Alternate Channel Structures

 

10 Mistakes To Avoid With Partners

 

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.

 

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