Dear Vendor: Here’s What’s Wrong with Your Channel Programs
Decades ago I began selling vendor phone systems to local small and medium-sized businesses. I’ve built my business on word-of-mouth and my reputation is critical to my success. My customers choose to do business with me because they know they can trust the solutions I deliver. If I take care of them, they recommend me to other small businesses.
VoIP was a critical pivot point for my business, as it offered something radically new to offer past customers. I learned quickly to be successful with VoIP as we needed to transform our business from a focus on telephony to network infrastructure. Structured cabling, router and firewall configuration became core services.
VoIP was followed by an aggressive movement of other technology favored by small businesses to the cloud. This made my customers receptive to cloud/hosted phone systems.
And then came security. From security cameras to cybersecurity, this submarket has presented a real transformational challenge for my business in both knowledge and people (I’ll come back to this).
Now that you understand my journey, let’s talk about your messaging and programs. My business didn’t transform because of my vendors’ messaging and programs. My previous vendors are out of business or on the brink today. I would be, too, if I followed their messaging or let their programs influence me too much.
Digital Transformation Messaging
Why did I transform? Did I do it because I wanted to improve my valuation? Did I understand the financial value of reoccurring revenue? The simple answer is no, I simply did it to survive.
You talk about the channel aging out, and I can relate. I’m at retirement age and thinking about what comes next. You can put those of us in this situation into two groups: Sustainers and Resisters. The Resisters are just trying to buy enough time to reach retirement. Sustainers intend for their business to go on many years after they retire. Most importantly, Sustainers are still very much customer-driven.
When I look at your messaging it is all about why Resisters should change. I’ve got news for you: The Resisters aren’t listening because they simply want to buy time and get out. You’ve had this same messaging for a decade now, and it’s time to shift your attention to working with the Sustainers to achieve the next level of growth. Stop telling us how to sell our business and start telling us about the next growth opportunity. What do I need to do to prepare for 5G? That’s a good place to start. If your channel is made up mostly of Resisters you need to recruit new channel partners.
You’ve got three big problems with your channel partner programs from where I sit: awareness, targeting and influence. Let me explain….
Awareness. Have you ever heard the old axiom: if a tree falls in the forest and no one hears it, did it make a sound? If I don’t know your programs exist, how do you expect them to have an impact? I’ve got more than 10 large vendors whose software, hardware and services I sell. I don’t have time to learn all the programs. If you don’t make it easy for me, I’ll remain blissfully unaware. I’m sure I’m missing out on some money, but growing and developing my business is more important. Having a central location/portal where I can easily find all programs, information and anything else I need is essential. I’d strongly recommend investing in this area to stay competitive.
Targeting. As mentioned above, it seems all messaging is targeted at what I referred to earlier as Resisters. All programs seem to be targeted at those that already are successful or transformed. What about those that are willing and eager but need a little help? You might want to try incentives to encourage enablement, that mix of content and tools, including information about your products, so your partner network can market and sell your services or products more effectively. Enablement is painful and time consuming, and often doesn’t … … pay off in short-term dividends. Market development funds (MDF) and programs are always a great way to get someone like me on their feet with something new. Funds and programs go together for a reason. I don’t have a well-staffed marketing department, never did, and I don’t expect to have one soon. If you offer to pay for a portion of a marketing program or offer half-baked programs, I don’t have anyone to complete them. Either pay for the whole cost of the campaign or deliver more out-of-the-box marketing programs.
Influence. Despite my tone, I do know you’re trying to help. I know the programs you create are designed to offer a carrot for me to take action. I’d like to help you understand why these programs often have no influence.
Let’s start with sales performance incentive funds, or SPIFs. Every now and then I get a SPIF check from a vendor. Thank you for sending me money, it is greatly appreciated, and feel free to send more. You should know, however, that the extra money changed absolutely nothing. I recommend solutions to customers that I know work. If one component of my solution fails, I fail. My reputation is everything, and I’m not going to risk it for a SPIF, but, again, thanks for the extra cash.
Your time and money would be better spent forming alliances to offer bundled solutions, creating enablement programs and testing interoperability. You’ve challenged me to find vendors for each component of the solution, educate my staff and test interoperability. I promise you that the vendor with the best alliances and enablement programs will always get my vote.
I also beg of you to rethink your volume rebates. With volume rebates, you’re rewarding channel partners who would already do a lot of business with you to simply keep doing it (see targeting above). It doesn’t help an up-and-comer get more traction and it definitely doesn’t help transform the Resister. In the end, it doesn’t really change anything except when the inventory gets purchased and at what price. Consider tying a key performance indicator (KPI) to it to transform the Resister. Consider bundling enablement and marketing development funds (MDFs) to support the up-and-comer.
My goal was to show you the view from the other side of the table. I hope that by understanding another critical viewpoint and becoming more knowledgeable about what works and what doesn’t, we can work better together to meet evolving customer demands, achieve digital transformation and stay ahead of growing and relentless competition.
C.P. McGrowl, Chief Channel Curmudgeon
Your valued Channel Partner
Get a glimpse of the original article posted in Channel Partners Online.