Tip #10: Choose partners who have no other partners.

"I have a direct sales force in a couple of international geographies -- the UK and Germany -- and I have only worked with partners who are 100% dedicated to Service-now.com," Luddy says.

"We started that in 2006. I know that it sort of runs counter to what I was saying earlier, but these were opportunities that presented themselves to us. For our particular company, we knew that the majority of the market is in North America and western Europe."

Tip #11: Work the markets you know.

 "There are marketplaces I know how to operate in and know how to sell," says Luddy. 

"We restricted ourselves to North America, Benelux, Switzerland, and Australia. 

"I avoid places where it's frankly just more difficult to do business --  not just from a sales standpoint, but also from a support standpoint. You have to ask yourself, 'Can I afford to have that customer?'"

Tip #12: The due diligence test for potential partners.

"There's a very simple litmus test that we applied very early," Luddy says. "Bring me a prospect. If you're in the business of selling and servicing the IT management space, you should be able to understand the value proposition. 

"Bring me the prospect, and I will be extremely loyal to the person who brought me to the dance. When you're successful, well-intentioned people will come out the woodwork; it's very easy to be distracted.

"For us, it was all about concentrating our efforts on the people who supported us directly; those people who stepped up to the plate and brought us a prospect, and we would go and jointly sell.

"The two people in Switzerland brought us a prospect, have now grown their organization to 25 people. The two guys in Australia brought us a prospect, and have now grown to 25 or 30 people. 

"The actionable item here is choose a market: You're either a channel person, or you're a direct person. You have to be willing to entertain a little bit of a hybrid model, but the position that we have evolved to is that our channel partners in essence own a piece of geography on our behalf."

Today, partners contribute 10% to 15% of Service-now.com's overall revenue. Partners handle 70% to 80% of customer support in their regions, Luddy says, "but have to come to back to HQ occasionally. All get the same training, same programs, same everything."

Tip #13: The best partner relationship feeds the partner's business model.

Service-now.com's deals with its sales partners vary, but all are based on the tenet of supporting what makes sense for the partner, Luddy says.

"It can be as simple as the partners buy from me at wholesale, then mark it up and take it to the market. The partner earns a couple points on the license. It's interesting for them, because it's predictable and renewable. 

"But more importantly, you have to look at what is the business model of the partner. It may not be selling licenses, it may be about providing professional consulting services. You create the opportunity, they manage the sales cycle, they buy at a wholesale, but the bulk of their revenue -- and profits -- are the services that are follow-on to the installation.  

"We are simply the catalyst that creates the opportunity for them to sell the services. This has to be true partnership; you have to understand their business model, then try to work out a relationship that allows them to make money around their core expertise."

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