Important Lessons for Working with Channel Partners
It can be a compelling proposition to have external companies working for your success without the heavy investments necessary to build, equip, and train an internal sales organization – particularly if you need to reach a broad geographic area. However, there are some tough lessons I have learned over many channel relationships, some painful, some amusing, and some highly productive.
Lesson 1 –Channel partners are in it for themselves. Regardless of how many times you hear adages from your partners such as, “Consider us an extension of your sales force” or “We’re all in this together,” – when the going gets tough, the partner will make decisions in its own best interest. The channel will often prove harder to manage than your employees will because you do not have the power of the regular paycheck to control their behavior. In fact, your partners have their own sets of problems and their own payrolls to meet, and they will support you and your ideas only to the extent that you contribute to their monetary success.
Lesson 2 –Win-win scenarios are crucial. Since the primary motivation of your partners is the success of their companies, why would they cooperate in a program that was not in their best interests? I have seen companies create greed-driven scenarios – such as offering low margins, or charging high registration fees – in order to generate short-term revenue or higher profit margins for themselves. Quality partners have many options, so why would they accept anything other than reasonable entry fees and revenue splits? Do yourself a favor and design a program that will attract, instead of repel, desirable channel partners.
Lesson 3 – Quality is better than quantity. Too often, the primary focus is on partner acquisition. Regional reps (and their managers) get excited when they sign up new partners, figuring that every new partner is a steady source of future revenue. But the fact is, a small minority of channel partners will usually account for the vast majority of your deal flow so it is better to focus on fewer numbers of quality partners. I would rather have ten active and engaged partners instead of thirty who have signed the agreement but are not committed to the partnership.
Lesson 4 – The best partners are the ones who bring in business, with minimal effort on your part. You are probably saying “duh” as you read this lesson, but let me explain. There are those partners who require lots of time and attention from you and can’t seem to close business on their own. They want you to bring them prospects and then require you to help them close the deal. A better strategy is to find channel partners who have access to their own leads and prospects and who can bring you that magical substance known as incremental revenue.
Lesson 5 – Selling is easier than sustaining. There are many steps necessary to get new partners productive, and if you don’t follow these steps, many new and promising partnerships will wither on the vine. Some organizations have solved this problem by supplementing their partner sales reps with partner enablement specialists, whose job is to work closely with each new partner to do whatever it takes to bring in the first few deals. Once this happens, the partnership is more likely to bear fruit far into the future.
Lesson 6 – Training is crucial. With few exceptions, the companies that provide their channel partners with the greatest quantity and quality of training have the most successful partner programs. This is true for two primary reasons. First, the better they know the specifics of your offering and how to sell it, the more effective they will be at generating initial deals. Reason two is that a partner that commits its team to a training program is putting serious skin in the game. A sales rep who sits through training is not generating revenue, and this is a real investment on the part of the partner, who will want to see that investment rewarded with future revenue.
Lesson 7 – Say YES to your partners. Organizations spend enormous amounts of time and money putting together complex partner plans or partner handbooks, detailing every possible aspect of the relationship. Unfortunately, they then use these documents to say NO to partner requests, and justify this by claiming that the same rules apply to every partner, and no exceptions can be made. Of course you need to practice judgment – you don’t want to invest major resources in potential deals that have only a minor upside, but there are many ways you can help partners in a cost-effective way. This will gain you the reputation as a good company to do business with, and this reputation will attract great new partners to you.