Falling Down: When Good Vendors Come Up Short

When otherwise good vendors come up short

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For two glorious years--2002 and 2003--Symantec reigned supreme in partner satisfaction for security management software, taking top honors in the VARBusiness Annual Report Card (ARC). Since then, the company's third-party allies have given the company poor marks in partner satisfaction, much as they did before the security software giant mounted a focused campaign to change key business allies' perceptions at the end of the last decade.

This year, Symantec finished fifth out of six in the ARC's Security Management Software category. The showing was disappointing and frustrating, but not unexpected.

"We know we're not firing on all cylinders," concedes Randy Cochran, Symantec's vice president of U.S. channel sales, "but we are committed to improving partner satisfaction and have plans in place that will make a difference." Unfortunately, Symantec now finds itself in the position that Hewlett-Packard, IBM, ViewSonic and others have found themselves in previously: playing catch-up.

At one time or another, each of these companies has had to ask themselves, "Why do previously successful plans and policies come up short when it comes to partner satisfaction?" This feature examines why once-laudatory companies stumble and what many are doing to regain partners' confidence.

Taking Partners For Granted

Vendors rarely shift strategies completely and fall out with partners all at once. More often, vendors stumble when they make seemingly subtle shifts in go-to-market plans that coincide with changing customer buying habits.

Take HP, for example. The tech giant hoped its server partners would tolerate some increased competition with its own direct-sales machine when rival Dell's efforts to cater directly to customers began to meet with market favor. "Why not?" HP figured. Analysts were pressuring the company to increase direct sales at the expense of customers, and new supply-chain theories suggest that HP could indeed take more business direct. Besides, the company concluded, Dell customers seemed to love buying directly from a manufacturer.

What HP found, much to its dismay, was that reality failed to match lofty ideals. Beating Dell in supply-chain economics proved impossible. Partners were incensed when they saw their one-time ally trying to steal their business. Many gave HP low marks for partner satisfaction, and a few chose to resell products from archrival Dell.

The miscalculation cost HP. In the 2002 ARC, HP lost to Dell in the Entry-Level Servers category. The poor showing caused HP to regroup and redouble its efforts to help partners. The work paid off. This year, HP finished tied for first place with IBM in this category, well above a fallen Dell.

The experience taught HP a valuable lesson that many vendors would be wise to heed: Challenge partners at your peril. While that may be the first rule of smart partner management, it's not the only one. Indeed, vendors must compensate, support and promote partners to receive high marks for partner satisfaction. They must also avoid some common pitfalls. They can't fumble when it comes to communication, consistency and basic execution.

Misjudging the Competition

One of the best ARC ratings ever in terms of partner satisfaction was earned by ViewSonic, the Irvine, Calif.-based monitor company. It won the Display Technology category a record five years straight. But then things began to unravel.

Executive moves, policy changes and competitive pressures contributed to ViewSonic's slide in scores. So, too, did its failure to recognize its rivals were improving greatly with each passing year. ViewSonic was hurt by an inability to respond with a clear, concise marketing message after Samsung, Acer, Sony and others made serious runs at eroding its channel base.

Samsung, in particular, claimed the mantle of "best in class" with a targeted recruitment effort, a world-class sales and technical support program, and an unprecedented financial incentive package. In a category where partners can swap out vendors in less time than it takes to say "refresh rates," the combined strategy proved to be ViewSonic's unraveling. By 2002, it was no longer best in class.

ViewSonic, however, reworked its strategy. It established an advisory council as a way for individual partners to provide feedback. It overhauled its partner portal, which made it easier for allies to participate in promotions and find the support they needed. And, it reassigned several dozen employees to call on resellers instead of users.

All told, the combined efforts have had a positive impact. After a slip, the company continues to climb its way back. Although it finished in third place again this year, its scores were improved year-over-year.

"It was a long crawl, but we're thrilled partners are responding positively to all of the changes that we've made," says Jeff Volpe, ViewSonic's vice president of channel-partner marketing.

Never again, he vows, will ViewSonic rest on its laurels.

Bumbling Basic Execution

Great ideas are often hatched at headquarters, but many die an untimely death once implemented in the field. Take Dell, for example. The Round Rock, Texas-based company, which won the 2002 ARC Entry-Level Server category, learned firsthand this year how costly bumbling execution can be.

In 2005, Dell fell to the bottom of the Entry-Level Servers and Advanced Desktops & Workstations categories, despite launching an ambitious program to recruit resellers. The program was launched amid great fanfare that created unprecedented interest in Dell products among PC and server resellers.

