Why do so many IT vendors treat their Channel partners poorly when the channel can make or break a business?
After 25+ years working in various roles with a number of small & large Information Technology vendors I have often wondered why so many seemingly smart people don’t wise to the way they work with Channel partners.
I think there are lessons in how IT vendors work with partners that can be applied to many industries.
The use of Channel partners can be a fantastic way to get your products into the hands of new customers with minimal use of marketing and traditional methods of direct outreach.
Invariably the channel partners are already doing business with the customers you want to attract.
Alternatively, the channel partners may be in putting together a larger solution that includes some of your products as well as those from complimentary vendors.
An individual or business that sells products or services on behalf of primary computer hardware or software producers. Examples of channel partner types might include: consultants, value added resellers, system integrators, managed service providers and distributors**
** – http://www.businessdictionary.com/definition/channel-partner.html
This post is going to discuss some of my experiences over the years in utilizing the channel and some suggested “best practices” for vendors looking to leverage the best that a good channel partner can bring to the table.
Experiences: the good
I once worked for a small specialist vendor that sold the leading ETL (Extract Transform & Load) tool for use in large data migration and data warehousing projects.
This was around the time of Y2K and there was a huge demand to migrate off old legacy systems or to extract data from multiple legacy systems so that the data could be mined for business insights.
Our competitors couldn’t touch us for performance on large volumes of data!
Although, the differentiating factor that really helped to dominate the market was our very close partnership with IBM.
The product was on IBM’s price list, which made perfect sense as IBM dominated the mainframe market.
For a little vendor we won some pretty big projects working with our colleagues from Big Blue.
IBM gave us the credibility we needed with large clients. All we needed to do was to sell the solution benefits and make sure the product ran smoothly once in production.
Experiences: the not so good
Fast forward a couple of years and I found myself working in a much larger vendor that dominated the open systems infrastructure market.
When I joined, we able to leverage a large reseller base to help us penetrate our target accounts.
This model generally worked well until we experienced a management reshuffle and the new local managers came in and started to shake things up a bit.
One of the first edicts was that we were now going to “sell direct and deliver by the channel”.
This in itself wasn’t such a bad idea, but it is open to interpretation how to implement this approach.
Some in our sales team had become lazy had relied on the channel bringing them deals.
This could be thought of as being behind the channel in a deal. i.e. the channel held all the relationships and the rep supported the channel.
In reality, the sales reps were required to get in front of the deals and make sure the customer knew the full breadth of our solutions from our engineers and sales reps.
So, what happened?
Well for some of us who leveraged the channel and worked with them, it paid in spades – more commission and plenty of awards from our management team.
For others it ended in tears:
- bullying the channel about who “owns” an account;
- not working with the channel but effectively against them in accounts;
- offering the customer discounts that came from the channel partners margin;
- supporting your favourite partner over another who had been working in the client for years;
- and many more indiscretions.
I think you will be able to guess what happened to these reps?
So why is there conflict in vendors in regards to channel partners?
In my experience these conflicts all stem from internal politics and bad management directives.
Get rid of these two issues then some of these vendors who fall into these bad practices might actually be pleasant places to work.
Too many managers in large vendors spend more time reading Machiavelli’s The Prince than actually managing the business.
Their entire aim seems to be how they get climb higher than their counterparts on the company totem pole.
So often, their decisions & directives to junior staff are entirely aimed at hurting their political counterparts instead of benefiting the business they work for.
How should vendors work with channel partners?
To get the best out of your channel partners then I suggest you:
- Treat the channel as true business partners;
- Pro-actively bring them deals from your prospecting efforts;
- Support the partner who registers the deal;
- Police discounting rules intelligently & fairly;
- Strategise the target account with the partner;
- Respect the Channel partners advise on solution fit as they often have a wider range of expertise than you.
- Never discuss deals you are working on with other partners.
- Work was a team
- Make sure your messaging is heard by the customer
Like any true business partnership to get the best out of your channel partner then treat them with the respect.
At the end of the day people still do business with people they respect.
Gain their respect and you will have a channel that will make you a lot of money!
I trust you found this post useful.
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Happy & Prosperous Selling