that will pay them the greatest income. It’s hard to compete for a BP on the basis of value when the BP will be paid in advance upon sale of a purchase system as opposed to the recurring type of waiting perhaps two or more years to earn the same amount of income. Sure, the recurring revenue is a nice addition and it creates more stability of income; but in the end partners will sell the machine that pays them the most money today. This is not to say that you should not approach these particular VAR’s. If they don’t provide a managed solution, at least you are presenting them with a package that enables them to close a deal they might lose otherwise. It’s just important to understand that these sales will be the exemption, not standard, for these partners.

If you wish to be successful with a funnel program, you need to find those VAR’s where your product either offers a new add-on for them to sell or greater value over the systems they currently sell. Your system simply may not work for a purchase only vendor. But at the same time, it may be a great fit for a service agency, time, or GL vendor it does not currently offer an HRIS application. In this case, you have no competition and you are only providing the BP a new revenue source for their current client base. You may have a software that fits into a larger market than what the seller is currently selling into or you may have one that fits into a smaller market. It is best that the BP sees some revenue, than lose the deal because they did not offer the right product. You can generate income from VAR’s without gaining market share, but the goal still needs to be finding your target VAR market.

  • How much will you pay your HRIS, HRMS or HOUR OR SO software funnel?
    i Many years back, I was trying to sell my home in Brandon, Florida. I had a contract to pay the listing agent 1. 5% and to pay the buyers agent 3. 0%. Five months into the whole process the house had not yet sold and I had missed on two contingency offers to purchase another home. I realized that if I increased the amount I was paying the buyers agent from 3% to 4%, they would stop showing my home and would start selling it because of the increased commission. It worked. My home sold within a month inside my price.

Yes, this little story has a point. The same principle can be said for HOUR OR SO software. If i have a supplier who sells two or three systems and they basically make the same money off all the systems, they are likely showing all of the products and not selling any one of them. They may, in fact, be selling the machine they have sold for the at best period of time since that represents their safe place. If they already have effective lead generation marketing in place, it would be nice to see them sell your system as opposed to another for those leads. It’s all a question of revenue. If i make more by selling this house than that one….

If you are just starting out with a funnel, don’t think that you can simply pay the going rate and overnight you will set up a winning funnel model. In order to gain market share, you will have to offer more for less.

Typically, HRIS vendors I have are exposed to pay anywhere from
30 to 55%; this is the case if the BP makes the sale and, in some cases, performs the execution. Most of the companies pay around 10 to 15% on annual support contracts. Note; if you are going to pay on support, pay not only up front but each year the customer renews. In addition, many vendors provide a affiliate agreement where they may pay as much as 15 to 20%.

Many of the HRIS vendors offered tiered border structures. If the partner sells over a percentage, they obtain a higher border. There are problems with this structure. What I might make down the road if i sell this much of your product is not motivating. What I make today is what is motivating.

Special note regarding managed HRIS companies

If your company offers a managed solution, determining a pay structure for a BP may present some additional challenges. Because the cost of your service or product is spread over the duration of the contract, you will never match the up front profit a VAR selling a purchased system would see. The potential benefits of recurring revenue may entice the BP to sell your product, but it will depend on what much they have to be paid. If i can sell product X and make 10K up front, versus selling managed product Ymca and make 2k over a year, which product can i be selling the customer on? In this case, it’s probably there is not enough profit under the managed model to truly gain mind share of potential VARs. As i pointed out earlier, the VAR could actually talk prospects out of the managed solution and guide them toward the more profitable purchase sale. They may sell the machine when the managed model is required but which will be it. For companies only offering a managed model and wanting to setup a funnel, they may find greater success selling to service credit bureaus or other styles of VARs than HRIS business partners. There simply is not enough up front profit to take on the profit made from purchase systems. Your best hope is that the VARs are experiencing greater amounts of prospects demand managed solutions and based on that, you will give you the partner the ability to meet this need.

Tip #1

Here is a concept I have recommended to many HRIS software companies that none, as of yet, has had action on. You don’t want your BP’s just being order takers on leads you create and hand to them. You want them out creating and prospecting for start up company. So, pay them a more substantial percentage on deals they bring to the table as opposed to leads you provide. With this option, your company is gaining revenue that otherwise did not exist and of course, you retain the majority of the support income for the first year and future years. At the same time, you have encouraged your partner funnel to try really hard to market the job, which is the entire point of a funnel. As an example, you may pay 40% on leads you provide and 60% on leads they generate on their own and close.

Tip #2

Why not on the first deal they bring to the table offer the BP 100% of the software profit? If you want to gain mind share and see them try really hard to advertising your system out of the gate, this would certainly do just as well. This might only affect a purchase based system. I realize that this option may not be possible with a managed solution. But the dollar amount could be significantly increased for the first deal.

Tip #3

As a getting qualification question when signing on BPs, ask “What border are you being paid by other vendors? ” and then pay 10 to 15% over that amount, if possible.

  • And what will you charge to participate in your HRIS partner program?

Honestly, I don’t understand the policy of a BP paying to sell someone else’s system when the BP is a 100% commission merchant. If you are going to charge a fee, I have seen them range from several thousands of dollars up to tens of thousands for a small to mid-market HRIS application. The benefit I can see with charging a fee is that a partner who so may end up being more committed to selling a system which is they have made a more substantial up front investment.

Tip #1

Charge a fee up front or yearly, but put all fees into marketing in the BP’s market area to quickly create a pipeline with your system. In this case, let’s imagine how many leads and, thus sales might be generated from three or five thousand dollars in marketing in the new BP’s market area. The partner is making the investment and that investment is directly placed into marketing the program. Everyone wins. Remember, it is all about gaining mind share.

