Nothing Trumps Ease of Doing Business
While vendors focus on program structures and incentives, the key to winning partners over is making channel initiatives simple, streamlined, and easy to navigate.
By Larry Walsh
Vendors expend much time and energy on honing the attributes of their channel programs, which often results in complexity. Many vendors come to 2112 looking for strategic guidance on what management structures, training programs, marketing and funding support, certifications and specializations, awards and recognitions, and profit schemas work best in stimulating partner performance.
Many vendors look for the silver bullets, believing that enough shiny objects in their channel chambers will result in a net increase in indirect sales.
Partners, on the other hand, don’t necessarily see it this way.
Over the years, partners have provided 2112 with mixed feedback on the subject of incentives and channel behavior modification. While many partners welcome rebates, market development funds, deal registration bonuses, and free training, they would much rather have a streamlined process for business transactions.
Our research at 2112 has found time and again that the best-performing solution providers are those with well-defined business plans and objectives. These solution providers typically operate around technology and vertical practices, having developed strong technical and sales capabilities that incorporate vendor products into their go-to-market strategy. They don’t much care about special incentives and specializations; they have their own visions and plans.
What well-developed solution providers do care about is ease of doing business. They want to operate at speeds that allow them to close as much business as quickly as possible – for their revenue needs as well as staying competitive. Processing quotes and orders faster is often the differentiator in partner sales.
The problem from partners’ perspective is that vendors spend far too much time on channel program structure and incentives, and don’t invest enough in the supporting processes and systems to make transactions uncomplicated, or, as some would desire, “simple.”
The average solution provider is actively conducting transactions with four to seven vendors on a regular basis, and with up to three-dozen on an infrequent basis. In many cases, the partner must navigate a dizzying array of portals, ERP systems, and compliance requirements. Solution providers tell 2112 that it can take anywhere from hours to days to get a quote and process an order.
Consider what this process looks like to a solution provider engaged in a complex deal. It will take hours to get information from a vendor for part of a much larger deal. Then, the partner must go through the same process with multiple other vendors, adding more time. Partners must also invest in people who learn and master multiple vendor systems. The cost in resources, effort, and time is enormous.
The challenge of doing business with vendors extends to the less structured and transactional partners, too. While strategic solution providers say special incentives do little to deviate them from their plans and objectives, rebates and spiffs are gold to smaller, more transactional partners. Getting orders placed and processed makes all the difference in closing sales and maintaining status in channel programs.
When it comes to channel program attributes that make a difference, many solution providers tell 2112 that ease of doing business tops the list. Many solution providers say they would do more business with a vendor if processes were simpler, better defined, and consistent. No wonder many channel chiefs often make “ease of doing business” a cornerstone of their programs. Unfortunately, many vendors will interpret ease of doing business as incentives and simplified program requirements, and not the simplification or streamlining of processes and systems.
It’s easy to criticize channel chiefs for not doing enough to simplify business processes for partners, but the problem isn’t entirely in their purview. Systems – particularly ERP and accounting – fall outside the scope of the channel organization. Many vendors are so wedded to their legacy systems that their solution often results in adding parallel or redundant systems, which only results in greater complexity. And the sheer cost of acquiring, customizing, and deploying new management systems is too high a barrier to overcome.
Nevertheless, channel organizations need to become stronger advocates for simplified partner management systems. While vendors avoid the short-term costs of improving systems, they spend multiples more over time on programs that result in only incremental performance improvements. Moreover, the cost of lost opportunities only amplifies the consequences of inaction. Avoidance of system improvements doesn’t mean channel performance won’t improve; it will just cost more and have lackluster returns.