Channel Partners Struggle with Transformation
… collected in a limited period of time, and against one or a limited number of discrete invoices. It does not work nearly as well when a client’s payments are received over a multiyear period, and where there is no master invoice defining total accounts receivable in a deal. In this situation, the channel organization can only pay the sales rep on a limited proportion (a month, a quarter, perhaps a year) of anticipated total revenue. The contract will define payments stretching over a period of time, but account value may vary (up or down) over the contract period — and few channel businesses have the resources or inclination to pre-pay commissions based on future expectations.
To align with the basic revenue model, cloud businesses often view sales commissions as tied to a book of business, in much the same way that insurance reps are paid: Each contract results in a small monthly contribution to the rep’s variable compensation, and the sum of these payments increases over time.
For seasoned reps who have substantial quotas and variable compensation expectations, this is a tough pill to swallow, and one reason why established channel businesses are having difficulty migrating away from product sales to hybrid/cloud sales.
Transforming from ‘Value Addition’ to ‘Value Creation’
Techaisle asserts that by 2020, all partners should predominantly be selling to line-of-business buyers and vendors should own the responsibility to train channels to use business language delivering business outcomes.
The familiar face of the IT buyer is fading fast. Line-of-business buyers and increased involvement of non-IT managers means there’s a new and expanded buyer community. On top of that, the channel struggles to understand and act on the new cloud-driven demands of a post-transactional IT market and the supply chain itself is undergoing tremendous change.
Today, only 46% of partners are focused on customer value creation. For many partners – or VARs where V stands for value-add – value is a well-understood construct.
What, though, is the nature of that traditional value-add? In some cases, it’s straightforward logistics — time and place of delivery of a product. In others, it is the addition of memory or storage to a central processor, the installation of software, the implementation of a system at a customer location, the provision of management services, or some similar type of activity.
Each of these value-adds has an important factor in common — it looks at what the channel does to enhance its own revenue stream or differentiation.
None looks at the issue from the other direction: in what ways do the products and services delivered create value for the channel’s customer? What is my client able to do differently or faster, or more efficiently in a way that enhances their revenue stream or differentiation? In an era of “good enough” technology, customers aren’t especially interested in optimizing the performance of their hardware and software widgets; they are focused on improving the performance of their businesses.
Transforming from ‘Lead Generation’ to ‘Digital Discovery’
According to Techaisle’s research, 53% of channel partners are still focused on …
… traditional lead-generation processes, such as referrals from vendors, distributors and customers, as opposed to investing in digital discovery. In fact, 52 percent of partners rely on distributors for leads, 51 percent on vendors and 49 percent on customers. Only 20 percent have been successful in generating leads through digital discovery.
Sadly, lead-generation trends have been stagnant for the last three, with partners relying on the same old processes.
It is Techaisle’s assertion that by the end of 2019 every channel partner must participate in digital marketing and be able to generate leads through long-tail content. Additionally, Techaisle contends that vendors should support discovery programs.
The traditional campaign approach to driving new customer engagement is no longer as relevant to a model that begins with internal (to the customer) research and ends with contact between a prospective customer and a potential supplier.
Techaisle research shows that one-half (50 percent) of the purchase-decision process is completed prior to first contact with a channel partner. An extensive and expensive lead-generation campaign will likely uncover some “ready to buy” accounts, but this is less a matter of developing opportunities than of identifying established demand.
If the customer journey begins with research online, the marketing imperative begins with digital discovery — or the ability to be identified as a source (of value, or partnership, of innovative offerings) in the early stages of the research. This requires the channel marketing team to invest in thought leadership in key business areas and in the tactics (SEO, retargeting and so on)) needed to put thought-leadership messages in front of prospective customers, and in the processes needed to nurture new contacts to the point where they become sales-ready leads.
The process required to arrive at this point is much different in the post-transactional world.