Tip #2

Don’t make the mistake of seeing your funnel as a revenue source. I have seen one company in particular kill their funnel by overcharging with creative fees. With one vendor, we were charged an annual training certification fee to be able to claim that our implementers were certified. No additional testing or courses were required for this designation, only money. This is not the way to encourage your funnel to keep selling your product and not seek out alternatives.

  • And what will you offer to help the HRIS, HRMS or HOUR OR SO Software partner succeed?
    i HOUR OR SO Software Leads?
    ? If you can provide leads to at least new partners, this will give you a huge leg up on the competition. Getting a few sales into the hands of a new partner can certainly motivate them to sell your system. As i mention above, you don’t want order takers here. Therefore it is not uncommon to pay out less for leads you hand off than for deals the partner ends themselves. In your lead distribution plan, it is very important not to create partners who are dependent on lead flow for success.
    i HOUR OR SO Software Marketing assistance?
    ? Some companies will offer their partners marketing assistance dollars based on percent of sales. This is a great idea and one that we think should be associated with any business partner plan. You might, for example, arrange it where the partner receives 3% of each deal to use toward pre-approved marketing efforts.
    ? You need to be able to answer these questions: What is the best way to market the job? Who are your typical customers? Who are your largest competitors? The point is you don’t want to just certify the prospective partner and send them out selling; you need to provide assistance with what is most effective with selling your system. It truly concerns me when a vendor can’t answer these questions.

What type of company is best equipped to sell your HRIS?

There are a number of ways and types of companies you can approach about a BP model. The best model may be to approach several options to see what is most effective for your organization.

Service Credit bureaus

I have not worked under this model and am a lot of familiar with it; but in short with this option, HRIS companies re-license their application to either payroll service credit bureaus or benefit providers to provide as a value add to their clients and prospects. While I have no experience with this model, I can will tell you that a number of HRIS vendors are very successful following only this model.

HOUR OR SO Consultants & HRIS

I have actually never heard of anyone developing a successful funnel using HOUR OR SO consultants. I have seen a few try, but I am uncertain any have prevailed. They may be a good starting point for a affiliate network but I am uncertain they are the best source to set up a funnel. HOUR OR SO consulting and HRIS sales and execution are two different animals. The skill set in one does not necessarily transfer to the other.

Other HRIS Business Partners

I think this more than any other is a great place to start as i outlined above. The advantage is that these potential partners already know how to sell HRIS applications, they likely have successful HRIS marketing plans in place, and they have people on staff with HRIS execution experience. Getting them to sell your product precipitates to how much you are paying and if your product fits a market need that their current system does not. If you provide a managed solution and they don’t, they have likely lost sales as a result. They may want a less expensive system to use as a fallout sale or they may want to move into a more substantial market. The point is to find out enough about the current resellers you are contacting and use your sales page to show how your system will grow their business.

There are two types of HRIS partners. You are usually the one or two man shops who survive off revenue from their existing client base, leads from the vendors, affiliate leads, along with perhaps with certain niche markets. The second are the larger firms who have an active lead marketing program already in place. Obviously, the latter offers greater potential benefit for your firm. They are already creating the leads. It’s just a question of getting them to sell your product over their current one to those leads. This is easily accomplished by paying them a greater amount to do so as i have lain out above. The first group is going to be a greater challenge and you might want to bypass this group altogether. The tip offered on turning their start up fee into seed for their marketing efforts, in this market, might be an alternative way to increase their lead activity. With a few getting qualification questions during your sales presentation, you will easily see which group you are working with. The biggest thing is to ask how they are generating leads.

Your big issue with working with HRIS business partners will be gaining mind share. These partners may have sold the same system for years. It won’t be an easy task getting them to step outside of their safe place to sell your system instead. This is why you hand off leads, assistance with marketing, and pay more than the other guy.

Make sure to read my special note under the “How much will you pay? ” section regarding managed solutions.

I am frequently asked “How can we find out who these partners are? ” Is there a list somewhere? Yes; it’s on Google or Yahoo. Simply search on the product name and look through the results. From there start cold calling. As scary as that term is, I don’t think it has to be. As i have said before, it is my belief that many of these vendors are try really hard to looking for other systems to offer. If you can show these vendors how you can make money selling your system and, perhaps, more money than selling their existing products you won’t have any problems finding BP’s to offer your system.

Attracting GL or Time providers with HRIS

A decade ago I worked directly for a large HRIS provider and this was how they successfully grew their funnel. They try really hard to created interfaces and setup relationships between their HOUR OR SO and payroll apps to leading GL applications. The same principle outlined here for GL apps could just as easily be employed to time and work vendors. Once the program was made, they greeted GL BP’s about selling their systems as either an add-on or as an choice to sell to their existing client base.

More and more often companies are looking for single integrated applications, combining HOUR OR SO, payroll, GL, and time collection. If you discover a provider who is missing the HOUR OR SO portion, offering your product may assist them with winning GL or time collection sales they are currently losing because they don’t offer the HOUR OR SO capability. The excess advantage is they already have an installed base to make contact with and potentially sell your system into. Task will be that unlike the HRIS vendors, these vendors don’t have direct experience or expertise with selling and implementing HRIS applications. More training may be required for this group to bring them up to speed on selling and implementing HRIS applications than with the earlier group.

Once you have created the program, how do you find these partners? As i outline above: use Yahoo and google.

Tips for having a direct HRIS sales funnel and a partner funnel

I have yet to come across an HRIS software company that does a good job with both. Either there are companies wanting to setup a 100% partner funnel or there are those that have the funnel and have seen the benefits of bringing sales back in-house; mainly, saving the expense of paying partners 40% or greater margins. As someone who has experienced both a primary HRIS sales capacity and a HRIS BP relationship, I want to construct how you can have both.

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