The Perfect Channel Programme

One of the most common complaints we come across from resellers is that channel programmes don’t work effectively for them. Yet every week another vendor launches a programme that it suggests will. The problem won’t go away and isn’t easy to solve.

Many channel programmes are nothing more than a set of T&Cs, a few accreditation hurdles and a plaque to go on the wall. When it comes to execution, sales conflicts, complexity and a lack of tangible benefits soon surface causing inertia and frustration on both sides.   

From a vendor’s perspective, they would argue that channel programmes provide fairness, consistency and allow them to manage the scale of the channel, but that still doesn’t solve the issues mentioned above. How can a volume model flex enough to benefit all stakeholders financially, enable personalised service for all and differentiate between those that are committed to the partnership, and those that are not?

When trying to think of another industry that has solved this problem we discovered a flaw with each one. Take travel, you can fly 1st class and feel genuinely valued, but you pay a hefty price for the privilege. Similar issues apply to the car industry, retail and luxury holidays.

Without the perfect business model to learn from, where should vendors start?

Best returns

Firstly and most importantly, they should look at the financial model to ensure that both sides of the partnership benefit. The most committed partners should be realising the best returns, whether that is sales margin, performance related rebates or just increased availability to leads. Many premium partners appear to be wrestling for the same deals as direct sales people or are closing large revenue deals with smaller margins.

Simplify

Demuto quite often hears comments, from partners, that channel programmes are too complex and require growing teams of administrators whilst returns are diminishing. Where these issues have been brought to light, the vendor has been amazed at how complicated their systems have become,  often unintentionally and as a result of positive growth.

Influence

Many partners don’t feel that they any influence on vendor strategy despite claiming to have strong executive peer relationships. Very few vendors arrange strategy sessions with key partners to share experiences, discuss product roadmaps or agree sales direction. Fewer still sit down on a one to one basis with partners to agree strategic plans to maximise growth.

Training

In order to join the elite, resellers should be investing in technical and sales skills, paying for training where required and maintaining a predefined level of accredited people. However, once this level of excellence is reached, surely the goal should then become that of the vendor in training as many customer facing people as possible to avoid poorly sold or badly implemented solutions? Perhaps training should be provided free of charge to both sales and technical people as long as the programme criteria is being met?

On the other side, when it comes to deals sold or implemented by non-accredited resellers, too many vendors choose to turn a blind eye or hide behind restriction of trade legislation. There is certainly more that can be done to educate end users about the risks of buying outside of the programme and to also promote the strengths of the partner community.

Incorrectly implemented solutions by non-accredited partners should attract punitive support penalties from the vendor, making it clear that these are being incurred because the end user engaged a non-accredited partner. Unfortunately, this issue then opens up a legal minefield around product warranties and has vendors worrying about brand image if they don’t move to rectify the situation. Failure to deal firmly with this matter is already undermining many existing vendor channel programmes.

Conflict

Regarding practical, day to day matters, much has been written about channel conflict but a lot has also been left unresolved. Who has the best or first relationship with an end user is never going to be clear or mutually agreed. Vendors should therefore attempt to name direct accounts, keep them constant from year to year and then leave the rest to the channel. If a new client approaches directly, a channel partner should be introduced on the basis that the situation may change at the annual review of the direct base. All business transacted before then should go through the partners at their normal margins. Unfortunately, where this approach is adopted, the margins are pre-defined by the vendor and the reseller is left with a simple ‘take it or leave it’ choice that doesn’t engender the true spirit of partnership.

So, whilst it’s not possible to pinpoint an industry where channel relationships are perfect, I do feel that IT has room for improvement and a need for closer collaboration.

Demuto specialises in reinvigorating channel relationships and improving performance. To find out how we can help you, please visit www.demuto.eu