Independent, Self-Driven Partners Start with Vendor Culture
Vendors must create a culture and go-to-market models that reward sales reps and encourage channel partners to be independent.
By Larry Walsh
A channel chief recently told me that only 20 to 30 percent of partners are capable of swaying a customer to choose another vendor’s product or service. One reason why partners are ineffective at moving customers in a different purchasing direction is that they’re often not driving the sales conversation.
The role partners play in the go-to-market equation is coming into question, again, as more vendors look for new routes to market.
Vendors are pushing into self-developed and third-party marketplaces as a means for automating the sale of commodity products. They’re launching new products and services that, in some cases, don’t require or can’t be delivered by partners. And they’re looking for ways to maximize their retained margins as price and margin compression make selling through the channel more challenging.
Vendors are rethinking their channel engagement models partly because many partners simply don’t sell.
This isn’t a revelation. In many channel programs, the ratio of partner-initiated sales to vendor-initiated sales is 3-to-1. In some organizations, partners are fulfillment vehicles in as much as 95 percent of the sales engagements. That means for every 10 deals with a channel label, only one-half of one deal is started by a channel partner.
Let’s assume for a moment that vendors are honest in saying they want partners more engaged, proactive, and independent in uncovering, developing, and closing sales opportunities. (I’ll get back to the “assumed honesty” later.) Vendors will need to make some decisions about the way they engage, incent, and support partners.
First, change culture. The reason I said something about assuming vendor honesty is because vendors often say they want independent partners that bring more deals to them but have sales cultures that run contrary to that notion. Vendor sales reps are punished if a partner uncovers a new or horizontal sales opportunity in their patch. Vendors need to make it more than just OK for sales reps to lose deals to partners; thye need to teach reps how to work with partners to augment and extend their capacity.
Second, adjust compensation. Don’t penalize your sales reps for selling with or through partners. Sales reps often come into conflict with their own partners because they get reduced compensation when a partner comes into a deal. Compensation should encourage and reward sales reps for working with or through partners. Leveling compensation will greatly influence the culture issue.
Third, differentiate. Under many channel programs, all partner sales are treated equally, at least on paper. Partners receive the same discounts and incentives whether they uncover an opportunity or merely fulfill one. It’s only when the deal starts moving through the system that the vendor and partner start horse-trading on compensation to make it more equitable. Vendors should create programs that provide different partner compensation scales. Partner-originated opportunities should get higher compensation than vendor-originated deals.
Fourth, set expectations. If you want partners to do more, you need to tell them that. Vendors need to set expectations for partners, tell partners what they want them to do, provide them with the resources and guidance to succeed in self-driven sales, and then get out of their way.
Finally, make choices. Not every partner can sell products and services to the satisfaction of their vendors. Not every product or service requires a partner to get to market. Vendors need to make choices on where and how they want partner involvement. In doing so, they’ll establish clear swim lanes with less conflict for partners.
If vendors want more self-motivated and independent partners, they need to create the conditions and set the expectations for partners to step up and perform. The partners that can perform will quickly identify themselves; likewise, so will those that can’t.
Larry Walsh is the CEO of The 2112 Group, a business strategy and research firm servicing the IT channel community. He’s also the publisher of Channelnomics, the leading source of channel news and trend analysis. Follow Larry on Twitter at @lmwalsh2112 and subscribe to his podcast, Pod2112, on iTunes, Google Play, and other leading podcast sources. You can always e-mail Larry directly at [email protected].