2010 Channel Chiefs: 10 Rules For A Channel Playbook5:32 PM EST Fri. Feb. 19, 2010
In the "new normal," it's more important than ever for vendors to be on the same page as their solution provider partners when it comes to messaging, partnering and closing deals with budget-strapped CIOs. For solution providers, there's no instant replay: Any bickering, discord or other sign of conflict between a solution provider and vendor might be enough to turn the customer away -- meaning a lost deal and the potential for a long-term relationship dashed.
It doesn't help that the game's always changing, either. But in the end, there are 10 best practices that have stood the test of time and should be included in all vendors' playbooks. In interviews with a number of solution providers, high-fives went out to several companies for doing just that. Other vendors, however, still have some work to do. For them, it's time to get their game face on.
Rule No. 1: Support From The CEO
If it all starts at the top, it will trickle to the bottom. The more confidence a CEO has in his or her channel organization, the more confidence partners will have in that company. That has perhaps been best illustrated over the past couple of years by Hewlett-Packard Chairman and CEO Mark Hurd, who has accompanied solution providers to several big sales calls and customer roundtables. In 2009, Hurd held 38 meetings with solution providers and their customers, and met with a total of 148 different partners and 250 of those VARs' customers, according to HP.
"It's a major commitment, but it's a major competitive weapon in showing support to customers in getting someone like a Mark Hurd or a CEO to step out in front of that," said John Convery, executive vice president of vendor relations and marketing at Denali Advanced Integration, a Redmond, Wash.-based HP solution provider.
If CEOs listen to partners and customers, they'll get a better feel for how their own company is doing, Convery said. This also encourages partners to want to invest more in a vendor's programs, he said.
"If they listen well, they will understand what is working but, most importantly, what's not working," Convery said. Mont Phelps, president and CEO of NWN Corp., a Waltham, Mass.-based solution provider, said CEO support is the best way to ensure that a vendor's entire organization has the channel embedded in its DNA.
"Everybody wants to do it. Everybody says they're going to do it," Phelps said. "The issue is what happens when you get into a situation where you have to make tough decisions. Will a CEO stand up and be counted then?"
Citrix Systems and Cisco Systems have been beacons in that regard, he added.
"Citrix understands driving business and creating opportunities and not just taking the order down. They've done that," Phelps said. "And you have to admire what Cisco has done. A lot of VARs have made a lot of money off Cisco."
Rule No. 2: Field Sales Staff Buy-In
While it's important for a CEO to understand and support the channel, it's just as important if not more so for the so-called ranks, the field sales and technical staff, to support the channel as well. After all, that's where any potential conflict will first rear its ugly head. Many VARs said their relationships with vendors depend greatly on their local relationships. If those flourish, it's a win-win for both parties. But a disconnect can lead to an unhappy, and eventually, an ex-partner.
For example, many field reps have a tendency to embrace one local partner, doing so at the expense of other solution providers that could be driving more business, said Bob Parsons, president of Automated Office Solutions, Evansville, Ind.
"It happens to the extent that they ignore the other 12 partners in town. In one instance, we took a manufacturer rep into a customer and he left and immediately called my competitor to undercut our offer," Parsons said.
Vendors should train their field reps to keep all partners happy. "What might be a small partner today could be a big partner in the future," Parsons said.
Pete Busam, a former VAR executive who is now "chief balancer" at Equilibrium Consulting, his own firm based in Marlton, N.J., said it's difficult for vendors to maintain a consistent channel message across multiple geographies and product lines.
"How deep can you go in your staff, especially with small [VARs] that have one or two sales guys?" Busam asked.
Successful vendors also will teach their field sales reps how a company's products fit into an overall solution, he said.
HP, Dell/EqualLogic, Watchguard, APC and Liebert are strong in that regard, Busam said.
"Watchguard has a field sales rep and a field engineer who will randomly call VARs to work deals to help build a more competitive posture. They'll get on a conference call with a customer and back up their VAR to help remove any objections. The engineer is more in tune with the product, and that can be very valuable to a VAR," Busam said.
Rule No. 3: Solution-Savvy Sales Forces
The premise is easy, said Larry Rine, CEO of Intersect IT Solutions, a Chicago-based solution provider. Vendors with a sales force that gets the channel are less likely to have conflict with partners.
But not every vendor has made that connection, Rine said. Vendors too often make the mistake of training salespeople to understand the technical aspects of the company's products, but not how the products fit into a bigger solution.
"That's hugely critical. If they don't have that, ultimately the whole thing is not going very far," Rine said. "I [don't] think it's possible to have a relationship with somebody that doesn't have a good, sound understanding of what you're trying to do and is willing to help you get there."
If vendors' sales organizations had more of a solution-oriented approach, they'd have more success with partners in the field, he said.
