From Experience…It Takes a Village to Nurture An MSP
Well, not exactly a village! But it’s true that successful MSP/Vendor relationships require more cross-functional involvement and coordination than traditional partner relationships. With that in mind, I’ve compiled a list of the top four issues vendors have faced when working with MSP’s from development through commercialization – and how they’ve worked through them to create a winning channel partner relationship.
Top Four Vendor Issues when working with MSP’s
Without targeted, selective vendor investment, it’s very easy to get lost in the financials of MSP management. Best practice involves establishing a budget for each MSP, with funds allocated to the specific activities required to move the relationship through its lifecycle. Ownership of the budget and committed resources must also be clearly mapped. But this can be tricky. It’s not unusual for the relationship to move through at least three vendor teams.
- The Business Development Team. This team takes the lead with business planning, technical planning and evaluation and the Beta and pilot stages. They coordinate with the lab and new service offers to make sure that all capabilities are represented and considered for the final offer.
- The Sales Team. This team also works with the lab and services organization. In this stage, their goal is to map out the usage management strategy and tactics.
- Lastly, the Services Team spearheads commercialization, working with vertical sales and marketing teams to make sure that the usage strategy is implemented successfully.
To help manage the complexity of MSP relationships, the Channel Mechanics platform offers vendors a range of configurable fund management options, including a configurable workflow and approval process, as well as the ability to transfer funds across financial periods.
2. MSP Revenue Recognition
Because MSP’s often deploy a “pay per use” pricing model, a complementary vendor tactic could be a subscription pricing model to the MSP. However, there are a number of considerations to factor in relation to the pricing model. Should this be (a) on the corporate price list, (b) available without special approval and (c) for all markets and regions? And does it require the vendor to collaborate with a financing partner?
There is no question that subscription pricing to MSP’s could be a valued differentiator, but there is also no question that many hurdles must be overcome first. But help is at hand. The Channel Mechanics pricing tool can be a valuable resource for vendors who wish to explore subscription pricing. The program enables segmented channel pricing for global, regional or local price lists. And it allows vendors to “pilot” subscription pricing if they wish, monitor partner response to this pricing in real time, and make any necessary modifications to the model before making a go/no go decision on a full roll-out.
3. Sales Capability
Vendors must face the reality that some MSP sales reps are just not experts in solution technology and solution selling. Consequently, they can find the offering to be too complex. There are however a couple of ways to address this issue:
– Vendor-led MSP Support. This involves:
– Simplifying the message. Develop sales tools for the MSP (for example a short list of qualification questions or an outline of the process for sales support once the MSP has identified the lead, etc.)
– Securing MSP commitment to training for the sales reps
– Fostering socialization via opportunities and events for the sales teams to meet their counterparts and to share solutions with prospects.
– Vendor as Default Channel. In some cases, it’s best for the vendor to accept the MSP’s current capability and use its own resources to identify, qualify and close deals.
4. Sub-optimal Use of the Full Partner Ecosystem
One of the major assets vendors bring to their MSP relationships is the existing partner ecosystem, so it’s important to leverage it in order to optimize market coverage and revenue growth. This can be done by:
– Identifying opportunities for eco-partnering early in the sales process – checking to see if the MSP has relationships with vendor ISV partners and evaluating the MSP’s sales channels as a potential vendor channel or affiliate.
– Incorporating an eco-partnering strategy in the business plan. Including (a) funding specific activities to build awareness throughout the ecosystem (b) linking vendor resellers to the MSP’s resellers and (c) offering incentives for leads through an affiliate program. Channel Mechanics’ sales incentives and rewards programs offer a variety of options to consider.
Net/Net, MSP relationships are not casual relationships. They require significant investment of funds and human resources throughout their life-cycle. Knowing the key challenges and how others address them – along with having professional management tools – gives vendors a sound path forward.