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Exploring the Channel Disconnect

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CHANNEL DISCONNECTwithin Technology Vendor Partner Programs
Optimising Your Reseller
Partner Program
INTRODUCTION
As the hardware technology industry
matures and different technology service
providers across the cloud, software as a
ser...
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Exploring the Channel Disconnect

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Exploring the Channel Disconnect - within Technology Vendor Partner Programs.

Many vendors, across hardware and software enterprises, are struggling to engage and benefit from their partner programs.

This whitepaper explores some of the ways the UK technology channel is struggling with optimising their reseller programs, and steps they can take to improve their partner programs - to ultimately increase revenues, reduce the cost of sale and provide a more rounded experience to customers.

Exploring the Channel Disconnect - within Technology Vendor Partner Programs.

Many vendors, across hardware and software enterprises, are struggling to engage and benefit from their partner programs.

This whitepaper explores some of the ways the UK technology channel is struggling with optimising their reseller programs, and steps they can take to improve their partner programs - to ultimately increase revenues, reduce the cost of sale and provide a more rounded experience to customers.

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Exploring the Channel Disconnect

  1. 1. CHANNEL DISCONNECTwithin Technology Vendor Partner Programs Optimising Your Reseller Partner Program
  2. 2. INTRODUCTION
  3. 3. As the hardware technology industry matures and different technology service providers across the cloud, software as a service and analytics areas enter the fold, traditional channel programs are struggling to rectify the problem of the ‘channel disconnect’. The channel disconnect exists because vendors originally set up channel programs with the aim of driving revenues and market share without the high investment required to build their own larger sales forces and associated operational infrastructure. However, vendors often drive and incentivise their channel to achieve different results from their original objectives without realising it. In addition, channel partners often have different drivers and objectives to those of the vendor. This creates a channel disconnect. Channel Disconnect in the Technology Industry © The Sales Way 2016 P.2 www.thesalesway.com INTRODUCTION
  4. 4. BACKGROUND
  5. 5. Channel Disconnect in the Technology Industry © The Sales Way 2016 P.4 www.thesalesway.com BACKGROUND Many vendors and resellers have lost sight of the reason why channel programs were created: to enable vendors to reach many more customers, without having to invest in their own operations and sales forces. The channel program concept enabled vendors to outsource the selling of their product to third party companies (resellers) who are incentivised to sell the product on the vendor’s behalf. What makes this program work is that the vendor creates the product and ensures there is a smooth process to manufacture, market and deliver the solution, whilst the reseller takes on responsibility for finding the customers and selling the product. Yet what often occurs in reality is that resellers are either incredibly self-sufficient and do not engage with the vendor, or they rely heavily on vendors to do a lot of the selling work which should instead be completed by the reseller. This results in a disenchanted and discon- nected channel. Resellers are often self-sufficient and unhappy at the intrusion of vendors into their customer opportunities. Or, in other cases, vendors are forced to employ large channel teams to support channel queries, issues, marketing and sales activities in order to ensure a sale happens. Resellers are often unhappy with the vendor for not ‘doing more’ and there is an increasing expectation that vendors should bring qualified sales opportunities to the resellers. However, this is unsustainable in the long term for vendors and goes against the very reason for which channel programs were originally created. This is why we are now seeing increased dissatisfaction from vendors about their resellers’ performance, and resellers’ unhappiness with the support coming from their vendors. The advent of newer software providers offering simpler affiliate programs that resonates with their reseller base only seeks to intensify the disconnect experienced by traditional vendors who are trying to better connect with their channel again. The range of vendors that the modern reseller has to keep up with is expanding; some resellers now sell traditional hardware from one set of vendors, licences from their software vendors, cloud services from a range of other vendors and web-based software- as-a-service from an entirely different set of vendors. This can be difficult to manage, price, sell and understand; and that is before you have developed strategic sales messaging and processes to sell each product effectively. resellers are often self-sufficient and unhappy at the intrusion of vendors into their customer opportunities
  6. 6. The Vendor Channel Manager
