Looney-Bin Behavior
Tens of thousands of loyal partners generating new business for vendors are being walloped by flat-out, looney-bin behavior. There is far too much sales time being wasted on channel conflict rather than on driving new business.
Bizarre Behavior No. 1: Direct-Sales Force Self-Mutilation. The direct-sales arm undercuts partners on deals that have already been signed, sealed and are ready to be delivered at a higher margin. The Fix: A pro-channel compensation policy that pays the direct-sales force more for sales that go through the channel.
No. 2. Swooping Discount Disease: A select few large discount-crazed partners incented with back-end vendor rebate dollars swoop in with an 11th hour last-minute vendor-sanctioned hit on solutions sales. The Fix: Deal registration for solution sales and systems that tracks precisely who generated the sale.
No. 3. Distributor Disrespect Leading To "Unable To Ship-itis:" No matter how many times they are proven wrong, vendors time and time again think they can do the basic pick, pack and ship that is a core competency of distribution. Think again. After failing to meet the ship date multiple times, the vendor gives up and sends the partner to distribution. The Fix: Embrace distribution and let it do what it does best.
No. 4. Special-Pricing Cancer: When everything is a special-pricing scenario, vendors in effect have no price. Talk about abdicating your responsibility as the vendor to price your product or solution. This is the equivalent of a vendor setting up shop on New York sidewalk hawking its wares at a different price for each and every passerby. The Fix: A clear pricing policy that rules all but a handful of deals, with the exceptions spelled out in dollar volume or units.
CEOs who are not drilling down to find out if their company is suffering from channel conflict are doing their shareholders a disservice. This is not rocket science. Channel conflict is not a natural state of affairs. When it comes to partnering, one plus one equals two,and one minus one equals zero. Do the math and profit or end up in the channel intensive care unit.