Let's call our VAR Joe. Joe is an enterprise VAR who has been in business for many, many years. He has been loyal to a few key vendors and has been appreciative of the partnerships they have had together and the money he has made through them. Quite simply, he is a relationship guy. And that is an important fact that vendors sometimes forget. Joe is all about relationships. It is how he built his business and stayed in business. Joe has great relationships with his customers. His contacts are deep and these users trust him. He knows their budgets, their goals and is the go-to guy when they need help.
Enter a young, ambitious direct/field sales rep under pressure to make his numbers. We'll call him Steve. Steve doesn't have the experience and he doesn't have the relationships. But what Steve does have is the logo of a large vendor on his business card. And with this logo he assumes he calls the shots.
Steve decides that Joe is charging too much and making too much money on a particular deal with one of his long-standing customers. But Joe knows what he can charge. Joe has been working with this CIO for years. Joe is generating monthly recurring revenue on his managed services offerings. Joe knows his total budget for the year and his top initiatives. But Steve undercuts him and forces Joe to respond. The move costs Joe hundreds of thousands of dollars and time on a highly consultative business solutions deal that is now at a much lower margin.
Joe isn't happy. He begins to question the vendor and complains about the deal to someone higher up in the food chain. Mired in bureaucratic red tape, there is no response.
Meanwhile, other vendors are courting Joe, and this latest move has left a bad taste in his mouth. He starts talking to competitors and begins to understand their technologies. They are responsive. In a matter of months he lands two deals worth millions of dollars and he brings in the new vendor's products. In fact, he makes the strategic decision to move business from his one-time preferred vendor to a new partner with product offerings that are just as good a fit for the customer. The new vendor, excited by the prospect of market-share gains, commits sales resources and joint engagement that is well above what the one-time preferred vendor provided.
Steve may be happy because he made his number for the quarter. Quick to make a buck now, Steve hurt a relationship that took years to build. Short-term goals obfuscated the vendor's longer-term needs.
This is a perennial problem with channel and vendor partnerships. If a vendor has a channel, the executives at the very top of the company must truly understand the benefits of scale the channel provides. They must be the biggest advocates for the channel and the programs they offer within the company. Channel religion needs to be ingrained in their DNA. And most importantly, it needs to reach all the way down to the field.
For all the vendors out there, manage all your Steves in the field and compensate them in a way where it is a win-win for the vendor and the channel. If not managed correctly, it can actually be a big loss for you.
BackTalk: Kelley Damore is VP, Editorial Director for Everything Channel. You can reach her via e-mail at firstname.lastname@example.org.
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