  7. 7. www.thesalesway.com THE VENDOR CHANNEL MANAGER Channel Disconnect in the Technology Industry © The Sales Way 2016 P.6 Vendor Channel Managers have a broad remit and their responsibilities tend to fall across many of the following areas: Recruiting new partners Growing the vendor’s share of wallet within existing partners Growing overall reseller revenues Increasing profitability of partner sales Making it easier for partners to sell a vendor’s product Administering sales and product training programs Creating incentive programs at the partner manager/director level and partner sales level Developing joint go-to-market strategies with partners Crafting partner-focused solutions, rather than just products and services Enabling vendor messages to transition through the partner ecosystem to end customers The channel manager often does not have the authority to drive change in a number of the above areas, such as developing solutions rather than just standalone products – as these tasks sit at the corporate marketing level within the reseller and the vendor’s products are often not attuned to the resellers who will eventually sell them. As David Ricketts, Head of Sales and Marketing at C24 (a Six Degrees Company) commented, “Volume resellers and niche resellers should be approached in different ways as their business models are often completely different”. Gus Safadi of KAINOS Channel, a channel sales and outsourcing company in San Diego, USA, added that, “Many programs are designed for the big resellers with volume sales rather than the reseller that might be smaller but loyal to them.” The vendor often treats all resellers as broadly similar; it does not change its product proposition depending on the reseller being a cloud service provider or a traditional hardware reseller. The vendor may develop separate channel programs for each reseller type, but the product and its messaging often remains the same. Channel Managers must therefore focus their efforts on making it as simple and compelling as possible for resellers to take on their technology solutions and sell them on to clients whilst making the process as profitable and valuable as possible for the vendor. These two sets of drivers can often be in direct competition with each other. “Volume resellers and niche resellers should be approached in different ways”
  8. 8. www.thesalesway.com THE VENDOR CHANNEL MANAGER Channel Disconnect in the Technology Industry © The Sales Way 2016 P.7 Simple • Incentives and commission should be compelling to the reseller salesperson and partner management • Revenues should have the potential to be at a significant level to be classed as an important part of the reseller business • Product, solution or service should be attractive and desired by customers to drive sales and interest to the reseller. Compelling ValuableProfitable • Simple to understand and learn the product information • Easy to purchase, quote, resell an deliver • Convenient to do business with the vendor throughout the sales cycle • Each sale should deliver and appropriate degree of profitability to the vendor • Fewer vendor resources are required to sell the product, reducing time and staff costs involved in each sale • Each sale should deliver and appropriate degree of profitability to the vendor • Fewer vendor resources are required to sell the product, reducing time and staff costs involved in each sale VendorObjectives In order for Channel Managers to attain these objectives for both the reseller and the vendor, there are a number of factors which impact whether the Channel Manager can influence partner businesses to move towards the key objectives of the Vendor’s channel program. RESELLERrObjectives How is your product being sold? As a vendor, do you understand all the ways in which your product is being sold? Maybe you have the luxury of keeping tight control over how the product is marketed, utilised, packaged and sold. Very often, vendors do not control this, and are unaware of their reseller’s business model and sales messaging, and as a result, vendors target resellers with inappropriate messaging and incentive programs that can’t be applied to the reseller’s customer base.
  9. 9. Exploring the channel disconnect
  10. 10. www.thesalesway.com Exploring the channel disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.9 There is no one formula to explain the channel disconnect, yet rather a series of patterns or ‘situations’ that create an overall picture of a complex relationship between vendor and reseller. Customer Disconnect For a customer to have rece- ived a call from a reseller account manager about a new technology solution, the initial sales message and initiative may have travelled through 5 different teams before it reaches the customer. This process can become more complex if the reseller is creating co-branded marketing in conjunction with the vendor marketing team. Fundamentally this is a problem, because at the heart of the relationship, as Matthew Bell, Channel Manager at MOBI Wireless Management puts it, “The customer is the most important aspect and without them, the partnership is pointless.” Reseller Management and Sales Disconnect ChannelManagersmustalsocontendwiththe disconnect between Partner Management and Partner Sales People within the reseller itself. Although both groups work at the same company and in the vendor’s eyes are one entity, within the reseller they have completely different drivers and therefore require different approaches. Partner Management is driven by different incentives to those of the partner reseller sales team
