Channel/vendor estrangement is a growing concern

A new study conducted by channel marketing and consulting firm Blueroads for the CMO Council finds the relationship between vendors and their partners is in serious need of repair.

On the positive side, the Channel Performance Outlook 2008 report indicates partners are bullish about their business prospects for the coming year, with 61 per cent expecting an increase in business, and four per cent a dramatic increase. Only eight per cent are predicting a decrease.

However, most partners don’t expect vendors to be much help achieving that growth. When it comes to sources of business leads, 54 per cent said their best leads come from customer referrals, followed by e-mails or direct marketing, the Internet, and events. Just seven per cent of respondents said their best leads come from vendors.

Digging deeper into vendor leads, respondents indicated the few leads they get from vendors generally aren’t that good. Just 19 per cent called their vendor leads highly or somewhat actionable, while 41 per cent classified them as somewhat actionable, 27 per cent a little bit actionable and 13 per cent not at all actionable.

Vendor marketing campaigns were also singled-out, with just 29 per cent rating them as effective, very effective or exceptional in driving business or shortening partner sales cycles. The biggest group, 47 per cent, called them somewhat effective while 24 per cent deemed them ineffective.

Charles Watson, senior vice-president of marketing and sales with Blueroads, says the problems can be traced back to the vendor level where the culture tends to be direct first, channel second.

“Channels, because they’re an outside entity, are really treated as an afterthought,” said Watson.

Leads need to be divided-up by objective rules, he says, instead of letting the direct team pick them over first and send the “sloppy seconds” to the channel. If only poor leads got to the channel, he says, it’s natural conversion rates are going to be lower.

“The truth of the matter is partners are going to lose interest in it. They’re not going to want to spend their time going through the direct sales team’s garbage,” said Watson, noting vendors will then use low conversion rates as an excuse to further cut back lead generation. “It almost becomes a self-fulfilling prophecy.”

To start, says Watson, vendors should carve-out a list of unnamed accounts or categories that are for the channel only, and fire direct sales staffers that poach. And it needs to go both ways. If a vendor is sending a partner A or B-class leads and isn’t seeing performance they should be cut off, says Watson, adding good leads shouldn’t be wasted on partners not willing to work.

“It needs to start at the top,” said Watson. “It really starts with the channel chief reaching out to the head of sales and having a hard conversation about how the business is going to be managed through direct and indirect.”

That’s tough to do in many companies though, he says. It needs to be a conversation of equals, and in most firms the direct sales chief tends to be the “alpha dog.”

This is where channel chiefs need to focus their efforts though, says Watson. While things like partner chat rooms or new program tiers are nice, at the end of the day, he says it’s about driving revenue, and that’s where partners want and need help.

The vendor chief marketing officer (CMO) also needs to step-up to the plate, take responsibility and play a bigger role working with and driving business through the channel says Dave Murray, executive manager of the channel performance program at the CMO Council.

“We believe the CMO can and should play a really big role in managing some of those disconnects,” said Murray, noting most partners aren’t necessarily marketing minded. “It’s the vendor that needs to create marketing processes that support the channel.”

Marketing is about more than branding or building a new Web site, says Murray. At its core it’s about creating business opportunities and leads, tracking and validating business opportunities, and tricking and supporting them through the selling process.

“The channel feels marketers are doing a poor job of marketing,” said Murray. “Perhaps the most telling issue we’re uncovering is that the channel feels they’re not getting effective business lead flow from the vendors, which we think is really what marketing needs to deliver to be effective working with the channel.”

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Jim Love, Chief Content Officer, IT World Canada

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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