I hear many times from vendors about channel partners who didn’t work and within a short conversation it becomes clear why. It’s always easier after the fact to determine what went wrong, but it's also easier to point out the lessons learned and how the wasted time could have been prevented.
Like in everything in business, it takes time and effort to make things work. Bluebirds with overnight successes make great stories because they are not the norm.
Vendor success in working through channel partners is not defined by the signing of the agreement, but in the successful joint market engagement that gains the market's interest, builds a sales pipeline and delivers joint customers for the partner and the vendor.
Like all management decisions, you must make the best of the information you have at that time to make your decision. But many mistakes could be avoided if business leaders didn’t put barriers in the way of their channel partner market engagement:
1) Poor Partner Fit, and Assuming Interest and Relationship is Enough
There are a number of simple and practical points to cover to ensure partner fit exists for both vendor and sales channel partner, yet these are often ignored or assumed out of pure enthusiasm and excitement.
Just because the channel partner is interested and you have a good relationship are not sufficient reasons to work together—this is only sufficient reason to evaluate partner fit.
2) Fighting for Your Share of the Big Time
Business leaders must have the mindset for partnering. If a vendor is always only looking out for its share and pushing the channel partner to deliver all the time, I’d have serious doubts whether results will follow or last.
In one recent customer project—and this is something I’ve seen a number of times—a complicated partner agreement that made onerous demands on the partner delayed discussions for three months with four partners. We lost the opportunity completely with one of these partners and had to work hard to get one other back to the table. The agreement didn’t represent our discussions up to that point and the sudden legal stance lost trust with the partners that had to be regained.
Fighting for too much of the "Great success the partnership may bring" before the relationship has even started turns out to be pure "nuts" in so many cases when the market engagement doesn’t happen.
What’s the worst that could happen if you just trust each other, keeping it simple and engaging the market to see if there is an opportunity in working together?
3) Protecting your Company for the Worst that Will Likely Never Happen
It is prudent and good business practice to protect your business, but when strong stances prevail and practical solutions are not sought quickly, so much time, trust and positive energy are lost. This is the positive energy that should be used in engaging the market together.
I’ve seen possible great opportunities lost because of extremely cautious non-sales focused executives who only saw risks, when there were no fixed costs required to bringing in possible sales opportunities.
Everyone should question their attitude to risk, to ensure it is being applied appropriately. If an over-cautious business stance is stopping your organization from being sales- and customer-focused, then fix it quickly as a matter of highest priority, please.
What’s the worst that could that could happen? You might win customers and business you would not have gotten before.
4) Detailed Planning for the Coming Three Years, Assuming There’s a Big Market
I’ve seen a great practice that worked very well for a major vendor, wherein the channel partner had to complete a partner business plan on how it would build a business around the vendor’s product. It worked well because the vendor provided significant support in the planning and training on how to sell, implement, support and build a successful business around a proven product.
I’ve seen the same practice adopted by a much smaller company with the same proof that the market will accept the product, but without the level of vendor support in planning, sales support or brand in the marketplace. The practice demanded a huge commitment from the partner that no doubt takes great effort to convince the partner of the opportunity and in the end fails to get engagement with many more partners.
How much planning is needed to get to what is the most important activity required?
5) Demanding Targets and Commitment Like You’re the Partner’s Only Business
A very regular question with companies new to sales channel development is, “What is the standard partner commission percentage on a software product?” This is only one part of the overall negotiation to be considered. So even though many companies struggle to determine their own standard commissions, they fight and negotiate so hard with partners on what commissions they will get.
Equally, I hear business leaders speaking very strongly about setting demanding sales targets with their channel partners. The words are stated in "fighting talk," that they will win the battle that is negotiation, which misstates the entire purpose of the partnership. The resulting agreement should be a win for both parties—a balance that makes sense for both. With a sense of balance and partnership missing from many, partner discussions can be protracted with ego taking too much place at the negotiation table.
Negotiations of partner agreements can be straightforward when approached by both parties in a practical manner. We don’t know what is going to work until we try. Even if something worked perfectly in another market or even another partner in the same market, the important thing is that we start and test what we believe will work. Targets can be set that are achievable when we have a good view of what is achievable. Targets are put in place to incent the partner action, but revenue-only focused targets are often used as a blunt tool whereas activity-based targets are closer to what both parties really need.
So, stop acting like this is your first time, even if it is. What if you had a partner who would engage the market and test your proposition and start building a sales pipeline very quickly with minimal delays in discussions or agreements? Then you would have faster market engagement while being practical about the shared risks and shared rewards.