  11. 11. www.thesalesway.com Exploring the channel disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.10 Vendors often strike deals with the management or directors at a reseller. These deals make great business sense and both can appreciate the benefits. They just need the reseller’s sales team to take this message to market and find new customers. And that’s where the process stops. Partner Management is driven by different incentives to those of the partner reseller sales team. The partner will have put in place a reseller compensation model that drives sales teams to reach certain targets, but that doesn’t mean the targets include the vendor’s product portfolio. The Partner Management team are typically focused on growing margins (as that creates higher dividends) and overall business revenue growth. Rebate payments from vendor sales may go straight into the partner’s accounts and never touch the reseller salesperson’s compensation. Reseller sales teams are focused on achieving their target, which also may be made up of margin and/or revenue targets. Kickbacks on selling products from vendors doesn’t always translate to higher commissions for the reseller sales person, so they will be motivated to attain their set targets; regardless of which vendor supplies the product. Very often, vendors develop one Key Account Plan for partners, when in fact there should be two. One for partner management that focuses on overall business growth, PR, marketing, and profitability, and another for the reseller sales teams which focuses on training, revenue growth and processes. Balancing both teams means that decisions agreed at Partner Management level can actually translate down to the sales floor. Very often, Partner Management is in the same position as the Channel Manager – they would like their sales teams to sell more and they see how vendors could help in providing a stream of products and services to bolt on to their existing offering; however both the Vendor Channel Managers and Partner Management cannot make that sales increase happen alone. Demonstrating to Partner Management that there is a clear path provided by the vendor for sales enablement, remuneration and sales support to aid the reseller sales teams, ensures that there is a firm next step after a channel contract is put in place – rather than Partner Management assuming that the vendor is responsible for taking the partner forward and the vendor expecting the partner to go away and put their own plan in place. vendors develop one Key Account Plan for partners, when in fact there should be two: one for partner management and one for partner sales reps experts are now advocating the idea of creating technical engineer led incentives and engagement propositions between vendor and reseller
  12. 12. www.thesalesway.com Exploring the channel disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.11 This is why vendors create incentive programs aimed directly at the reseller sales person. However, these programmes can sometimes be associated with units sold rather than revenue figures, so the result is a sales force driven to sell product numbers whilst the vendor wants to drive highly profitable, strategic deals over the long term. Conversely, if the reseller is a strategic supplier who engages with their customers to find the correct solution for the client, an incentive program that drives them to sell a certain number of units is unlikely to impact on their behaviour. Their focus is on winning the deal, and that involves providing a superior service to the client. It does not depend on selling more units of a product purely because of a vendor’s current marketing campaign. Furthermore, the values associated with these unit sales incentives are often low and become a “nice- to-have” rather than a “musthave”. This can sometimes create strained relationships between the reseller and vendor as it puts pressure onto a reseller who may be doing all they can to grow business, yet the results are unsatisfactory for the vendor. Vendors often only engage at one level within a partner account (usually where they have the most success). However, without a joined up approach, the outcomes are never delivered. Engage with management alone and the selling is never done, or engage with the sales teams and management will not have put in place the processes to make selling possible. Whilst engaging at both a management and sales level is a safe place to start, some experts are now advocating the idea of creating technical engineer led incentives and engagement propositions between vendor and reseller. “A lot of time, sales engineers at resellers are at the fore front of engagements with customers, so we need to look at what can be done for them”, comments Gus Safadi of KAINOS Channel. incentives can sometimes drive the opposite behaviour that the vendor is trying to achieve Partner compensation disconnect There exists a partner compensation disconnect within many channel programs, which reduces the efficacy of incentives. Vendors often make agreements on partner compensation at a board level between vendor and reseller management teams, yet these incentives may never trickle down to sales teams who are driving product sales. To attempt to compensate for this disconnect, many vendors also introduce incentive programs that reward sales teams, yet the rewards are often so low that sales teams ignore them completely, or the incentives are earned in such a way that makes selling what the vendor wants contradictive to the original incentive. For instance, vendors often state that they want strategic, multi-year, multimillion dollar sales yet they reward reseller sales people on how many components they have sold in a given month. This drives the opposite behaviour that the vendor is trying to achieve.
