June 6, 2022
By Kirk Horton
The channel landscape is going through a major transformation. Rapid consolidation, with larger service providers acquiring smaller players, has resulted in weakening the competition while equipping acquired companies with the expertise (and customer base) they need to dominate in their respective markets.
Private equity and investment are also game changers, with VC funding flowing into the IT channel like never before. All these moving parts have resulted in rapidly evolving vendor/partner relationships. There is still tremendous opportunity for midtier partners and independent consultants with expertise in niche markets such as telecom, security and cloud infrastructure services, etc., to bolster their reputation and help vendors expand the reach of their offerings beyond their respective comfort zones.
Quality Over Quantity
Another change that has shaken up the vendor/partner status quo is that today’s channel programs are all about quality over quantity. The old mantra of signing as many partners as possible and hoping this will lead to more deals was unrealistic, unsustainable and unproductive.
For channel programs to lead to successful outcomes, there must be material value and alignment for both the partner and vendor to justify the investment in the partnership. The relationship needs to have strategic value for both parties and be reciprocal in nature. This requires that both the partner and vendor make deep investments across all levels of their respective organizations to make the partnership mutually successful.
To build and maintain a thriving channel organization, the vendor must also vet and choose the right partners, making sure they’re a good fit from a portfolio perspective and have a proper program in place to support the partnership.
Why Vendor-Partner Relationships Fail
Before exploring the key elements for a mutually successful partnership in the highly competitive technology industry, let’s review some of the more common reasons vendor/partner relationships fail:
The one-way street conundrum – Some vendors expect their partners to be lead engines. Partnerships are like any personal relationship in that they require good communication and an alignment of goals. This misconception commonly leads to a failure to live up to expectations and the eventual failure of the partnership.
Misalignment of goals – The service provider may have an expectation that isn’t in alignment with the vendor’s partner strategy, or the vendor may provide services or products that don’t match up well with the partner’s core expertise. This creates false expectations, which are accelerated by poor communications.
Poor training and enablement – There’s minimal chance for partnership success if vendors don’t provide the partner company with rigorous training and an enablement program that reinforces the vendor’s value proposition. Without proper training, the partner’s sales team won’t be equipped to ask the customer the right qualification questions and assess the opportunity correctly.
Bringing ‘Harmony’ to Channel Relationships
So how can vendors and their partners build mutually successful, long-lasting relationships? First, rather than having the direct sales team compete against their partners, which can degrade trust (and the relationship), the most effective approach to building a successful channel program is by using the “harmony” model. This entails the integration of sales organizations that enables direct sales through the channel and vice versa.
Not only does this create synergy and harmony, but vendor sales representatives are also incentivized to work with partners in a more collaborative fashion and partners receive the training they need “on the job.” This includes equipping partners with case studies, resources and a proper training regimen that includes …
… a virtual walk through of an actual client engagement. The more training, the more comfortable the partner will become with the summary elevator pitch that provides just enough information to get buy-in from the potential customer. Most service providers want to expand their portfolios, including embracing new technologies and new markets, which is all possible with the right training and enablement. This more collaborative approach to deal flow builds trust between partner and vendor while enabling “load sharing” — providing the customer with the best possible service and outcomes.
One invaluable tool that vendors can provide their partners with is a “battle card,” which consists of a two-page summary of the product offering, features and benefits, the value proposition and company overview. This can be an invaluable cheat sheet for partners that are just being onboarded.
The Many Flavors of Channel Programs
Another key element for a successful partnership to consider is that there are many different flavors of channel programs — one size does not fit all. Depending on the size of the company, a distribution channel may not be the right choice. For emerging growth companies, a referral and a reseller program provide the best frameworks to enable companies to scale as they grow.
One key benefit of a referral program is synergy with partners that don’t want to carry their own contracts. This lowers the risk for smaller service providers and other partners that may not want to take on risk. A resale model typically requires the partner to execute its own contracts and provide tier one escalation and support services, which requires more of an investment and is higher risk than a referral program. It also requires massive investment in the partner, which can be a challenge to smaller emerging growth companies.
Another advantage to referral programs for emerging growth companies is the ability to strengthen the bond with customers while building brand equity. While reseller and distribution models degrade some of the company’s brand recognition, referral programs allow vendors to retain some control of the customer relationship. Partners are incentivized for referrals and collaborate with vendors, while the vendor maintains control of product delivery, after-sales service, etc., all which work to maintain brand recognition, which is critical to smaller companies that want to scale quickly.
The IT channel has evolved dramatically over the past decade. Emerging growth companies can take advantage of referral and reseller-based partner models to accelerate company growth, create new revenue streams and attract a new breed of customer. The goal is to continue to provide meaningful value to the customer, and this requires a vendor/partner relationship build on a foundation of trust, and an alignment of values, goals and core expertise.
Kirk Horton is channel chief and vice president for channels and partners at Netacea, where he is helping build Netacea’s partner organization. His previous experience includes executive positions at Akamai, IPR International, QTS Realty Trust, Nautilus Data Technologies, Telx, Cable & Wireless, Digital Island and Sandpiper Networks. You may follow him on LinkedIn or @Netacea_AI on Twitter.
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