VENDOR WATCH
Long Live PRM: Q&A With TreeHouse CEO Erich Flynn

Partner relationship management has an intriguing business case: It applies the concepts and tools of customer relationship management to the business relationships that also affect a company's customer base. The problem with PRM is that it hasn't caught on -- for myriad reasons, starting with its expense and difficulty in implementation.

Enter the next generation of PRM companies -- such as TreeHouse Interactive -- which are leveraging the tech advancements of the last few years to restate their case. CRM Buyer spoke with CEO Erich Flynn about the company's plans as its digs into the market.

CRM Buyer: How is Treehouse weathering the economic downturn?

Erich Flynn: As a fortunate consequence of a very unfortunate macro economic downturn, we are seeing increases in sales . Companies are still being expected to maintain or increase sales -- so they are increasingly looking to expand existing partner networks or create new ones -- and our PRM systems are well positioned to help companies do that. Last year, we increased our sales by 35 percent, and we are on track to increase 50 percent or more above that this year. That is top line sales revenue.

CRM Buyer: What are some of the cost-cutting measures you've taken?

Flynn: Well, since we are increasing sales, we are also hiring to keep up with growth. We haven't decreased any spend. But in general, as a privately held company, we have been careful about spending from the beginning.

CRM Buyer: How can your products help your customers' bottom lines in the near term?

Flynn: Our PRM systems help our customers increase sales through their partner networks ... by providing visibility into their sales pipelines so companies can help them -- their partners -- close those deals. Secondly, our products help our customers' bottom lines by providing the tools to sell, service and support.

CRM Buyer: What are some of the bright spots for your company right now?

Flynn: DemandGen, our on-demand lead-gen system, has been upgraded with demand generation capabilities and -- most importantly -- improved ROI (return on investment) tracking. This is groundbreaking for the industry because in this crowded space, it is still so difficult to differentiate among campaigns. A system that can track real hard dollar return sets us apart from everyone else.

CRM Buyer: How will your company look a year from now?

Flynn: Our partnerships with Oracle (Nasdaq: ORCL) and Salesforce will have increased our revenue by another 50 percent to 100 percent. Also, I believe Treehouse will be recognized as leader in PRM, besides maintaining our leadership in marketing automation. That is my goal -- and given what we have executed on this first quarter, I think it is an achievable one.

CRM Buyer: The PRM heyday was a few years ago. In fact, some analysts have labeled it a "dead" or "stagnant" category. Of course, they've said that about CRM too, at one point -- but can you elaborate on why you think PRM is resurging?

Flynn: The problem with PRM in the past has been twofold. One, vendors took a narrow approach. They offered, for example, only partner communication or training modules. Nobody came to market with a complete solution -- and that is what customers in this market want, a complete solution. Also, the PRM space never had the evangelists that the CRM industry did -- people like Tom Siebel and Marc Benioff, for instance.

CRM Buyer: I am also curious about your statement that your marketing application is the only one that generates for customers a hard dollar ROI. It seems I have heard that claim from other vendors.

Flynn: Perhaps it's been claimed, but the applications don't deliver on it. We decided to build this application after we did an intensive study of the market. We had just executed on three products enhancements. We looked at what features we could add -- we looked at our competitors and what our customers were asking us to do. We found that the area that was wide open -- and this was a shock -- was ROI.

There was no company out there that could take you from marketing campaign creation to real hard dollar ROI.

CRM Buyer: One final question. You said you were hiring. By how much?

Flynn: We are increasing hiring in this quarter by 10 percent and then have plans to add onto that in subsequent quarters.