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Motivating the Channel Members
10 Mistakes To Avoid With Partners
How to improve relationships, reduce conflict and increase
revenue
Success starts with treating partners like partners. In the following excerpt from the new book Revenue Rocket: New Strategies For Selling With Partners, published by ProStar Publications, author John Addison points out 10 mistakes any technology vendor engaging with the channel should avoid. Smart solution providers will want to keep these red flags in mind before choosing a new partner or evaluating a current partner. Nice ones might even pass this along to some guilty parties.
Mistake No. 1: Confusing Partners With Final
Customers
You can be the market leader if you never confuse an order with a
customer. You build lifetime relationships with final customers. You
have created a value-chain of partners to grow your business with these
final customers. Many companies become lazy. They ship products to a
distributor, and then consider the sale complete. Some corporations do
not even know the names of their final customers.
Mistake No. 2: Confusing Press Releases With
Partners
Have a planning session with each of your partners. The result will be
agreed-on goals, plans of action and commitments from you and them. For
example, Strategic Technologies is a regional solution integrator. With
Sun, the relationship started with a strategic plan that included goals,
financial projections, target markets, marketing campaigns, service
programs and training plans. Both Strategic Technologies and Sun agreed
to action items with people's names, deadlines and budget commitments.
Strategic Technologies CEO Mike Shook built his profitable business from
ground zero to more than $100 million in less than 10 years.
Mistake No. 3: Stuffing the Channel
Your goal should not be to make this quarter's numbers in a way that
will get you fired next quarter. The phrase "stuffing the
channel" refers to convincing distributors and VARs to take large
inventory positions. They will then insist on a large discount, extended
credit, unlimited returns or all [of the above]. The next quarter, the
low-cost players offer deep discounts. Then, value leaders get fed up
and take their business to a competitor. A vicious cycle is created
where everyone loses: The manufacturer's profit margins shrink, partners
make no money because the final customer gets a big discount, and the
final customer buys from someone who cannot afford to install and
support the systems.
Mistake No. 4: Expecting Distributors To Give You An
Instant Channel
Distributors are excellent at order-processing, logistics and credit
lines. When deciding whether to go to two-tiered distribution, evaluate
whether your cost savings in outsourcing inventory management, sales and
support justify the added discount. Do not be captivated by a
distributor's size or number of VARs. Expect to drive end-user demand
and channel sales.
Mistake No. 5: Believing That More VARs Equals More
Revenue
When you have thousands of VARs, many will do nothing more than take
orders. You need partners who are actively marketing your products, then
giving customers effective support. Partners can only afford to market
your products if they have adequate profit margins. Thus, too many VARs
result in disappearing margins and sales.
Mistake No. 6: Taking Partners For Granted
Your partners have a choice. They can devote their time to selling for
you or for other companies. Treat them like partners. Help partners to
build their businesses. You can create dialogue through one-on-one
discussions, partner advisory councils, surveys and collaboration. The
idea is to continually understand their issues and help partners grow.
Mistake No. 7: Failing To Train
People sell and support what they know. One key to Microsoft's success
is the investment it makes in training its partners. In preparing to
launch Windows XP, [for example,] Microsoft trained thousands of
partners. It offered technical training, sales training and application
training...It taught partners how to improve the sales of their
profitable services in enterprise network management, application
implementation, wireless solutions and specific industry solutions.
Mistake No. 8: Failing To Arm Partners For Battle
Your partners typically sell for hundreds of firms. Provide better sales
and marketing tools than [your competitors] and you win. Your partners
need prepackaged, integrated marketing that is focused on your products
and services. They want up-to-the-minute digital files to use in placing
advertising. They want to modify advertisements and include their own
logos. Partners want to be given brochures and mailers, or be able to
easily buy them with MDFs. Use a partner Web site and call center to
give partner salespeople fast answers to the questions that customers
will ask them. Arm partners to win the battle for profitable business.
Mistake No. 9: Ignoring Demand Creation
Involve your channel advisory council in creating and reviewing
marketing communication plans. Plan from the beginning to have channel
marketing activities integrated with your own. When you launch a new
product or new marketing campaign, give your channels all the marketing
tools in advance so that their activities are coordinated with yours.
Partner relationship management (PRM) is a platform to manage the
content distribution, management and analysis of marketing campaigns
[and]...can be an excellent way to automate the distribution of leads to
the best partner.
Mistake No. 10: Going Directly To Jail
Every country has specific laws about channels of distribution. In the
United States, you need to be concerned about antitrust, collusion,
franchise laws and unfair business practices. You cannot tell a VAR at
what price to sell. You must treat all partners in a class the same way.
When you are managing channels, you need to educate everyone in your
company about how to deal with partners. Your firm's direct salespeople,
for example, may tell a partner the price that they should quote. They
may say: "Stay out of my account." This could put your company
in a lawsuit or land someone in jail.
