Getting Partners to See Beyond Paychecks

With some guidance, vendors can show partners that the key to high performance is building value, not one’s salary.

By Larry Walsh

Last week, I was interviewed by BusinessTown, a news site for entrepreneurs and managers, about how vendors build channels and how entrepreneurs start and succeed in the technology reseller business. One question asked by the interviewer, Lee Pender, formerly of Redmond Channel Partners, was this: “What causes reseller businesses to fail?”

It’s an interesting question with no one simple answer, but I offered two possibilities that vendors and solution providers need to consider. First is a lack of vision for how to achieve their goals. And second is focusing too much on their paychecks.

I tell this to solution providers all the time: You have to define what you’re going to do to change the world. Yes, changing the “world” is an ambitious goal, but you can define the world more narrowly than the globe and focus on your immediate surroundings if you like. The point is that you have to identify what it is that makes your business different and define how the world will measure your accomplishments.

Vision is the underpinning of differentiation. It’s not enough to simply have different products and services. It’s not enough to say, “We have the best people, and that makes the difference.” No, you need a vision for what makes your organization unique.

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Vision also reflects what you want out of your enterprise. If you can articulate a vision, you can most likely say what you want to achieve through the development of your enterprise. Every great business had this at the beginning. Microsoft wanted to put a PC on every desk. Google wanted to organize all the world’s information. Amazon wanted to create the world’s biggest marketplace.

This leads to the next problem: paychecks. Too often solution providers obsess over their compensation. And the industry encourages it. Several channel consultants have made a cottage industry out of telling solution providers how much they should pay themselves. And vendors don’t help, as they often couch partnership value in terms of direct compensation on product sales.

When I started The 2112 Group, Gary Fish, the founder of FishNet Security, FireMon, and Fishtech Labs, offered this bit of advice: “Never make a business decision based on your paycheck.” His advice has proven sound time and again.

While speaking with a group of about 200 solution providers and managed services companies on this topic, business owners decried the idea of dismissing the value of their paychecks. They noted their responsibilities to their families – mortgages, college tuitions, retirement funds, etc. They couldn’t afford to overlook their paychecks or avoid taking their compensation into consideration.

My answer to them: They had activity that resulted in a paycheck, not businesses that accreted value over time.

I raise this point because it opens the door to an important and revealing conversation vendors can have with their partners. If solution providers can both define their value and demonstrate their willingness to invest in long-term returns rather than focus on short-term paychecks, chances are they’ll be better partners.

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In some cases, you can help your partners understand the need to define vision and purpose, as well as long-term goals. After all, many solution providers are looking at selling their businesses as an exit strategy. While strong businesses enable owners to draw regular and good paychecks, that usually comes after much time of investment and development. Businesses with good valuations are those that have well-defined missions and organization structure that results in good performance.

Conversely, a solution provider’s inability to answer these questions will quickly reveal its value. Without vision and too much focus on short-term returns, a partner will likely underperform expectations and not contribute to a vendor’s greater goals.

Vendors need to challenge partners to look beyond their paychecks, develop visions for how they’re going to stand out in the marketplace at large, and create value for their customers and themselves. Sometimes, partners need just a little guidance and encouragement to get over the fear of missing a check. Once they do, they’ll thrive on building value, not just paystubs.

Larry Walsh, The 2112 Group

Larry Walsh is the founder, CEO and chief analyst of The 2112 Group. Follow him on social media channels: Twitter, Facebook, LinkedIn.