Two weeks ago channel partners in the U.S. were aghast when Sun Microsystems decided to undercut its VARs by selling some of its servers online direct from the company at prices they couldn’t match.
Perhaps the company thought it was innocent because the deals were limited to two weeks to celebrate some sort of anniversary. Or perhaps it thought partners ought to take it in stride from a vendor that they know has some direct business. Or perhaps it didn’t think at all.
Channel conflict is apparently alive and kicking, even among one of the most reputable names in the business.
Perhaps Sun, and a number of others, should heed a recent report from Forrester Research, which quizzed executives at 25 companies that run highly-regarded channel programs, including Hewlett-Packard, Symantec, McAfee, SAP, Novell, EMC, 3Com and CA on what should be part of a successful program.
“Channel conflicts undermine partner commitment,” wrote author Michel Speyer. “Sales and marketing executives, always on the hunt for revenue growth . . . may even be tempted to direct go after business that ‘belongs’ to the channel. The channel conflicts that inevitably arise result in at least one unhappy partner and undermine the vendor’s credibility in managing the channel effectively.”
Regretably, Speyer’s report was issued just as Sun’s marketing machine for the promo was getting into gear, so it wouldn’t have had the benefit of reading those words.But for vendors whose aging partner programs haven’t been touched in a while, or who have fledgling programs or who are just starting to piece together their programs, here’s a précis of what Speyer concluded which I’ve boiled down from his report and an interview.
While channel partner programs vary, he found three common elements for success: communications, training and performance measurement.
The executives he interviewed almost unanimously spoke of the importance of a strong culture of communication with partners, through annual meetings, quarterly reviews, partner advisory councils, Web portals and training and certification sessions.Listen and respond to partners’ gripes, the urged, share your company’s road map and put your money – in training, marketing development funds and the like — where your mouth is.
Training isn’t merely good for the partner, it’s essential for the vendor, and for a partner that makes money pulls in bucks for the vendor, too. And the executives weren’t just talking about technical, marketing and sales training. Many channel partners, especially smaller ones, needs business skills training for things like how to talk to customers who don’t have IT backgrounds, draft a basic business plan, arrange financing and compile a budget.
Some suggest tying training and certification to a reward system, which increases its value to the partner.
Finally, there has to be a way to measure the partners’ performance. Day-to-day measurements, focusing on revenues, margins, discounting and sales pipeline for all products gives the vendor a way to compare overall channel performance to goals so incentives can be fine-tuned. Larger partners should be worked individually.The vendor also needs to know how much capacity the channel can deliver for its business planning.
Forrester’s report, of course, was written for vendors to buy so they can benchmark their programs against some of the best. However, channel partners wondering how their vendor programs stack up, or those of a vendor they’re thinking about adding to their portfolio, might also be interested in the report.
Hopefully, they won’t get sunburned.
