Channel Partner Selection Temptations
In my experience, channel partner selection accounts for 80%+ of a vendor’s channel success. However, it’s not about the number of partners in a vendor’s ecosystem that impacts results. But rather the quality of those partners. That is their ability and willingness to see the vendor’s target markets and sell effectively and profitably to them, at a reasonable vendor cost.
The two “gold standard” inputs to channel partner selection have always been, firstly end-user research to map buying behavior. And secondly, channel preferences coupled with territory analysis, to map the partners’ presence, market power and penetrability in a given geographic region and/or vertical.
As much as these two strategic outreach initiatives help vendors identify and recruit quality partners, they have – in many instances – been replaced by a more passive process in which partners simply sign up online. Although this approach may be perfectly fine for “simple” portfolios that are suited to an open distribution model, it falls short when applied to more complex technical portfolios. At best, the vendor ends up with a “long tail” of underperforming partners. However, at worst, end-users do not experience the levels of service and support they expect and vendor market share declines.
So, given the state of corporate timelines and budgets, what are vendors to do? It’s clear that channel organizations could use some guidance as they encounter the most common channel partner selection situations – situations when the challenges are significant and the temptation to do what seems “easiest”, runs high!
Temptation #1: Major Channel Ecosystem Initiative
– Vendor is new to the channel and is investing in an ecosystem for the first time or
– Vendor has decided to undertake a major overhaul of its go-to-market system
Pressure from investors or corporate to show rapid results. Either in number of partners signed up or in rapid revenue recognition.
Sign up anyone and everyone you can
Temptation #2: New Offer Launch
– Portfolio extension
– Major new offer launch
– New market focus
– Managing partner expectations – everyone expects to be able to sell the new offer
– Corporate makes revenue projections based on offer availability to all partners
Make offer available to everyone
Evaluate and measure the likelihood of potential partners being a good fit in terms of their target markets, business strategies and key capabilities. Request a demo of our automated partner profiling program.
Temptation #3: Migration to New Business Model
– Vendor shifts business focus (ex. from hardware to services, managed services, cloud etc.)
– Projected company growth favors new business model
– Key partners who have been loyal and top performers, may not have the ability and/or willingness to make the journey with you
– No relationships with powerful new market entrants who can drive the business model
– And finally, existing partners feel threatened and/or abandoned
Stick with existing partners and try to make the new business model work
The Answer: A Powerful, Automated Partner Profiling Tool
Happily, organizations can resist these temptations and the havoc they wreak on long-term ecosystem performance. Automated tools such as the Channel Mechanics’ partner profiling program can:
– Firstly, help vendors structure and weight selection criteria for every major channel selection situation they encounter.
– And secondly, allow channel managers and product teams to evaluate and score partners against these criteria.
The underlying guiding principle is that partners are not going to change their business for any one vendor. So it’s best to align with partners who already look like what you need.
For example, a vendor who is new to channels could use the tool to evaluate potential partners using a number of variables that might include:
- Coverage – high percent of sales and marketing efforts on the end-users being targeted (ex. size, vertical, geography).
- Compatibility – proven expertise in like or similar sales modes (critical if your portfolio requires a long, complex sales cycle).
- Competence –
- For Services: existing tech availability, operational infrastructure (ex. call tracking, dispatch, escalation procedure), customer references.
- For Sales: number of competitive lines, number of active customers, number of salespeople, certifications and experience with relevant technologies/products, organization (pooled vs. dedicated).
- Commitment – regular, scheduled training for the team, organized and effective marketing efforts, senior management articulates a strategy and creates a plan.
The actual variables used would be highly specific to the vendor’s requirements. In fact, the more specific the better. Creating these variables is a good exercise for cross-functional teaming. Product teams can help to articulate the technical skill requirements as well as identify where customers are likely to need the most support in the sales cycle. While Channel team members can input coverage and commitment requirements.
With an automated partner profiling tool, each variable is customized by the vendor, assigned an importance weight, then aggregated onto a graphic matrix that identifies the “best fit” partners. Because getting started with channels is a complicated process, the tool should be used sequentially – screening on the most critical variables of coverage and compatibility first, before moving into a second level of assessment.
An automated partner profiling tool can be adapted for each situation a vendor may encounter. For example, factors such as Commitment and Financial Stability/Access to Capital may be most important for partners transitioning to a new business model.
Above all, the vendor team decides while the tool facilitates a structured assessment that cuts through the politics and bias. The result: partners with the profile vendors need to execute their strategies with the highest levels of confidence in their success.