November 6, 2023
Vendors can improve their relationships with the channel by building dedicated MSP programs that help partners create the most value for their clients’ IT ecosystem, according to a new Canalys poll. In doing so, vendors must have a strong sense of their position in the market and realize that all MSP programs should not be the same.
About 70% of channel partners polled said a dedicated MSP program improves their relationship with a vendor. The message comes as many vendors are working on updating their partner programs. Vendors have to take a hard look at how an MSP program should differ from a broad partner program. A vendor specializing in remote monitoring and management tools aimed at a core customer base of MSPs – such as Kaseya or ConnectWise, for example – has different needs than vendors like HPE, Lenovo or Dell that focus on infrastructure hardware, the Canalys report notes.
The need for larger vendors to create the right MSP-focused programs becomes increasingly important as more former MSPs start their own technology vendors and create successful partner programs based on their first-hand experience dealing with a variety of vendors. David Payne, CEO of Payneless Computer Solutions in Melbourne, Australia, and Chris Noles, CEO of Beyond Computer Solutions in Canton, Georgia, two of Channel Futures’ NextGen 101 MSPs, recently told us vendors like Rewst, a SaaS company founded by former MSP Aharon Chernin in 2021, deliver programs and customer service that put the needs of MSPs first. Bigger vendors, they said, should take note.
Vendors Must Know What They Want
Canalys, which was recently acquired by Informa Tech, owner of Channel Futures, suggests vendors distinguish what they want to incentivize through their program. If they’re looking to drive more recurring revenue, for example, the program should reward partners only on sales of SaaS. Canalys states that may not be a pure MSP program, since it doesn’t specifically drive or enable managed services. But it would share similar elements to an MSP program, such as flexible billing methods. For a more defined MSP program, vendors should focus on the program that benefits a managed services business model over a transactional resale model. That could include specific technical certifications on managing the vendor’s technology, MDF for building marketing campaigns around managed services offerings, sales enablement tools, business model consulting and MSP-specific QBRs, as well as financial incentives for partners selling on a recurring revenue basis.
MSPs aren’t the only type of partner seeking a dedicated program. The poll also found that a similar percentage of resellers, systems integrators and managed service providers felt a dedicated program would help address their needs when it came to their managed services relationships with vendors. They are looking for the right mix of incentives, assistance and external marketing tools for a managed services model.
In a key element of the poll, respondents underscored the value of MSP-specific certification to demonstrate the partner’s capabilities in delivering managed services on a particular technology. Partners continue to see value in these badges and logos where the level of training is high enough to differentiate between partners that have earned these badges and those that have not.
Certificates and Badges Helps Separate the Good MSPs from the Bad
Roman Golshteyn, president of The Computer Guy in Sterling Heights, Michigan, another MSP that earned a spot on the NextGen 101 list, told us those types of certifications and badges are needed today as more inexperienced MSPs enter the market, oftentimes delivering substandard service to unwitting customers. Partners say it’s important the certificates are attainable for smaller MSPs and are not revenue-driven, Canalys wrote.
Canalys pointed out a big difference between MSP programs and resell programs. Vendors must recognize that value in a managed services world is created between the partner and the end customer, regardless of technology. Where technological differences exist, it is in the way technology is leveraged. In RMM, for example, the technology enables the partner to monitor and manage the health and security of other technologies such as PCs and servers. In infrastructure-managed services, the value could be in managing the servers, the workloads and applications that reside on them, analyzing the data produced as a result, and the overall security of the hardware and the software. It’s clear these two distinct technologies, RMM and servers, and the vendors in those spaces, could learn from one another on basic elements of their MSP programs, Canalys wrote. Those include flexible billing, partner enablement and MDF, even if they are serving two different but overlapping partner bases.
The poll responses, however, were not universal. The poll data and partner conversations reveal MSP programs are not always necessary or they become too commoditized, Canalys wrote. If poorly structured, they can do more harm than good. No partner program will please everyone or engender equal involvement, but if vendors approach the MSP program as a distinct, iterative entity, they may generally produce something of worth, according to Canalys.
Incentives, Requirements, and the Nuts and Bolts
Here are some other key points from the poll regarding incentives, requirements and other elements of MSP programs.
In MSP programs, there is little consistency in the approach between volume and value and it is one of the biggest frustrations of partners who see some MSP programs as little more than reseller programs by another name.
There are ways to structure an MSP program that rewards both, in order to recognize the value of the partner to the customer, even if they do not generate large amounts of revenue for the vendor, while also leaving space for those larger resellers who are still growing their managed services capabilities.
An obvious method is to reward highly certified companies with greater levels of technical and sales support, MDF funding and lead generation while providing volume sellers who have lower levels of certification with higher discounts. It is not a perfect system and there are many potential pitfalls, but it can be useful for specific vendors who are managing their own transitions toward MSP models.
In programs where MSPs are the large majority of the vendor’s base and where the partner is the primary customer, there can be a mix of models as the vendor wants to reward its heaviest revenue-driving partners but also does not want to stifle the opportunities for smaller partners who are still delivering value.
In these circumstances, a vendor can offer access to special programs to help small MSPs build their business size, such as business model consulting groups that provide sales and marketing strategy and industry benchmarking tools.
Whichever path is chosen when building an MSP program, vendors must first understand their own value in the managed services landscape. How do their technologies enable partners to drive services for end customers? And what kind of partner is most likely to engage with that strategy?
The answers to these questions allow a vendor to decide if their program is geared toward large resellers that are moving toward managed services or if they are primarily dealing with pure MSPs, the majority of which are selling into the SMB community. This also allows the vendor to decide which kind of incentive structure they are looking for and whether they need a distinct MSP program or simply a certification within a broader program. In this case, they allow specific resellers to differentiate themselves without overhauling their dominant channel model.
Too often MSP programs are built primarily to benefit the vendor in a way that does not require significant investment or change. These programs can see little engagement unless the vendor holds such a significant share of their market(s) that partners have little choice but to engage and are seen as less valuable to the channel.
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