  13. 13. www.thesalesway.com Exploring the channel disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.12 The vendor disconnect Vendors are struggling with understanding how to effectively engage with their channel partners. In recent years, traditional resellers have morphed into a variety of business models; offering cloud services, specialist integration services or software-as-a- service solutions, to name just a few. This has meant that traditional approaches to partner management does not work with a large majority of resellers, however many vendor programs have remained the same, creating a vendor disconnect. • Vendors do not have plans in place to engage effectively with new models of resellers (i.e. MSPs, Cloud Service Providers, SIs, ISVs.) Many resellers now offer a variety of these services in-house, rather than being solely a transactional reseller therefore the mix of reseller types is changing. • Resellersareincreasinglyofferingservices that encroach on vendor offerings in a bid to differentiate themselves in a competitive, and declining traditional reseller market. • Vendors want strategic deals generated and delivered by partners, however they incentivise resellers based on short-term product sales goals. • Incentives are focused purely on revenue generation (i.e. not onboarding, training, prospecting, engagements) – however making the sale is the last step in the customer engagement process. • Vendors market the idea of “partnerships” with their resellers but then engage, lapse, engage, and lapse in their partner onboarding and management process. Partners often have multiple different Account Managers at the vendor over the course of a 2 year period creating a degradation in the strength and longevity of relationships. • Vendors want to work hand in hand with resellers but competing teams within vendors often circumvent the channel process and engage directly with customers despite channel teams already being engaged. Even if this is only true in just a handful of cases, it quickly impacts on resellers’ distrust of engaging early on with vendors on significant customer opportunities. Research from Ruby Newell-Legner, “Understanding Customers”, estimates that it takes 12 positive experiences to make up for one unresolved negative experience. • Vendors themselves do not trust a large majority of their resellers and therefore do not share critical customer information with them and vice versa. • Vendors may think that they want resellers to be skilled up and autonomous in their dealings with clients, however vendor sales teams often get involved in customerssalesanddemandmicroscopic detail on customer projects in order to ‘check up’ on the reseller’s activities. resellers are increasingly offering services that encroach on vendor offerings Vendors must therefore critically assess the behaviours they want to encourage within their partner base and analyse whether their current actions encourage or discourage those behaviours (i.e. incentives based on product units/revenue).
  14. 14. www.thesalesway.com Exploring the channel disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.13 The enterprise and SMB disconnect Channel Managers must also look at their marketing practices, to take enterprise vendor marketing to SMB partner marketing. Not all partners focus only on SMB customers, but many are SMB organisations themselves, and many of their customers are too. The marketing created by vendors is predominantly enterprise focused – with a bias towards promoting solutions costing multi-millions of dollars despite the average reseller deal being much lower. Content must be readjusted to suit the partner’s customer base. Some vendors create specialised “SMB campaigns”, however the SMBs they are targetting probably does not even identify themselves as an SMB; they define themselves as the industry they work in (legal or financial, for instance) or as the service they deliver (i.e. marketing services), rather than “an SMB company”. More awareness of the budgets, outlook and challenges faced by your resellers’ customers would ensure your marketing campaign is better equipped for success. marketing created by vendors is predominantly enterprise focused
  15. 15. Recommendations for Addressing the Channel Disconnect
  16. 16. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.15 What is preventing Channel Mana- gers from reaching their objectives? The key objectives of a Vendor Channel Manager appear straightforward, however there a number of factors that prevent vendor channel management from having a positive impact on partner revenues and sales. It is worth noting these key areas as we often forget them in day to day activity. Firstly, as channel programs grow, it becomes very difficult for vendors to dedicate sufficient time to each reseller. Early stage channel programs are often very successful as lots of time is dedicated to enabling those first few resellers; providing them with heightened support, lots of onsite help and more flexibility over pricing. As the channel program matures and more resellers are added, it is unsustainable for Partner Account Managers to dedicate the same level of time to individual accounts, and therefore the high standards slip and the results are less dramatic. It is not possible for each partner to have months of dedicated channel enablement services from the vendor, however putting in place a standard approach to onboarding – that aligns to the partner’s needs and not just the vendors, will enable a systematic and consistent approach to channel onboarding. Whilst the majority of technology vendors may have an official approach to channel management, the approach to account management often varies between Partner Account Managers. The initial stages of onboarding are usually very formal as legal and contractual details are finalised, however the various stages of enablement, training, skill gap awareness and customer engagement support usually depend upon the individual resellers and vendor account managers. as channel programs grow, it becomes very difficult for vendors to dedicate sufficient time to each reseller Many channel programs are now bloated and contain a proportion of resellers that do not fit the ideal requirements of the vendor (i.e. 80% of revenue will come from 20% of partners) so channel teams should critically assess their partner base and make cuts where needed, to prevent more time and resources being wasted, by both the reseller and the vendor. This will not be an easy process and will cause upset among a number of resellers, but if the opportunity with the reseller doesn’t exist and sufficient time and resources have been deployed into the reseller with no effect then it is time for the vendor to move on. This is important, otherwise it takes away time from your most productive partners. The reason many of these resellers stay on the vendor’s ‘books’ is often due to two reasons: • The vendor does not want to show a decline in achievements against targets (whether that’s revenues or number of channel partners who they transact with). • The vendor account teams change regularly so partners are just migrated to new vendor account managers rather than being assessed as a good fit or not.