But partners who agreed to resell Dell's white-box systems found the company woefully disappointing. Dell wasn't helpful from a support standpoint and, worse, was competitive from a sales perspective. Among other things, its partners complained that Dell tried to steal their accounts once customers began buying more than a few systems at a time. That has never endeared a vendor to the channel, and it certainly did little to dispel the notion that Dell isn't a partner-friendly ally.

Dell isn't alone in letting down channel partners; even winners sometimes stumble when it comes to execution. Intel, which bested AMD in the Client & Server Processors category, saw its support scores fall sharply after moving its support center from Oregon to Costa Rica in 2005. The company spent an inordinate amount of time training the Costa Rican engineering staff, but never counted on the local government to drop the ball when it came to telecommunications infrastructure. Intel wound up having to arrange for alternative satellite telecommunications to make sure calls got routed to Costa Rica properly.

Though partners have largely forgiven Intel, the company worries that poor perceptions may still linger, especially since it has struggled mightily with product-allocation issues. Despite recording some of the highest partner satisfaction scores in the entire survey, Intel partner-program managers believe they can still do better next year.

"Winning means overlooking nothing," says Steve Dallman, Intel's director of U.S. channels, who won this year's CMP Channel Executive of the Year award (see "My View: Where Things Stand," page 115).

Costly Miscommunication

Perhaps the most common of all mistakes vendors make is poor communication. Symantec now recognizes that some tactical mistakes made more than a year ago still irks some partners. For example, partners once managed by people but were then directed to a telemanaged system to save Symantec money are still smarting from the perceived slight.

Had they been better educated about the benefits they could find on Symantec's partner portals, they might not have been so upset, Symantec managers believe.

Then there's the notable, blockbuster acquisition of Veritas, which itself had struggled with partner-satisfaction scores despite some innovative program efforts. In an exclusive VARBusiness interview, Symantec CEO John Thompson says his company managed confusion by adopting what he refers to as a "stay in your lane" strategy.

"What that means is this: If you call on a Symantec partner, we're not going to change your assignment. If you call on a Veritas customer, we're not going to change your job. That kind of consistency, we hope, will help make the transition period smoother," Thompson says.

Thompson's charge to his lieutenants, however, has proved tougher to execute in the field than expected--integration success notwithstanding. The biggest challenge: communication, of course.

Conveying the acquisition's benefits to partners has been extremely difficult, especially as rivals try to infuse the market with fear, uncertainty and doubt. In his keynote address to partners at Symantec's recent North American partner summit, Cochran addressed the challenge facing the new company: "We didn't do well at all communicating, and we will improve," he vowed.

While those types of issues can take several quarters to fix, some perceptions can be changed in short order. For example, Cochran surprised Veritas partners at the Symantec summit with the promise of more up-front financial incentives for those selling the company's software tools. Money, he notes, can go a long way to making people happy, though not ultimately satisfied.

To improve overall satisfaction, Cochran believes Symantec will have to improve communications, collaboration and competitiveness. Luckily, partners are warming to Symantec's latest efforts.

"They have been saying all the right things for some time, but are now executing on their promises," says Brian Okun, director of strategic partnerships at CHIPS Computer Consulting in Lake Success, N.Y.

That suggests nearly anyone can get up after a nasty fall, so long as there are satisfied allies willing to lend a helping hand.

Vendor Downfalls

Five common causes for vendors earning failing partner-satisfaction scores in this year's Annual Report Card (ARC).

Poor communication: Vendors spend billions of dollars on partner programs and policies. But many fail to communicate strategies effectively. Symantec, for example, concedes it hasn't communicated with partners effectively. And it vows to change.

Lack of execution: Dell recruited partners to participate in a white-box program amid great fanfare. But partners who tried to resell its systems found it tough to get any traction and support from the company. This year's ARC scores suggest Dell took a step back, not forward, for the effort.

Conflict: For years, Oracle has battled the image of a conflicted vendor ally. Not until Oracle hired a channel executive with clout inside the organization and respect in the channel did partners respond favorably.

Underestimating the competition: For five years, ViewSonic reigned supreme in partner satisfaction in displays. But it never saw NEC, Sony and others coming, let alone Samsung, which has won the ARC in Display Technology for three years running. ViewSonic has regrouped, but concedes that it should have responded better to Samsung's massive channel investments.

Complexity: IBM, Hewlett-Packard, Microsoft and Maxtor all won ARC awards this year. And each has lost in the past. One reason why they have turned things around: Each made program simplification a cornerstone of their strategies for 2005.

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