Channel Convergence Will Never Happen — and That’s a Good Thing
… the rapid change in technology and new offerings their customers are buying today.
MSPs are faced with additional challenges beyond the shift in buyer behavior. They are losing revenue to SaaS suppliers who are displacing the technology and services they have been offering. One example given at CP Expo was Office 365. It is killing MSPs’ very lucrative managed services for on-premise Microsoft Exchange. They want to add new services to replace this lost revenue without sacrificing their customer service-focused business model.
Dilemma for telcos and ISVs. Meanwhile, telcos are moving into providing cloud services such as SD-WAN and UCaaS that have longer sales cycles and require a consultative sales approach with more technical skills than their agents have or want to obtain. So telcos and other communications suppliers are logically turning to MSPs, who are a natural fit. But they are having a hard time getting the MSPs’ attention with their agent commission model that MSPs perceive as creating a loss of control.
Ironically, SaaS suppliers and independent software vendors (ISVs) are looking to capture the attention of agents and their vast customer base but are running into the same challenge when trying to push the reseller model.
Reality — and why this is good news. As any sales manager will tell you, compensation plans drive behavior. The agent compensation model of sales commissions drives a focus on, and rewards for, selling. Agents don’t have or think they need the technical and customer experience skills, nor are they motivated to add them under their compensation plan. They’re happy to sell new technologies as long as it doesn’t disrupt their model. Conversely, the MSP compensation model of recurring revenue from the customer drives a focus on customer experience much more than on selling. They are happy to sell new technologies, too, as long as it doesn’t disrupt their model.
The reality is that both models are needed in the market to serve the customer. Some products and services don’t require hand-holding and professional services for the customer to gain full value. It makes sense for customers to receive these directly from the supplier, even though they look to their local trusted partner to help them decide which service is best for them. Other products and services require more assistance or bundling with other products to produce the business outcome desired by the customer. These customers look to their local trusted partner to provide these services.
What suppliers need to do to win. Many suppliers today have products and services that fit both scenarios mentioned above. As a result, they need multiple partner types with different skills sets and different customer relationships. And even when the suppliers’ offering only falls into one of the two scenarios, they may need both the agents and MSPs to accelerate revenue growth. That’s why suppliers should embrace the different business models of agents and MSPs. They should offer different compensation plans in their partner program to attract and motivate these partners for what they do best. To be successful, suppliers need to …