  17. 17. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.16 Channel onboarding Channel Managers must look at how they can reduce the time it takes to get resellers onboarded and enabled to sell solutions. The quicker this can be completed from initial vendor and reseller engagement through to first sale, the lower the cost associated with future customer opportunities will be. Channel Managers should be looking for ways to ensure partners are ready to sell, through sales enablement activities, joint sales planning and customer profiling initiatives. Having a company standardised model of enabling reseller teams is the best method to ensure consistency across the vendor’s Partner Account Management team, and should ideally mirror the processes of the vendor’s own sales teams. Improving the quality of vendor Partner Account Managers Channel Managers are trying to ‘push’ a message from their own internal marketing and product strategy teams, to the vendor Partner Account Managers. This is where the difficulty starts. The Vendor Partner Account Manager then has to take that message, and pass it on to the Reseller’s Vendor Manager or channel sales team and make the message so compelling and clear that reseller salespeople take it out to their end customers with enthusiasm. This process is difficult to manage and guarantee consistent sales message delivery and, therefore, results are often unsuccessful. In order for sales messaging to move through the various ‘barriers’, the proposition has to be instantly simple to understand, incredibly compelling or already in the awareness of end users who will ultimately be purchasing the solution. The trouble with enterprise technology is that propositions are often not ‘instantly simple to understand’. Technology so- lutions are regularly reiterations or newer versions of older, complex technology or if the solution is truly new to the market, then its use case and value is not already known by customers who will need to be educated by the vendor and/or reseller. Let’s consider the technology of blade servers, introduced to the market within the last decade. When blade servers were introduced, vendors had to educate the market about what blade servers were, why they were different and superior to traditional services and use cases for customers. This isn’t a simple message that will flow through vendor channel teams and resellers to customers intact. Secondly, vendors believe that their latest product launch is ‘incredibly compelling’, but in reality, it fails to spark the interest of resellers and customers to the same degree. What may seem an ‘incredibly compelling’ solution within the confines of one vendor, is probably not so compelling when compared to all of the different products across the range of vendors that a channel partner engages with. Channel Managers should be looking for ways to ensure partners are ready to sell the trouble with enterprise technology is that propositions are often not ‘instantly simple to understand’
  18. 18. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.17 Therefore Channel Managers have to recognise the reality of where their product portfolio will sit within the reseller, and develop a highly skilled team of Partner Account Managers at the vendor level, who can take a clear and compelling message out to resellers and continue to work alongside the resellers to guide the delivery of the message to end customers. In summary, the first step is improving the quality of the Partner Account. Manager (PAM) role at the vendor, as PAMs will be key in taking out sales and strategy messaging to reseller teams; as they are the last link in the process before the solution moves over to the reseller to sell. Improving the quality of reseller sales teams Once sales messaging comes to the reseller, it is up to the reseller sales teams to communicate that messaging to end customers. The sales messaging may reach the reseller intact, but if the reseller teams lack the skills to start compelling conversations with customers, then the plan falls apart very quickly. The Vendor Channel Manager must therefore look at how they can affect change across the skill set of reseller sales teams in order to make the sales process as smooth as possible and heighten the chances of success. Working alongside partner management to develop sales skills programs within resellers helps reseller sales teams increase the effectiveness of their customer conver- sations and sales processes. However, vendor channel management often focus on training which is product related rather than generic sales skill focused. Importantly, skills need to be developed across general sales activities such as lead generation and presenting, account management, sales pipeline best practice and customer service handling. Increasing the profitability of reseller deals Sales teams who are left to their own devices and measured on revenue attainment alone will drive down margin levels in a bid to drive sales numbers. When a sale becomes difficult or a customer stalls their decision, regardless of other underlying issues, sales people will tend to blame pricing. Channel Managers must be able to control this at a macro level, by giving channel sales teams the tools and skillset they need to bring customer conversations up to a strategic level where objections about price can be handled effectively. Implementing a thorough process to review margin levels and regularly investigate the reasons behind falls in margin in particular deals (through win/loss analyses), will stand the Channel Manager in good stead for ensuring that vendor margin does not become the first victim in deal negotiations. Data analytics can also help to dynamically assess margin position in real-time across deals, partners, product categories and customer segments.
