- March 21, 2024
- Posted by: Larry Walsh
- Category: Blogs
Vendors’ need for revenue generation and growth is causing many chief revenue officers to refocus channels on immediate returns at the expense of traditional partnership programs.
By Larry Walsh
Surfing around LinkedIn, one will find an interesting trend of channel professionals removing or diminishing the word “channel” in their titles and descriptions.
Many vice presidents of channels that operated under the moniker “channel chief” are now opting for the alternate title “chief partnership officer.”
And many channel professionals are calling out their “ecosystem” focus.
Undoubtedly, partnerships and ecosystems are getting repositioned as the new wave of indirect sales. One young channel manager told me, “Channels are old; ecosystems and partnerships are new.” Despite his assertion, the channel has always been about partnerships.
Through collaboration with partners, vendors can scale their market coverage and reach more customers with greater economics and efficiency than they ever could through direct sales. That is the foundational value proposition of the channel.
While the channel community is busy repositioning itself around these buzzwords, another force is reshaping the nature of channel priorities and imperatives. That force is chief revenue officers.
Increasingly, CROs — under the direction of their executive leadership teams, shareholders, and stakeholders — are exerting more control over channel imperatives. They’re less interested in the finesse of channel strategies and programs.
They want partnerships, but they want productive relationships with resellers and other ecosystem members with more immediacy and predictability in sales.
Sales: The Top Hiring Criteria
I recently spoke with a prominent executive recruiter known for positioning CROs and channel chiefs within the industry. He highlighted that vendors now prefer channel leaders adept at understanding the essentials of revenue generation and recognition, with a pronounced selling orientation that makes them capable of ensuring swift and steady outcomes.
Conversely, those adhering to conventional channel strategies — centering on program management, community building, and long-term channel investment returns — are increasingly viewed as less relevant and effective.
A well-known channel chief saw this shift in priorities first-hand during a job interview with the COO of a large vendor.
The channel chief spoke about organizing teams, analyzing data, building programs, and developing long-term strategies to produce results.
The COO was interested in hearing only about whom the channel chief knew at the top resellers and how quickly meetings could be scheduled to discuss selling more products.
For certain, vendors are under immense financial pressure. High inflation and interest rates have put a crimp on customer spending and vendor balance sheets.
Vendors are “optimizing” — the new code word for laying off and restructuring — their operations to cut costs and preserve profits. Under these conditions, they naturally turn to the channel with a “sell first” mentality.
Misunderstanding the Channel
A general misunderstanding about how channels’ roles and mechanics work complicates the CRO’s focus on channels as a sales machine.
Many executive team members and their money-backers don’t understand why resellers and integrators don’t wake up every morning thinking about selling their products and services.
They hear the axiom that partners are an extension of their sales force but don’t understand that they’re still independent entities with competing and—sometimes—conflicting interests.
This misunderstanding causes some CROs and executive teams to see the channel with diminished value and dismiss its utility as a revenue and value generator.
Balance Needed Quickly
Ironically, CROs exerting more influence — if not issuing directives — over channels comes as the channel community shifts to a more collaborative footing. As noted by the change in their titles and identities, channel professionals want more latitude in interacting with partners.
Partners want more liberty in how they engage with vendors. Many partners see traditional channel programs as a means for vendors to exert “command and control” over their operations — a model antithetical to their interests.
The shift to focus first and foremost on sales will eventually cause a rift between heavy-handed vendors and their partners.
In the middle is a balance between what vendors need in the way of predictable revenue generation and indirect-sales goal attainment and the development of collaborative and low-friction partner relationships.
The community needs to find that balance sooner than later.
Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.