Strong Medicine For A Sickly Channel

Hewlett-Packard's partners are shopping at Dell. Sun Microsystems and Computer Associates International are consolidating programs, cutting back on their number and diversity and placing them under one umbrella. Microsoft is making its sales team accountable for partner results and extending internal sales support resources to work with partners. Many examples exist, but one thing is certain: A truly fresh approach is needed to reinvigorate today's channel partner programs.

Partnering programs are faltering because the once-leading-edge basis for partnering is outdated. Manufacturer-led programs are based on a simple exchange. The supplier gains "reach and revenue" by offering financial incentives and legitimacy, the latter benefit delivered through brand alignment and certification. Tiering goes one step further and allows partners to run their own business as they make return-on-investment decisions. Ultimately, partners pick a level of investment and commitment and receive a predefined reward.

This approach is flawed and fosters a supplier-centric, push-oriented partnering relationship. Programs focusing on financial incentives create pricing artificialities and insufficient linkage between value-added activities performed for the customer and payments made by the manufacturer. As partners mature, they are more interested in promoting their own brand than positioning themselves as lowly squires carrying the lofty knight's armor into battle.

Next-generation partnering models must build a new relationship based on real, measurable business benefits for the partner and a new level of commitment on the part of the manufacturer. It's still up to the supplier to lead the relationship, but three priorities exist for those that would innovate:

1. Rein in program proliferation. Strategies that work well can fall apart when they are repeated too often. Product, marketing and sales groups replicate one program after another to achieve discreet, incremental goals. The first step toward rehabilitation is to prune ineffective programs and combine the remainder into a focused, coordinated approach for working with partners.

2. Create outcomes, not payments. Instead of offering incremental discounts, rebates and marketing funds, partnering relationships should extend supplier competencies relevant to the partner's business. Examples include sales resources, market information, planning tools, and training and advertising expertise. The goal is to directly help partners grow sales or profits to levels they could not achieve on their own.

3. Listen and then communicate. The best-laid plans often run awry because they are not effectively communicated. Suppliers need a crisp strategic message, communicated frequently through informal and formal means to all layers of the partners' business. In short, they need a communication plan. But that's not enough. Suppliers must genuinely listen to their partners' concerns and dig deep to learn about their challenges and plans before they craft a message. If suppliers don't listen, all the shouting in the world won't help.

Just as products have life cycles, so do partnering relationships. It's time to move on, to innovate and to define the next-generation partnering models that will carry manufacturers and partners forward.

Editor's Note: CRN welcomes letters and other commentary about current events from its core audience of solution providers, as well as occasional columns by consultants. If you've got something on your mind, share your opinion by e-mailing CRN Editor Heather Clancy at [email protected].