  19. 19. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.18 Reducing the length and speed of sales cycles Profitability is not just affected by price discounting; it is also impacted by the amount of resources that a vendor has to direct towards the reseller to assist with a sale. Being able to reduce the average sales cycle length through better training and standardised processes means that vendor resources can be controlled more effectively whilst helping the partner to reach their revenue targets quicker. Having a methodical approach in place that is consistent across the company (not just across individual Partner Account Managers) for managing partner pipeline will be critical for reducing vendor costs. This will involve looking for strategies to reduce or streamline vendor engagement in sales activities when reviewing partner sales opportunities. Increasing the quality of reseller deals and leads In order for the Channel Manager to reach the objectives we set out earlier, it is key for a standard to be set on the quality of deals and leads coming from their channel. This is important as a less than stringent approach to qualifying leads and passing on poor quality opportunities results in many hours of wasted time on the parts of both the vendor and also the partner. Putting a system in place early on for ascertaining what is a ‘good fit’ and what isn’t a ‘good fit’ will pay dividends in the long run as CRM systems quickly fill up with unqualified, low quality opportunities. Training programs should be put in place early on, in place of product training, to help resellersalesteamsidentifywhatisaqualified lead in the eyes of the vendor. Vendors often invest thousands of pounds, if not millions, of expert sales training each year for their sales forces and resellers are usually not in a position to replicate this scale of funding, so adherence to standard processes may vary between resellers which can therefore impact on the deal qualification process. Additionally, vendors must effectively qualify resellers in the first place to ensure they are selecting resellers with the ability, business model and approach required to sell to a vendor’s target customers. For instance, a mission critical solution focused reseller may not be a good fit for a volume components vendor, and the quality and fit of leads generated is likely to be negative. vendors must effectively qualify resellers in the first place to ensure they are selecting resellers with the ability, business model and approach required to sell to a vendor’s target customers Better reach customers with messaging through partners Developing a compelling sales message that resonates with customers is difficult enough, never mind when that message has to first go through a separate tier; i.e. the partner, before it reaches the customer. Channel Managers struggle with sales enabling not only their own sales teams, but also those of the reseller. The key to success in this instance is ensuring that sales messaging is as simple as possible, to avoid key points being lost in translation and interpreted in different ways. The second step
  20. 20. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.19 is then ensuring that the message really is compelling for each tier of the process. Does this new product really make a difference to your Partner Account Managers? How will it help them to grow revenue personally? Does this product also make a difference to reseller teams – will they see the value in going out and speaking to customers about it? vendors often overestimate the level of relationship that resellers have with customers Showing reseller teams how customers would use the product and the difference it will make to customers’ businesses will resonate more than training them in product features. The reseller is essentially looking for a product or service that his or her customer is keen to buy – they don’t want to risk introducing a product into the customer account that will require lots of uphill selling and convincing, as it could impact on their relationship with the customer. They need to be sure that they are delivering something compelling and valuable to the customer. Vendors often overestimate the level of relationship that resellers have with customers, and therefore push reseller sales teams to drive vendor messaging out to customers. Resellers will look to protect the relationship they have with their customer and push back against further product messaging. In an age where traditional long term supplier and customer relationships are breaking down in favour of buyers doing more of the investigative work themselves, the strength of the relationships between resellers and customers are often not as strong as they may have been pre-internet days when you had a trusted supplier and couldn’t easily retrieve quotes. Resellers understand that in a pure transactional product sale, they are on shaky ground if they start to ‘push’ the customer in a different direction, based on vendor pressure. In complex sales, where the reseller is a trusted advisor, there is more room for offering guidance and direction to the client. Demonstrating Vendor Value Staying on the topic of competition, Channel Managers must also be able to demonstrate their vendor’s value to a partner. Many vendors struggle to be valued and prioritised by resellers, especially resellers that are selling wide ranges of products from many different vendors, a scenario which is not uncommon in the technology channel space. Reseller sales people must not only get skilled up on their own company’s offerings, solutions and service wraparounds, but also be trained in understanding the products and services offered by each vendor – with enough knowledge on each topic to be able to have useful conversations with customers and aid them in choosing the correct technology solution. As a Channel Manager, the only way that reseller sales teams will sell your product is if the reseller genuinely values and priorities your vendor above other suppliers. the only way that reseller sales teams will sell your product is if the reseller genuinely values and priorities your vendor above their other suppliers
