What really drives your channel performance? A history lesson for IT vendors

By Kit Craig, Channel Consulting Director

Outsource regularly works with IT vendors struggling to maximise channel sales. Usually, according to the vendor, the technology they sell is red hot and should be flying out of their distributor’s warehouse (or the cloud, as the case may be).

In my experience the vendor is probably right – the technology is good. In fact, I can’t think of the last time a contemporary vendor offered technology that didn’t do what it said on the box.

With social media and other online forums being what they are – you’d have to have rocks in your head to launch a truly bad product today and expect anything less than an online storm of brand-damaging outrage. So the problem of poor channel sales is rarely the quality of the product in question.

In fact, it’s channel alignment. The often overlooked reality is that partners don’t sell products to serve a vendor. They sell products to serve their own business model.

Successful vendors appreciate the diversity of business drivers within their channel, and therefore, how to build a value proposition that resonates with partner CEOs. The less successful vendors spend a lot of time explaining product features and benefits to their partners.

It’s not a new problem in channel sales

In the late 80s and early 90s IBM was a hardware company, and its mid-range application server, the AS/400, was the business computer of choice. The AS/400 had its own networking and could natively attach both dumb terminals and PCs. It was highly reliable, handled heavy transaction loads and was a truly integrated server with a database engine, print server, security and email server.

Hundreds of applications were written for it and many ISVs sold their application and the AS/400 together as a turn-key solution.

IBM saw every one of these ISVs as a hardware reseller. It treated them that way, inviting them to events highlighting new product features and offering quarterly rebates for increased hardware sales or discounts for inventory. This sort of channel marketing cost IBM a lot of money and only upset the ISVs. They almost all migrated their applications to Intel servers running Windows NT during the mid-90s and stopped selling hardware.

That’s because selling hardware wasn’t what ISVs did; they were software companies. The only help they wanted was selling more of their software. The hardware deal was inherent in the software deal and the hardware brand of choice, eventually, was interchangeable.

Today I talk to dozens of vendors, and many still don’t understand that the IT channel world is made of independent companies with their own reasons for being in business. These vendors fool themselves into thinking that, as long as they have the best mousetrap, channel partners will fight each other to sell it.

Of course, they’re wrong.

A product vendor must have a good product; that’s a given. But that’s not what it takes to succeed with the channel.

How to make your IT product channel ready

Success comes from understanding your channel and doing everything you can to help your partners succeed in their businesses while they help you succeed in yours.

Here are three ways you can start to turn things around and build alignment (and sales success) with your partners.

1. Are they the right channel partners for you?

Not every channel partner is the right fit for your company. Perhaps, when you think about it, you have been trying to push your product through the wrong partners. Do your research, if a partner is not selling a lot of your product, what are they selling? Look at their top performing products and try to find out as much as you can about the sales structure, product training, marketing funds, and supply chain. Which of your partners is selling lots of your product? Why?

Remember, an ISV behaves differently to an MSP. An SI looks nothing like a break-fix business etc etc. What are their business drivers?

2. Communicate, communicate, communicate (then communicate some more)

If sales are still low it’s important to have a frank and open discussion with your partners (probably outside of the formal QBR).

Do they need more training? Have they got sufficient funding and support to generate leads? Have they had issues with supply or product reliability and are now recommending a competitor? Is the price structure an issue? True partnering requires genuine, informed and empathetic communication. It’s not an email newsletter or a once-a-year partner roadshow. It’s really getting to know the people behind your partner’s business and what they need to succeed (so you can succeed).

3. Trust conquers everything

Vendors can sign new partners in minutes if they want to. Partners on the other hand are very cautious about investing in new vendors and can be distrustful at first.

So work on practical plans with your partners that you know you can honestly deliver on. Don’t offer grand sweeping promises. Partners have been around the block, often more times than the vendor rep sitting across the table from them and have a hard-headed approach to business. Trust comes from delivering on your part of the bargain, again and again and again.

If you have a solid product, the right partner, an aligned selling proposition and a network of channel partners who trust your company to keep its word, I can guarantee you’re going to be streets ahead of competitors who offer branded hats, lush lunches, 38 page product-centric slide decks and little else.

At our next complimentary breakfast session in Sydney, Outsource Channel Consulting Director, Kit Craig, will walk through a complete framework to help you make your IT solutions completely ready for the channel to sell.