Setting and Resetting Partner Expectations
It’s completely reasonable for vendors to raise the bar a little higher for partners each year, but setting unrealistic goals can push partners away and into the arms of competitors.
By Larry Walsh
Just one month from now, with the revelry of holiday celebrations still ringing in our ears, we’ll collectively turn the calendar pages onto another year. At that point, most partner statuses will reset to zero. Everyone will start over with a clean slate. And that clean slate acts as the foundation on which partners re-earn their status in vendor programs.
But there’s a catch. While the start line is always zero, the goal inches out a little further each year.
It’s all about goal-setting. A vendor never wants to keep goals static for its salespeople or partners. Setting Incrementally more ambitious sales and performance objectives ensures that salespeople and partners don’t get complacent and continue to strive for growth.
Partners, however, report something different to The 2112 Group. Many partners tell us that the goal reset by vendors is often unrealistic. They understand the need to elevate expectations and make rewards harder to get. What they don’t understand is when vendors set performance standards beyond realistic reach, sometimes to the point of unattainability.
The channel is unique in that vendors have only carrots to motivate partners and no stick. By law, vendors can’t require partners to do anything. They can’t require partners to invest money, assign resources, or perform certain activities. They can only reward and reinforce what’s considered “good behavior,” which often reflects the attributes of solid performance and goal attainment.
Vendors, though, are in an interesting position. While the economy is rocking along at a solid pace – it looks as if the 2016 GDP may top 2.5 percent – technology spending is uneven. As more IT money shifts to cloud computing and services, legacy technology vendors are challenged in propping up sales of their hardware and software products. If you look at earnings reports, many legacy vendors are posting positive earnings but lower unit sales. Increased prices and higher discounts will keep the balance sheets in the black for only so long.
In this climate, some vendors cave to the temptation to push unrealistic expectations on partners to close the sales and earnings gaps. The channel is an extension of a vendor’s sales force (or at least an augmentation of sales capacity). So it’s logical for a vendor’s channel chief and management team to believe that channel partners can and should push for growth.
But setting unrealistic expectations for partners can have countervailing effects.
If a partner is growing at an average rate of 10 percent each year and then suddenly has a breakout year of 20 percent growth, it’s unrealistic to think that partner can and will more than double its growth again in the following year. But that’s how some channel managers think. They see a strong year and building momentum and assume the good times will just keep rolling.
Meanwhile, the partner faced with that kind of vendor mindset may decide to apply resources to other vendors with more realistic expectations and higher rates of return for them. Now the partner is working harder for another supplier at the original vendor’s expense.
Some vendors have mechanisms for reconciling and resetting unrealistic partner goals. In most cases, though, partners must initiate the adjudication process. That’s not something partners are always comfortable with, so they take the path of least resistance instead, and that’s a silent downgrading of the vendor relationship.
To avoid that, vendors’ channel managers – specifically, channel account managers – should engage partners in strategic and business planning, understand their mutual goals and objectives, and set realistic expectations for the coming year. By working collaboratively with partners, vendors will gain partner buy-in and, more than likely, produce stronger returns.
Ultimately, setting arbitrary goals and unrealistic expectations often results in minimal returns. And that’s no way to start a perfectly good new year.