  21. 21. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.20 Resellerswillnaturallymovetowardsselling the simplest product. This isn’t because they can’t understand your product; it’s because it makes the most business sense. If they can make X amount of dollars selling Product A and it takes them 6 months to get trained up on the solution, whereas they can make the same amount of money selling Product B after a week, then it’s obvious they will choose Product B. If Product B’s company is easy to get hold of by email or phone when they have a customer request, then they will sell Product B in future. If Product B has a simplified ordering system and an incentive program that rewards to such a degree that it is compelling and behaviour-changing, then reseller sales teams are going to choose that particular solution time and time again for their customer. They are familiar with the experience, they know the process, they understand the product and they can bet on the service quality being consistent. Vendor and Reseller Collaboration Channel Managers must also look at how to increase the opportunity for vendor and partner teams to work together. Partner Account Managers are responsible for engaging with partners, but for also bringing the partner into the wider vendor ecosystem and helping to bridge relationships between different reseller contacts within the vendor. It can be difficult for established vendor programs to change behaviours entrenched over many decades, where trust has eroded and there is a general suspicion surrounding vendors being involved in reseller deals. Channel Managers must work hard to encourage more holistic working programs between their vendor teams and reseller teams in order to foster a culture of reliance between the vendor sales and reseller sales people. Many times, initiatives created to encourage teams to work together results in only one side providing customer intelligence and information to the other – so it is not a win/win situation. Demand generation programmes are specific product launches originate within the vendor or the partner and so one or the other develops a sense of ownership over customers. Driving a program that truly gives vendor teams and partners the opportunity to develop joint leads and participate in joint sales activities (such as joint meetings and joint calls) will help to encourage future cooperative working practices. Drawing up a list of vendor and partner resources that can be shared is a useful place to start. By ‘resources’ we mean more than just marketing collateral and product information. Resources could include access to demonstration products, event space, workshops or technical resource. It could even be informal training offered by the vendor, or access to city centre meeting rooms for the partner to meet with clients. These informal resources are often what make the difference between a good working partnership and a failing partner program. drawing up a list of vendor and partner resources that can be shared is a useful place to start
  22. 22. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.21 Timescales for deals often causes conflict between vendors and channel partners as vendors usually work to quarterly, six monthly or annual plans, and there is a regular need to influence the sales cycle and bring deals forward to drive results. Channel Managers often do not have the leverage to significantly drive reseller sales teams to push for deals to come in sooner. Often, the leverages offered by the vendor are low-value, such as a nominal further discount that doesn’t really impact the client or the reseller greatly enough to spark a behavioural change. In other cases, the vendor sometimes tries to exert pressure on the relationship. The problem with the stick approach in this instance is that the vendor- partner relationship is often less valuable to the reseller than the vendor as they can swap out products and put a like for like vendor product in. Where the customer has specified a specific vendor, then the vendor has more control to push for a shorter sales cycle. vendors often fail to fully appreciate how their resellers make money ImprovingChannelBusinessAcumen Vendors often conduct detailed customer analyses, but how often do they follow the same process for partners? Having a detailed key account plan for partners, in the same way as would be done for strategic customers, is crucial for ensuring that milestones and objectives are reached. A2014ChannelSalesCompetencyStudyfrom Miller Heiman highlighted the importance of vendors understanding their channel partners’ business models and having a high degree of ‘channel business acumen’. Very often, vendors (more specifically their channel teams) fail to fully appreciate how their resellers make money and how their channel partners measure success. How long does your Channel Team spend investigating resellers’ strategic objectives before engaging? Do they dedicate time to fully understanding their resellers in the same way that end user account managers seek to understand their key accounts and look at industry changes, challenges and their subsequent business initiatives? Different resellers have different drivers depending on their model. A hardware vendor selling into a software-as-a-service company will need to vary its approach compared to selling into a pure hardware resell partner. Both models have vastly different compensation schemes, revenue models and business objectives. Failure to appreciate how a product is being packaged, sold and compensated within a particular partner, results in further disconnect between the partner and vendor. Very often, the vendor’s product may be packaged into a larger solution by the partner which is then sold out to customers. The end customer may not see the individual vendors’ products within the overall solution, and the purchase of that particular solution may have very different drivers to those of the individual products. If we look at servers and point-of-sale (till different resellers have different drivers depending on their model
