Ok, so you’re a vendor who’s “100% channel”. Great! But is it working for you? Because I meet a lot of vendors who say they have a “100% channel” model but still complain about lacklustre results from non-performing partners. If that’s you, my guess (based on having assisted more than 180 vendors over the last 20 years) is you either have the wrong people in channel roles, the wrong partners in your ecosystem, or the wrong approach for how you manage them.
In this article I will focus on the third issue, but let’s first look at the first two as I have written about them before.
The Wrong People
Having the right individuals in key channel roles is crucial. Effective channel managers have a fundamentally different mindset to effective direct salespeople. They must also possess a unique combination of business acumen, strategic planning, leadership, selling and relationship building skills. I discuss the issues of Putting The Wrong People In Channel Roles this article.
The Wrong Partners
The partners you choose to work with can either make or break your channel strategy. Effective channel partners are aligned your business values, understand your product or service deeply, have a strong presence in your target market, and are willing to invest in joint activities that grow your mutual business. I wrote about why it’s important to Recruit Partners Like You Recruit People in this article.
Which brings us to the third problem…
The Wrong Approach
Many times, a poor performing channel isn’t due to the wrong people or the wrong partners, but rather how the vendor is managing the partners. Here are five questions you should ask of your organisation about how you manage your partners. It may give you a clue as to why your channel strategy is not performing the way you’d like…
1. Are you selling through partners or fulfilling through partners?
So many vendors say they are 100% channel, but dig a little deeper, and it’s obvious they’re generating the majority of their business through their own sales team, and really just using the channel for fulfillment. While you think you might be doing the partners a favour, you’re actually doing the opposite. Partners make their money from the services they sell around your product. If you don’t treat them as strategic partners and involve them early in the sales process so they can position their value, they will support someone else. Another problem that this model creates is when you release a new product, your partners aren’t interested in attending your training sessions, because your behaviour has taught them that you are the one making the effort to get the order, and that their role is just to process it.
2. Are you really 100% or almost 100%
A common phrase I hear is “we’re 100% channel… but there are some clients that we deal with directly”. If it’s just a handful of very strategic clients, then that may not be an issue. But I have seen cases where those direct clients account for 20% to 30% of the vendors revenue. And in those instances, the business you’re leaving for partners may not be enough to keep them interested. But there is one . Partners are quite happy to work with a vendor that is not 100% channel if there is enough money to go around, and more importantly, if there is a clear line of delineation (ie. the partners know which accounts are direct, and which accounts are sold through partners). So if you’re going to be an “almost 100% channel” vendor, there are two rules: 1) you can’t change your mind half way and convert a partner account into a direct account, and 2) you can’t just give the channel all the difficult or unprofitable accounts and keep the lucrative accounts for yourself.
3. Does your whole company know, or just your channel team?
Being 100% channel does not just mean that 100% of your sales go through partners… it means 100% of your business (sales, marketing, operations, finance, etc) works with partners, not just the channel team. I’ve seen vendor support teams deprioritise calls from partners to take support calls from customers. I’ve seen finance teams question partner rebates with comments like “why are we paying them to sell our product”? I’ve seen consulting teams that build out services that compete with partners. And I’ve seen marketing teams who view criticism from customers as “feedback” but view criticism from partners as “complaints” (even though the partner is simply passing on customer feedback). All these behaviours are indications that you are not really committed to the channel. If you genuinely want to be 100% channel, make sure everyone in your company understands the value of partners, and why they are critical to your success.
4. Are you providing theoretical margin or real profitability?
It’s surprising how many vendors believe that offering (say) a 30% margin to a partner is reason enough for that partner to drop everything else they’re doing and start selling their product. Firstly, profitability isn’t about percentages, it’s about dollars. So if the revenue number is small, then 30% of a small number yields a small profit. But more importantly, profitability is about the total revenue (including all the other products and services in the deal) less the total cost (including training, risk, ease of selling, time to learn your product, the length of the sales cycle, the impact on their brand, and the amount of support required). To be a truly 100% channel company means not just seeing your partners as an extension of your sales force, but seeing how you can fit into their business, to reduce their costs, and increase their overall profitability.
5. Are you enabling partners, or just certifying them?
Contrary to popular belief, certification isn’t enablement. Certification is the piece of paper that says you completed the training. Enablement is the ability to actually perform what you learned in the training. That requires planning, collaboration, support, repetition, making mistakes, and learning from them. To truly enable partners, you need to work with them on a few deals and support them until they become proficient. It also means working with their sales team, having a relationship with their managent team, training their technical teams, working with their operations team, and getting alignment with your respective finance teams. If all you’re doing is putting them on a training course and leaving them to their own devices, you’re not building a strong or capable channel.
Summary
If you don’t have the right people, or the right partners, a channel model will fail. It doesn’t matter if you’re 20% or 100% channel, it will fail. But once you’ve got those two things in place, you need to have the right approach, namely, treating partners as real partners, not as an afterthought. That means making sure your entire company knows how to work with partners, focusing on delivering real partner profitability, and enabling partners to create business, not just fulfil it.
If you need a hand getting your organisation (and I mean everyone in your business, not just the channel team) to understand how to become a truly 100% channel company, ping me at https://www.channeldynamics.com.au/contact-us/
