Partners Think Vendors Want To Go Direct

direct-sales-channel-2112blog

Joint business planning can go a long way toward creating harmony between direct-sales teams and the channel.

By Larry Walsh

We hear a lot from vendors about their desire to go 100 percent through channel sales. We assign labels to such vendors, such as “channel-centric,” meaning they’re predominantly indirect-sales organizations; or “channel-friendly,” denoting their strong relationship with partners; and even “channel first,” meaning the vendor opts for partner sales over direct.

Despite the assertions of vendors about their commitment to the channel, partners are fairly mixed on their vendors’ commitment to working with partners, according to the results of the 2017 Channel Forecast study by The 2112 Group.

Nearly one-half of participating partners told 2112 that they believe vendors would adopt a direct-sales model if they could. Conversely, only one in five partners said their vendors have a “channel first” philosophy that places partners’ sales and interests ahead of their direct-sales organizations.

It’s not surprising from whence this perception comes. Vendor channel sales models are the most likely source. Thirty-six percent of partners say their vendors engage primarily in a “sell-with,” or co-selling, model. Another 33 percent of partners say their vendors use a “sell through” channel model, with products passing through partners to the end user. In either case, vendors often have a heavy hand in the partner sales process.

Why is any of that significant?

Well, it’s mostly because co-selling and teaming arrangements expose partners to much of the same sales pressure and bureaucracy faced by vendor sales reps. Some would say this isn’t a bad thing, as it gives partners much exposure to resources that result in sales and revenue. Many vendors take great pride in holding sales kickoffs and training sessions in which they commingle direct and partner salespeople for that very reason.

The problem comes from the divergent roles of direct salespeople and partners. The partner’s mission (in theory) is satisfying customers’ technology needs. As an intermediary, a partner can navigate the supply-side of the technology business to identify the products needed to meet those needs.

On the other hand, direct salespeople are responsible for meeting their vendor’s fiduciary needs. They must sell their product and make their numbers. As a result, direct salespeople and channel account managers pressure partners into pushing products on customers and, in some cases, even try to work around partners. Many vendors over the years, overtly and covertly, have indicated that they’ll sell around partners if they don’t deliver customers. How many times have we heard a channel sales rep say, “I can sell the product if only I can get in front of the partner’s customer”?

The stress caused by vendors’ constant need to feed their pipeline leads partners to think direct sales will go around them. Too many partners say they’re pressured by their account managers to do joint sales calls to drum up business. Moreover, partners express persistent concern that vendors will usurp deal registrations to feed their pipeline.

We can’t blame vendors entirely for this conflict. Partners are terrible at pipeline development, sales management, and forecasting. Only 45 percent of channel partners set annual sales goals; most partner sales are opportunistic. And, in some channels, 2112 has seen as much as two-thirds of indirect revenue by partners originate through vendors’ sales and marketing efforts. To say the least, partners can do much more to drive sales that result in mutual benefits to them and their vendors.

What’s a solution to this problem? Joint business planning. Yes, vendors and partners need to do a better job of expressing goals, defining their respective needs, and setting action plans to achieve their mutual and respective objectives. Vendors do joint business planning with the channel, but often only with select partners. Vendors need to extend their channel planning to more partners to establish expectations and garner partner support and action.

When it comes to channel strategy and commitment to partners, vendor communications are laden with hyperbole. Joint business planning, the establishment of expectations for all, and open communications will go a long way in establishing and reinforcing trust between vendors and partners in field sales.

2112 offers more insights into partner performance, growth potential, and sales expectations for 2017 in its annual Channel Forecast report. Full versions of the report are available for purchase; a complimentary summary is available for all in the 2112 Library.


Larry Walsh, The 2112 Group

Larry Walsh is the founder, CEO and chief analyst of The 2112 Group. Follow him on social media channels: Twitter, Facebook, LinkedIn.

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