"That's a little bit of an issue, particularly in a space like health care. Physicians don't want products; they want solutions. If I have some vendor pushing me for activities that don't fit into what we're trying to do, we probably won't have a relationship," said Rine.
NEXT: Rule No. 4: Cut The Conflict
Rule No. 4: Cut The Conflict
One of the most frustrating facets of vendor relationships can be in addressing conflict resolution, said solution providers. While the amount of channel conflict has been reduced over the years and some vendors like Dell utilize a mediator to rule on channel conflict, sometimes a vendor will just give the deal to its direct-sales rep, said solution providers. While it seems absurd to in essence undercut itself, that's what some vendors do, VARs said. It can also threaten the vendor's relationship with that solution provider, who is really an extension of the vendor's sales force.
Bruce Geier, CEO of Technology Integration Group, a San Diego-based solution provider, said more vendor sales reps are now willing to work harder with solution providers.
"A number of vendors do a pretty good job. Dell will fund marketing events if you become part of one of their Elite programs. If you attend seminars or join programs, a lot of vendors will help you out," said Geier.
Jonathan Elster, CEO of distributor SED International, Tucker, Ga., said most vendors now working in the channel have limited channel conflict. Especially in this economy, vendors recognize that the channel is a cost-effective route to market, he said.
"Due to credit restraints, vendors start to worry about getting their own salespeople on the street. We [the channel] are an extension of that sales force. Vendors can't do it themselves," Elster said.
Rule No. 5: Fix Channel Compensation
Many vendors have developed channel-neutral compensation plans, in which the vendor's sales rep gets paid the same for taking a deal direct or working with a partner. But it's unrealistic to believe that every vendor sales rep behaves the same way. In many cases, the vendor itself might evangelize the channel but individual sales reps still look to take deals direct, undercutting VARs in the process and hurting the vendor's own wallet.
Compensation plans should also be tied to how much investment the VAR has made in the vendor's programs, said Equilibrium Consulting's Busam.
"There are more levels of training that qualify you for the different levels. That's consistent across most manufacturers," Busam said. "Most programs are not geared toward, 'Are you a $10,000 reseller or a $10 million reseller?' It's, 'How many sales and technicians do you have trained? What specialties have you got?' If I'm a vendor, I want people to represent my organization properly with best practices and good implementation skills."
NWN's Phelps wants to take it a step further. In his mind, vendors should compensate more for channel business than direct sales.
"Sales organizations have to be biased to leverage the channel. It shouldn't be neutral. It has to be biased. Salespeople who are control freaks will want to control the account themselves. They have to want to learn about the channel," he said.
Rule No. 6: The Right Deal Registration
Deal registration programs can be a solution provider's best friend. Or its worst enemy. When they work properly, registration programs allow solution providers to protect the presales investment they've put into a client. There's no worse feeling than spending six months helping a client design a new or updated infrastructure only to see that effort wasted when the customer takes the information and signs with a competitor for a point less. Solution providers said some programs are flawed and offer too many loopholes or not enough protection.
A solid deal registration program can substantially reduce channel conflict, said Bill Richardson, vice president of sales at Micro Solutions, a Thousand Oaks, Calif.-based solution provider.
"If it's done right, resellers aren't stepping on each other or sniping deals," he said. In general, smaller vendors tend to have better deal registration programs because they are more nimble and flexible than larger vendors, he said.
"IBM in some cases does it very well, in some cases they don't. It depends on the product and on the program we're working under," Richardson said. "Also, any vendor that sells directly, by the very nature of doing so has a problem with their channel and with channel registration."
SED's Elster said VARs tell him that deals need to be registered more quickly by vendors.
"Time is of the essence. If it's not done quickly and efficiently, the VARs get uptight and some opportunities [might be lost]," Elster said.
NEXT: Rule No. 7: Communicate, Communicate
Rule No. 7: Communicate, Communicate
An open-door policy between solution providers and vendors helps both parties set their long-term road map and develop the right strategies for their customers. Solution providers said most vendors offer strong lines of communication, but they could be a little more forthcoming in some areas.
"I think it's very important. It's all about the deal these says," said Busam. "Everybody is price-sensitive, but when you make a decision at the executive level, you're not just spending on price. A customer is not going to spend anything if it doesn't solve a business problem. What's the differentiator that makes your solution solve my problem? If you can convince me, I'll find the money," he said.
Microsoft and Symantec are especially strong in their communications skills with partners, Busam said.
"Symantec is doing a really good job right now. They have a blitz going on for sales and technical training for their whole Backup Exec solution set. On the same day, you can get sales training and get your tech certified. And you get a good road map on the product and understanding the whole solution," Busam said.
Clear communication can be the difference between having a relationship with a vendor or an arrangement, said Intersect IT's Rine.