  23. 23. www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.22 checkout systems) solutions as an example, then we can see how partner packaging of a product affects the associated sales and marketing activities. The point-of- sale solution may be installed into a store, and require a server to run the software underneath the payment processing application. The customer (the store or retailer), purchases a point-of-sale system because they need to upgrade their old system, offer new services to clients, or because they are opening a new store. The server manufacturer usually sells a server to replace ageing servers and provide a more productive, faster and economic compute service or if the customer has a new application they need to deploy. The server vendor could impose all kinds of targets and offer incentives to the point- of-sale reseller to drive more server sales, but this would be in vain. The point-of-sale vendor only requires a server when they sell their point-of-sale (POS) application. Therefore it would be much more useful for both businesses, if the vendor helped the POS reseller to market their POS products, in an effort to sell more servers. A failure to understand how the POS reseller goes to market, interacts with customers and engages in sales cycles would result in an unhappy vendor who can’t understand why their marketing funding for server technology or their server demo offers were not driving higher revenues. Channel Managers must therefore instigate a system of partner business analysis to ensure their teams are regularly keeping up to date with potential threats to their position, new opportunities and business changes in the reseller base. Many vendors do not train their partner teams in channel business acumen, and so many untrained Partner Business Managers apply the same principles of enterprise selling or account management to their role; functions which do not fully take into account the complexities of the channel partner relationship. Channel Managers must therefore instigate a system of partner business analysis
  24. 24. Rewarding the ‘correct’ behaviour to address the compensation disconnect Do vendors always reward the behaviour they want? Or do they inadvertently create incentive programs that reward low value products? Many vendors say they want strategic, long term customer partnerships, when in fact they tend to reward purely on product sales figures alone. Channel Managers must look at how they can better incentivise reseller teams to deliver against a set of sales behaviours that they want to encourage, such as: www.thesalesway.com Recommendations for Addressing the Channel Disconnect Channel Disconnect in the Technology Industry © The Sales Way 2016 P.23 • Completing sales skills training based on vendor solutions • Increasing generic sales and account management skills • Developing strategic customer conversations • Uncovering business opportunities (i.e. that are business led, rather than IT led) • Consistently increasing the vendor share of wallet within each customer • Creating thought leadership content and marketing around vendor products and use cases • Meeting with business and C-level contacts at the customer These behaviours may be harder to measure on a spreadsheet but it will help to improve the current disconnect where channel teams are rewarded based on product unit sales, but are then discouraged from selling just ‘products’.
  25. 25. SUMMARY
  26. 26. www.thesalesway.com SUMMARY Channel Disconnect in the Technology Industry © The Sales Way 2016 P.25 In summary, what are our 10 recommendations for better channel management? Create something new - combine vendor and partner solutions and skills to produce a differentiated, specialised solution. Drive behaviours alongside revenue - iincentivise for training, marketing and engaging. Improve skills, not just product knowledge - funnel management, sales skills, industry understanding. Reimagine the partner portal - how can it be used to drive more value for the reseller and be seen as the go-to place in customer engagements? Drive specialised and targeted marketing and sales initiatives - account based marketing and different marketing approaches for partners, customers, industries. Transform your program to be flexible enough to accommodate new partner models - CSPs, MSPs, SIs, ISVs. Focus on collective-trust - info-sharing, collaborative marketing, zip mentality at all levels and roles. Analyse partners to drive channel business acumen - understand business drivers, revenue models, priorities, motivators, initiatives and goals. Drive loyalty through relevance - give resellers the ability to access the latest skills and industry thinking, process, business transformation support, processes, methodologies, thought leadership and new marketing initiatives - all through the vendor. Standardise and systemise your Partner Account Management engagement model - to guard against disruption and lapses in engagement.
  27. 27. FIND OUT MORE © The Sales Way 2016 Online: http://www.thesalesway.com Twitter: @TheSalesWay LinkedIn: linkedin.com/company/the-sales-way Tel: 0161 818 8600

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