How to Build Successful Channel Partnerships to Increase Sales
Three Pillars of Channel Partner Success: Sales, Service & Support, and Executives
Over the years, colleagues have asked for advice on the best ways to build and grow channel partners. I know from firsthand experience that working with channel partners can help vendors and manufacturers materially increase their coverage, reach, and scale. This powerful Route To Market (RTM) cannot be taken for granted, and must be properly resourced.
After working with hundreds of channel partners, I've also learned that there are three main pillars that vendors must address in order to create successful partnerships:
Service and Support
The Executive Team
Mutual Empathy Builds the Foundation
The fundamental basis of any successful partnership is mutual empathy. This means both parties need to be in tune with the needs of each other. Nowhere is this more important than in channel partner relationships. The channel partner should understand the goals of the vendor, and the vendor must be aware of the partner’s objectives.
The key to success for a channel partner is to understand what is driving the vendor. In addition to hitting revenue targets, this might include net new customer goals, new customer reference sites, or customer retention targets.
For vendors to be effective, they need to be thoughtful and strategic with the three major constituencies at a channel partner: the sales team, the service and support team, and the executives. All three of these stakeholder groups must be engaged for a partner strategy to work.
If only one or two are working, the relationship will collapse.
Sales, Technical, and Executives: A Three-Legged Stool
A good metaphor for working with channel partners is to picture a three-legged stool, where you need all three legs to be in balance. I have seen it play out time after time - a vendor misses one or two of the legs, and the entire relationship collapses. Companies must address all three consciously and proactively.
Back in the early 90’s I was a part of a sales team at Hewlett Packard responsible for getting our partners to sell more PCs to customers. At the time, HP had some sales reps that sold directly to customers, and for greater reach and scale we also had a sales team charged with developing a set of channel partners to be another “off payroll” selling team for us.
HP was not alone in working with partners. Almost all technology manufacturers and vendors recruit and enable partners to help them reach their end customers. In addition to providing a greater reach, there are myriad advantages of working with partners for vendors and customers alike. Partners provide geographic proximity, deep expertise in a vertical industry (such as healthcare or manufacturing), and customized services that a larger company may not be able to do on their own.
Hewlett Packard prided themselves on their technology. In fact, one of the top selling points across the entire HP product line was their world class technology along with their investment in research and development to continue to provide the most technically advanced products in the world. So you can imagine the company’s frustration when Compaq’s personal computers were outselling HP’s.
How was Compaq selling more computers? What were they doing that HP was not?
Looking back, my assessment is that Compaq was more adept than HP in each of these three areas. They were strategic and established an early leadership position with channel partner executives. They understood how influential the partners’ services team was and made sure they were well informed and equipped. And, they were adept at working with the partners’ sales teams, providing sales tools, leads, and other resources to help them meet their individual and group goals.
When companies want to succeed with partners, they need to consider, address, and optimize all three elements. Missing one (or two) of the constituencies altogether or leaving out critical pieces of any of them will result in a failure to launch.
You Cannot Afford to Miss a Critical Component
An example of missing the sales leg of the stool is when a vendor is successful in gaining executive buy-in, they get their product on the list of approved solutions, and they get the services team ramped up.
But, if there are major gaps on the sales side such as a compensation plan that does not help the sales team meet their monthly or quarterly goals, a lack of customer demand for the sales teams, a shortage of customer references, or inadequate sales training, then the sales leg of the stool will collapse.
Some companies nail the partner sales team component with solid training programs and resources for partners’ sales teams and develop strong relationships with executives at their partners.
However, if the technical support and service teams are not convinced of the technology, are not confident in the solution, or fear high failure rates, they will go so far as to tell their sales teams they will not support an implementation. This group makes it clear to their sales teams which solutions they strongly prefer to support and service, so it is important to treat them with strategic importance.
Even if a vendor has a solid plan for the sales and support teams, they will never fully gain traction at a channel partner unless they also have the full commitment from the executive team. This is the group that makes the financial and strategic decisions around which vendor’s product lines to pick up, which businesses and business models to pursue, and where to invest.
They need to feel that the vendor is side by side with them, with joint investments and commitments. If they do not consider the vendor of strategic or financial importance, the relationship will not thrive.
Vendor Considerations When Working with Channel Partners
Partner sales reps are the vendor’s face to the ultimate end customers. As such, they need to be as effective in delivering product positioning and messaging as the vendor’s own sales team.
This requires providing resources including sales skills, product skills, target customer profiles, sales collateral, customer references, and any other tool deemed essential to making a sale. They need to be sensitive to the fact that a sales person is most likely on a quarterly target and is always looking to shorten the selling cycle.
In addition, vendors need to understand how selling their solution impacts a partner rep’s compensation. Are they paid on margin or revenue? How does your product/service/solution impact their pay?
At the same time as you are creating plans to develop sales effectiveness at your partners, you need to ensure that their service and support teams are not only knowledgeable about your solutions, but also will wholeheartedly get behind them. After all, this is the group responsible for making sure that whatever a customer is sold will work as promised, will not fail or cause known or inadvertent problems, and will be a resounding success.
This team also needs timely notifications of service issues, and again should be treated as an extension of the vendor’s own service and support organization.
Finally, vendors need to remember that any time out of the office spent on training for a services team represents the loss of billable service hours, so every effort should be made to find the right balance between education and time out of the office.
While it is essential to address all three stakeholders, the executive constituency may be the most critical “leg” since they set the strategy for the rest of their organization.
The partner owners and executives are focused on cash flow as well as their top and bottom lines. They need to optimize their resources, so vendors need to be either revenue relevant or strategically important to them. They will be doing economic modeling to understand financial implications of adding your brand and solutions to their offerings.
Partner executives will need to know what investments are required up front, when they will break even, ongoing investments, and other services. They should to be a part of building and owning a shared business plan that documents commitments, goals, and milestones to be reviewed on a regular basis.
How Solid is Your Channel Partnership Strategy?
Building a partner ecosystem is a common and common-sense step many companies take. Creating a strategy and plan for sales, technical, and executive alignment is best done at the start of your partner program or relationships, but it is never too late to start or to step back and evaluate how you are doing with each of them.
Here are some questions to ask yourself and your team:
Is the sales team effective in selling your solution – are they enabled and is your solution peaked for their compensation plans?
Is the service and support team proficient in supporting your solution – are they knowledgeable and are they advocates?
Is the executive suite bought in – do they see you as a vendor or do they truly view you as a partner with shared goals, metrics, and commitments?
The vendor, partner, and customer can all benefit when a partner program is optimized, but this can only happen with a thoughtful strategy that addresses each of these three pillars of the partnership model.