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Married couples will tell you it can be a challenge managing a relationship with one person. But imagine if there were 299,998 more folks in the equation.

Software titan Microsoft has about 300,000 partner relationships in the United States (and 775,000 worldwide) for its traditional desktop, server and operating system programs, as well as its business application software, Microsoft Business Solutions Products.

“Really, we're a channel distribution company in many respects, [with] a tremendous choice of local resources,” says Ken Stone, senior marketing manager for West region small and mid-market solutions and partners. “Microsoft's success is directly tied to the success of our partners.”

Stone has been with Microsoft for three and a half years. He moved to San Francisco last year to become regional director of marketing and sales operations, and prior to that was marketing manager for enterprise accounts (companies with more than 1,000 employees) in the West.

Earlier on he was vice president of marketing for a $1.6 billion division of Galileo International, a travel services company that's now part of Cendant Corp. Partner relationships were his specialty there too — travel agents in 107 countries were his customers. His career also includes roles in finance, sales and marketing at firms specializing in software, hardware and telecommunications.

Direct talked with Stone recently about how Microsoft manages the potential conflicts that can arise with so many partners.

“It's both challenging and just an incredible opportunity, given the sheer volume not just of our partner community but our customer base and products,” says Stone.

“Think of the breadth of our products,” he continues. “It poses huge challenges, so we focus a lot on trying to facilitate the communications from corporate and augmenting what corporate does to help our partners.”

DIRECT: What's the focus of your partner marketing initiatives?

STONE: Direct marketing is one part of it. There are several things we're working on to improve their skills and allow them to leverage and augment what corporate can provide. Some of our partners are fairly small, some are huge. Their [direct marketing expertise] scales based on their size. The small partners [often] don't have a dedicated marketing staff. We really want to make sure they've got the core skills they need to help sell and implement some of these projects successfully. We've got massive marketing — particularly direct marketing — activities coming out of Redmond, [WA]. We want them to be able to evangelize with those to their own customer base. And they can fill gaps we're not filling with their own niche marketing targeted to their specific customer and prospect database.

DIRECT: What about direct mail? Are you doing a lot of turnkey programs?

STONE: We have some that are really turnkey, programs where we've created direct marketing materials — postcards, newsletters, banners, etc. — they can take and [add in] their logo and call to action. With some minor customization they can quickly get out to market and leverage [our] creative investment. The message, the PR and the positioning statements are tried and true and proven by our market research. There are also other campaigns where we'll do everything — help on the list strategy, do the printing and distribution, and even telemarketing follow-up. There's also an la carte program, where [partners] can choose what facets they want. Our direct mail volume is in the tens of millions.

DIRECT: Are you helping your partners with telemarketing?

STONE: We've started a telesales operation in the Western region for the medium-size businesses I cover. It's a service that allows our partners basically to outsource to us. We're providing small increments of telesales capacity based on their budget [with reps who] know the product line, know how to identify issues for customers and how to map the right solution to them to help them grow their business.

DIRECT: Are these efforts lead generation or direct selling?

STONE: Some of it is relationship marketing, but I would say about 80% is lead-generation oriented. What we're trying to do is what I call 360-degree marketing, where they're integrating their telemarketing and direct mail and e-mail pieces, along with events and relationship marketing tools like newsletters and pulling that [together] so they have the appropriate call to action at each step of the sales cycle. Whether the customer says yes or no, we've got something to offer to help nurture that relationship, to help increase velocity in the pipeline. Hopefully, it will form a stickier relationship with the customers and a more successful deployment.

DIRECT: Are you seeing partners investing more money in their marketing plans?

STONE: The partners are now refocusing and reinvesting in direct marketing. I think part of that is [after] the dot-com fallout people are coming back and have a little more budget [available]. But it's also a numbers game. If their primary goal is lead generation and they're trying to build their pipeline and expand their customer base, direct marketing is a great tool for doing that. Get the right number in the top of your funnel, get good targeted messaging so you drive higher response rates and then if you've got a well-trained sales force and the right solution for the customer, you drive higher close ratios. That's how you're going to build your business. The other thing I'm seeing is more of a turn to telemarketing. If you can get someone on the phone, it's still a numbers game. If you've got a well-targeted list, you're going to drive higher response rates and get that higher level of conversation with the customer.

DIRECT: Do leads generated go directly to the partners or back to Microsoft?

STONE: It varies depending on the type of campaign. At times, we preprocess leads and then we assign them to partners based on the partner's competency or what [geographic area] they're in. We're very keen on having customers and prospects work with local [vendors]. We'll invest in the market research and the messaging and the creative to help our partners. But we want the partners on point, particularly in the mid-market and small business spaces, so they can manage the relationship and that particular campaign.

DIRECT: What challenges do you face in managing 300,000 partner relationships? Obviously, there's going to be overlap in business expertise.

STONE: We're trying to encourage partners to add value so they can diversify their portfolio — and, more importantly, differentiate themselves and add value for the customer. They can specialize: Our partner ‘ecosystem’ includes independent software vendors that essentially are adding code on top of our products; and it also includes value-added resellers that may be adding services on top of our products. They can differentiate by industry, by the type of value-add code or software, specialize in a geographic market, all of those. As large as the customer base is and as many partners as we have, there's still room for each partner, provided they've got a strong value proposition. We try to manage the partner conflict as best we can and hopefully the pie is big enough for everyone.

DIRECT: How does the Web factor into these initiatives?

STONE: Obviously, we use the Web as a resource for all our programs and product information and so forth. We're doing Web profiling with customers where we might send an e-mail piece [to encourage the customers] to go to a site where they can raise their hand and [create] a self-profile. That's one of the best ways we're using the Web now, to preprocess leads.

DIRECT: Is a great emphasis placed on relationship marketing?

STONE: For the partners, sometimes it's a challenge to do something that's purely relationship marketing. I think the primary focus for partners is twofold. It's lead generation and its ensuring successful deployments, and then happy customers after that. In some respects, that is relationship marketing. But in terms of explicit direct marketing or events purely for relationship marketing, often they don't have the budget. So hopefully, they're driving their relationship marketing through satisfied customers.

DIRECT: How important is tracking return on investment in your partner marketing efforts?

STONE: I personally, and Microsoft in general, are keen on measurement. This is something I teach in our partner marketing workshops: Measure everything at each stage of the sales cycle. This isn't rocket science, but it's very important. You [need to] understand how you can really track how you're doing on response rates, truly qualifying that opportunity. [We look] at how we're doing on close ratios, play with those measurements and really track them and do root cause analysis, where the response rates and other metrics fall down. It's a discipline companies face in IT and elsewhere. It's huge, and we're really trying to have partners focus on that.