"It really boils down to whether we have a partnership or sell somebody's stuff. We obviously don't think you can make it without a lot of collaboration," Rine said. He cited a document IBM published a year or two ago that explicitly details how the company plans to go to market. "It said who was fair game, who wasn't. That's pretty solid. I like that. There are no misunderstandings."
Rule No. 8: Effective Lead Generation
Solution providers have long complained that leads they get from vendors are poor and rarely result in a successful deal. But those days should be long over thanks to innovations in CRM and sales applications. Today's VARs should be receiving qualified leads that can be turned more quickly into revenue-generating solutions for customers. Sadly, that's still not always the case, said solution providers.
In some cases, the leads are stale as customers may have already implemented a competing solution.
"Kaspersky will give you a lead within two days. I've seen other vendors take anywhere from four to six months," said Jay Tipton, CEO of Technology specialists, a Fort Wayne, Ind.-based solution provider. "I got one lead and when I called they said they talked to the vendor four or five months ago went and bought another vendor. Oh, great. Gee, thanks."
Again, smaller companies seem to have an advantage here, with the ability to process leads and pass them along more quickly than larger companies.
"If we go into the larger companies, I think the only decent leads we got were one from HP on the ProCurve side and Cisco," Tipton said.
Automated Office Solutions' Parsons had to think hard about the last good lead he got from a manufacturer.
"We recently went in on a big Novell opportunity. They might have come to us first. But the account might have told them to bring us in," Parsons said.
Some software vendors such as CA are better at providing VARs with renewal opportunities if not new customer leads, Parsons said. In general, any field salespeople that engage in an active dialogue with a partner have the upper hand over competitors. And, he said, some of the onus is on the VAR to grow the relationship.
"Even if it's just a phone call saying, 'We're thinking if you, what have you got for us?' and vice versa," he said. "It shouldn't all be about them sending us stuff. I should be bringing them opportunities and saying, 'I need your expertise.' We're feet on the street for them, but it should be a two-way street."
Rule No. 9: Avoid Training Overload
It's inevitable that vendors will want to focus their training and education initiatives on their respective products, but smart vendors have evolved their messaging to meet a solution provider's need—how does the product fit into a solution to solve a customer's business problem?
"More are coming around selling the 'why,'" said Geier. "Another thing that vendors have done well is put more training online so you can get involved without having to travel."
Geier credited the industry's bellwethers for helping to evolve the channel's education efforts. "We've seen more bigger vendors try to teach us 'why' and more about how we whiteboard solutions."
He cited Cisco as an example of a vendor that has invested heavily in solution provider education, resulting in success for the vendor and the channel.
"Their solution isn't just point products, especially if you look at their higher-end stuff, the Nexus products, for example," he said. "They're very involved in what touches many parts of the data center. A solution for them touches enterprise storage, security, infrastructure. The solution now becomes a broader understanding of how all those processes work with multiple vendors. Nobody is going to go all-HP or all-Cisco. You need a broader understanding of that. Training has to evolve down those roads."
Technology Specialists' Tipton believes that vendors' training requirements have taken a step backward in recent years. Once, the trend was for vendors to assume a baseline knowledge of common PC or other skills, but that trend has reversed, he said.
"It's getting to [where] a vendor wants us to have five or six different tests passed, and a couple to have multiple people pass them. To keep our IBM, Cisco, HP and Microsoft certifications, we're looking at 20 or 40 tests a year," Tipton said. "Guys, we're 12 people. I can't afford to keep rotating the door to send people out for a class or a test every week. That's almost what we're up to." If training requirements continue to increase, small VARs will be at a distinct disadvantage, Tipton said.
"Some vendors have tiered it—to be Platinum you need X number of tests—but it's getting to even the very basics are five, six, seven tests," he said. "If it's 20 to 40 tests at about $150 apiece, you're starting to talk about a good piece of cash. That doesn't include lost billable hours or time to study."
Rule No. 10: Listen To VARs' Feedback
While you'd think it's a given that vendors listen to their customers, it's not always the case. And when manufacturers do add functionality based on customer or partner feedback, it might be a couple of years later when the competition has widened the innovation delta.
"I'm getting old enough in this industry that if they're not listening, then I'm not working with them. The channel needs to be a partnership. A lot of the manufacturers forget this. They've got all this research data about what they think they need to do, but then we have to struggle to make it work or implement it," said Tipton.
One vendor bucking that trend is Kaspersky, he said. The security vendor routinely meets with partners and seeks input for future improvements, he said. This month, Tipton was invited to meet with Kasperky programmers to hammer out some ideas, he said.
"You can call them up with a question. Normally you get 'I don't know' as a response. But they say, 'I'll get so-and-so to give you a call.' That's all you really want. You don't expect a person to have every answer, but someone has the answer."