CCC RECAP: Why Customers Buy From Partners

Customers profess a preference for buying from vendors but often source from partners. Channelnomics explains why.

By T.C. Doyle

When asked, end customers say they prefer to buy technology goods and services directly from vendors instead of independent channel partners. Yet the majority of tech goods and services are still sold by those partners.

In our latest Channelnomics Community Call, on Sept. 20, Channelnomics examined why this contradiction exists — at least for now.

Our own research from this year found that more than two-thirds of IT buyers would rather buy products and services directly from vendors than go through the channel. Those findings mirror research from Gartner G2 revealing that 70% of end customers prefer buying technology products and services directly from the vendor rather than going through resellers. Gartner also found that only 8% of buyers prefer sourcing products through resellers.

But does all of this reveal a true shift from indirect to direct sourcing? The truth about customer buying journeys and technology acquisition is more nuanced.

Our research further finds that more than half of customers (56%) purchase through the channel when they need deployment and integration support, while more than a third (37%) will buy through partners when they want to consolidate purchasing and relationship management, which happens quite frequently. In fact, some MSPs will tell you that the thing they feared most — the rise in line-of-business buying among business leaders who work outside of IT departments — has turned out to be a good thing. Many customers are coming back to them after COVID and begging for help because they have one of everything, with no sense of how to manage, renew, standardize, secure, and bring into compliance their recent technology acquisitions.

Struggling to integrate complex business apps with their technology infrastructures, many line-of-business buyers would gladly hand over acquisition choices, integration, and securitization to a third party, despite their stated buying preference. And why not? The average MSP, after all, sells as many as four different vendor brands and more than seven unique products to customers with each solution it delivers.

Now, that being said, there is some movement among younger buyers toward self-service and self-selection. While 73% of all B2B buyers use digital channels regularly, 97% of millennials buy primarily through marketplaces, which, more often than not, are owned and operated by vendors, not channel partners. How this plays out over time remains to be seen.

What we do know now, however, is that partners enjoy success with products and technologies that fall into what we call the “Channel Goldilocks Zone.” Those channel-ready offerings are complex enough to require professional support for customer procurement and implementation, but not so complex that they’re beyond the reach of partner capabilities. Products that are too complex for partners are usually sold direct. Commoditized, simple products are generally eligible for automated digital sales.

At Channelnomics, we’ve been thinking about the choices customers make when picking their acquisition channels. Whether customers realize it or not, they’re making channel choices every time they opt to buy through an MSP vs. a marketplace vs. direct. We’re at the beginning stages of our exploration into this topic, which is why we wanted to take an opportunity during the call to share a few thoughts based on our historical data.

We’d like your thoughts on customer buying preferences and propensities through and around the channel. If you have some ideas to share or questions you want answered, please drop us a line at info@channelnomics.com.