Vendors Misunderstood Demand Creation
Most channel partners are the perfect engine to create demand with the end-user customer. They know their customers' needs and purchase cycles, and they know how to reach them. Whether they influence, resell or provide the customer's complete solution, the value of this motion is entirely undervalued and, in a lot of ways, unappreciated by most vendors.
The vendor's view of demand generation is not the same as yours. It needs to move its technologies, products and solutions to the next tier of the channel. That usually means it emphasizes the push motion: The vendor ships; demand is fulfilled.
Ask a vendor about creating velocity, increasing sell-through and creating end-user demand and suddenly it is out of ideas. Or even worse, a non-channel-savvy organization within the vendor steps up with a direct-centric campaign. This creates channel tension, contention, polarization—you choose the adjective. Pretty soon, the channel is clogged with inventory and frustrated partners.
That's just the beginning. Next, the vendor throws money at the problem. Distributors get push funds, and the general partner population gets token funding or SKU-based rebates. That would be fine but for one small detail—the vendors also turn to the direct-response channel group made up of e-tailers and catalogers for expensive catalog insertions, and overlapping and competitive offers that are all delivered to the poor customer in bulk. In return, pricing is adjusted to sweeten the deal.
Follow this through and what do you get? One end of the channel swoops the hell out of local and incumbent partners to ensure they come close to their volume targets. Their weapon: price.
Why is it that a major direct-response partner can sell commercial IT products more cheaply than the incumbent partner? One word, laziness—of the vendor, that is. It's easier to manage eight major partners than hundreds or even thousands of partners that actually hit the segments you are trying to reach and create demand.
Vendors have created this cycle, not the partners. We need these vendors to step into the 21st century and use real and proven market- and segmentation-driven strategies to ensure their brands are preferred in the customer set. If a vendor wants to capture the SMB market, then it should attack the SMB verticals and manage the aggregate partners that give it the greatest reach there.
Right now, we have a polarized channel, where solution providers rightfully point out that their investment in technical expertise and services practices is in danger of being trumped by the larger, direct-response partners that always get the first bite of the vendors' "Oh, my God, I need demand now" money.
I have one piece of advice for vendors: If you want to attack the SMB market and drive sales downward away from the enterprise, then reward demand-creation behavior. Put in place rebate programs that reward segment-based growth, and you will encourage more of that behavior. If you don't, you will probably pay later and run the risk of collapsing your product pricing and creating more disillusioned partners.
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