Recently we were engaged by vendor client to help them work through how they would achieve the growth targets they were given, and of course willingly and gratefully accepted. Therefore I thought it was worth taking a broader channel wide view of what drives growth, not only in resellers but across the entire channel ecosystem of vendor, distributor and resellers.
An ICT reseller cannot achieve strong growth in isolation, but needs the support of an aligned channel ecosystem, as well as good business skills, dedication, determination, focus etc as well as a great product portfolio from leading vendors.
Reviewing our recent consulting assignments I offer the following observations for our top tips that will drive channel growth. The first regardless if you are a vendor, distributor or reseller the number one tip is alignment.
What do I mean by alignment, put simply it is the match of channel business requirements, suitable products and customer requirements in order to generate a sustainable and profitable outcome for all parties. Easier said than done.
Technology, markets and therefore customer needs move at an increasingly rapid pace and therefore the concept of channel alignment is one that is often transitory, and like the frog in the warming water, you don’t notice there is a problem until it is too late.
An example of this is where vendors introduce new products or technology where their existing channel does not have the skills or customer base to be able to profitably meet the customer expectations. This could be an SMB vendor “going up” with a more complex, higher priced mid market product that needs a reasonable amount of configuration, staging and integration into customers that are typically larger in size and more complex than the bulk of their existing customer base.
The vendor is pushing the reseller to take on this new product line (sometimes due to an acquisition) as they have targets to meet, but the (distributor) and reseller are not geared to be able to sell, support and service this type of product, regardless of training offered. It is just not a fit, but due to loyalty to the vendor or distributor the reseller agrees to take on the training and the product only to find that after months of effort the sales results are disappointing. Worse still there are the hard costs of training etc as well as the opportunity cost of not focusing on their core product/business that results in lower revenue and/or profit.
Therefore the first tip for growth is review the product/technology mix based on targeted customer or market requirements against channel capabilities. Do not try to stretch an existing business model or fit a square peg into a round hole as it will not work without the desired corresponding change in strategy at all levels of the channel.
2 Engagement, Trust & Understanding
One of the things that we have observed is that the vendors and partners that have gown the most spectacularly all have one thing in common, great trust and engagement with each other, regardless of partner program tier status.
This will not happen unless the first tip of alignment is in place, but alignment does not necessarily mean that this will happen either.
The adage that “it takes two to tango” is never more apt than in developing an engaged and trusting relationship where the entire channel ecosystem is working as one. No one gets it 100% right 100% of the time; it is just not possible as there are so many variables, mainly people. However when it does work we have seen extraordinary success and growth as synergies are created that require less effort for larger gains.
An example of where this has worked in some of the larger partners and distributors are vendor funded heads, usually technical SE’s, but sometimes sales BDMs, depending on the circumstances. These funded heads will know the vendors’ products, process and people intimately and the productivity gains within the recipient can be significant when all this knowledge is effectively leveraged.
For this to work there are a couple of critical checks. The funded head has to be well selected and not just a one eyed vendor bigot, but can recognise and respect the independence of the best solution, which may not necessarily include all the vendors’ products all the time. Secondly this person is actively involved with a structured business planning and review process with both the vendor and the partner or distributor management team regarding targets, performance review and direction on a regular basis, nothing should be left to chance.
Finally having this person in the partner can help the vendor develop a much greater understanding of the partners’ skills, strengths and capabilities that they too can leverage, rather than just looking at the channel partner as a means to a quarterly number.
While not every partner can access a funded head, the same principles of better engagement, understanding and trust can deliver growth well in excess of double or even triple the market growth rate when working well.
3 Vendor Resources
I would hate to think of the amount of vendor money that is wasted or unspent each year with poorly executed MDF programs. Vendors need and want to leverage the partners’ access to customers; however partners are typically great at building technology solutions, but poor marketers.
The end result is often funds get spent at the end of the quarter on quick fix template driven marketing campaigns with a “use it or lose it” mentality, or diverted to non new business generating but approved activities such as subsidised training and certification, but still don’t get fully spent.
As a general rule vendors have more resources than the channel they are looking to go to market through, however mostly the channel does not effectively ask for what help the vendor can provide, or come up with a reasonable suggestion as to how the MDF could be spent.
Vendors will fund a range of activities if they think that they a) will get a decent return, b) there is sufficient compliance and probity around the request c) their brand is protected.
It does not take a huge amount of effort to write a simple proposal or even sit down with the vendor and/or distributor rep to work up a plan, in advance, agree to the (aligned) objectives, what resources are required and then execute. If this is all done well the vendor will pay within the prescribed time and may even want to do another campaign, as so few partners are stepping up and asking for help and funding to do business development marketing activities.
In summary the key to growth is having regular open conversations both within your own business as well as those of your key channel partners or suppliers. If these conversations are looking to ensure continued alignment and engagement because of respect and understanding of each other’s business models, before the quarterly target is discussed then there is far more chance of achieving the quarterly target, and then some.