I’m often asked ‘what makes a good channel partnership?’ Like most successful relationships it’s about good communication and shared goals. Both partners need a clear focus and understanding of what each other wants to achieve and then it’s a case of working on it. Or is it?
Anyone who has been in a long-term relationship knows it’s not that simple and I’d refer to another long standing business mantra and add that before signing any contract, preparation is key. I’ve found that apart from checking all the financials are also up to scratch, it’s worth taking a bit of time to understand your prospective partner’s business model and how that fits with what you are looking for in the short, medium and long term. Here are some of the key aspects to investigate:
Is the potential partner brand or technology focused?
In general terms, a brand-focused partner will work with big brand names and expect to be treated as part of the company or an extension of the marketing division. A brand focus will mean that the partner will normally want to operate as an extension to the vendor’s sales teams. Such resellers tend to be large in size and expect a lot of commitment and resources from the vendor. This might include a combination of best discounts, volume rebate schemes for target fulfilment, marketing funds, executive level attention, close support, funded heads, account and deal introduction by direct sales, free training and even sales leads. The focus for these partners will be to take market share from other vendors or bundling to sell a product alongside other well-known complementary products to create an overall solution. In general, this type of business model is more suited to vendors with mass marketing goals for an established product.
At the other extreme of the business model spectrum, there are smaller technology-segmented resellers that specialise in certain technology areas such as storage or virtualisation or that focus on customers in specific vertical industry sectors for example, in Spectra Logic’s case, the academic research community. Developing a close relationship with customers as trusted advisors, these VARs can bring real value to the table by monitoring the market, trying out new technologies and solutions and making recommendations. These partners have a looser, more flexible vendor set than brand-focused resellers and therefore less vendor loyalty. The big sell of course for these VARs is best-of-breed and innovation. Increasing revenue for these partners is about bringing more products to their close customer set and bringing new customers into the fold through acquisition. This model tends to suit new products with a more niche appeal and it’s very important to align the right partner, with the right resource for the right product at the right time of the product journey to get the best results.
There are of course many shades of grey in between the brand and technology focused reseller but these two extremes serve as a useful tool to identify the best channel partners to meet marketing goals.
What marketing resource does each party bring to the table?
As I’ve already mentioned, different kinds of channel partners will want and offer differing levels of marketing support. When looking at which resellers you want to work with it’s important to understand what level of marketing commitment they will provide and conversely the channel partner will need to know how much support the vendor will give. In more detail, aspects such as training, marketing funds for promotions and events, as well as executive support at events and for campaigns, all need to be discussed upfront to check that there is a full alignment of vendor and reseller expectations and commitment.
Who owns the sales leads and relationship?
Some channel partners prefer ownership of lead generation and the sales relationship and the vendors that they work with are happy to share or relinquish ownership of sales relationships. More often than not there is a combination of direct sales and channel sales so that the vendor can maximise on all prospects as is the case for Spectra Logic. However the relationship works, this particular element of the agreement needs to be clearly outlined at the offset to avoid conflict further down the line.
Who provides the technical support and when?
Support levels expected by both parties before, during implementation and after implementation are also a critical success factor of any vendor-reseller partnership because at the end of the day, if a customer is not supported properly the likelihood of a repeat sale diminishes. At Spectra Logic we work closely with our channel partners so that customers are supported properly and this often leads to repeat business which also of course helps to cement our relationship with our partners.
Going for a test drive and third party endorsement
Sometimes only by working with a channel partner will you truly know if the relationship is going to be successful. Often vendors will choose partners based on personal experience of that partner or endorsement from a complementary vendor. After all—who would marry a stranger?
This blog provides an overview of some of the elements to consider when choosing a channel/vendor partnership. In reality, it’s much more complicated but by breaking it down in this way, we can see some of the areas where attention to the details is very important. Having a good relationship with our colleagues in the channel makes for good business but as with all relationships you need to be prepared to take the rough with the smooth and state your boundaries upfront as much as possible so that expectations are clear. And don’t forget on-going communications is key, that’s both talking and listening! As George Bernard Shaw said: “The single biggest problem in communication is the illusion that it has taken place.”