Stop Bragging About How Many Partners You Have
It’s an old maxim that still holds true today: quality, not quantity. Vendors should stop counting channel partners and start celebrating the high performers.
By Larry Walsh
I spent the past several days reviewing nominations for the annual Channelnomics Awards. It’s always a privilege to read carefully crafted entries describing channel program enhancements, channel chief leadership achievements, and innovative channel-ready products and services.
Something that struck me odd is the number of vendors touting the size of their channel programs.
Entry after entry noted how many partners are in their reseller and service provider networks. Some vendors mentioned the speed with which they’ve added partners to their programs, with one company boasting the signing of nearly 500 partners within six months of the program’s launch. Many vendors talked about their global channel network numbering in the thousands of partners.
I guess the message they’re trying to convey is that hundreds – if not thousands – of partners can’t be wrong.
Bragging about the number of partners in your orbit has some merit, in that regard. If Alice the VAR and Bob the MSP trust you and think you’re a good supplier, I can’t go wrong by signing up. After all, there’s wisdom in the crowd, despite whatever Yogi Berra said.
The open secret in talking about partner populations is that it’s all a myth. Most channel programs operate on the 80/20 rule, with 20 percent of the partners generating 80 percent of the indirect revenue.
Actually, the numbers are more skewed than that, so channel teams must undertake some creative accounting to hit that 80/20 ratio. Many vendors see this level of channel performance only after filtering out the underperformers (infrequent, opportunistic resellers) and PINO (partners in name only). Even then, the numbers still don’t flatten out much beyond 80/20 – if at all.
The truth is that most vendors lean on a handful of partners for their indirect revenue. At 2112, we’ve seen channel programs in which 25 percent of the indirect revenue is generated by just 2 percent of the partners. We’ve seen channel programs with thousands of partners, but less than 10 percent driving 95 percent of the revenue. And we’ve seen vendors sign up hundreds of partners in short periods but have virtually no channel revenue.
None of this is unknown to vendors and channel chiefs. Nevertheless, we – as an industry – persist in perpetuating the myth that more is better when it comes to partner volume. As the logic goes, if you cast a wide enough net, you’re going to catch something – namely, revenue. If you have three partners operating in the same patch, you’ve increased the probability of winning a sale threefold.
This strategy almost always results in a lot a dead weight in channel programs. Management sees a lot of expense going into recruitment and enablement followed by suppressed performance metrics. While some people will argue that the long tail of the channel is cheap, the low performance often comes back to bite channel chiefs when they need it the least.
Waxing poetically about the size of a channel program undermines partner confidence. Partners aren’t oblivious to vendor sentiment toward partners; they know vendors care mostly about the metaled partners (platinum, gold, silver, bronze, etc.). When vendors talk about commitment to partners, the partners know they’re speaking to a super-minority.
Rather than brag about the number of partners in a program, vendors should look at and celebrate the effectiveness of the performing partners. Let’s talk about how the vested partners receive the bulk of support and rewards. Let’s show how well sales territories are covered by partners and how channel conflict is minimized. Let’s highlight the number of active and regularly transacting partners rather than some opaque number of mixed-performing partners.
Do you know that John Deere commercial that has people dispensing sage advice: “It’s not how fast you mow; it’s how well you mow fast.” It’s somewhat the same in the channel: It’s not how many partners you have; it’s how many partners are actively engaged in selling.
Let 2112 help you identify the right partners in your program. Learn more about our channel optimization services by e-mailing us at [email protected].