Story image

Evaluating your vendor relationships

01 Sep 09

Vendor complaints of partner disloyalty and lack of commitment may reflect the inability of avendor to make a  sufficiently compelling business case to a partner.

Ask any channel partner about the reasons a vendor relationship is not working as expected, and you might hear the following:

  • “We want more ‘hot’ leads to work on.”

  • “It is too expensive to keep up with all the requirements to stay authorised.”

  • “They expect us to sell more than we can commit to.”

  • “Our sales team is fully capable to sell their solutions.”

  • “We need to have a full-time person to manage our relationship with the vendor – it costs us too much time to  manage our partnership.”

Vendors offer several typical responses:

  • “We provide leads and they let them sit.”

  • “They are not willing to invest in our training and certifications to learn the products.”

  • “We want a guaranteed sales target.”

  • “They’ve got a bunch of box pushers trying to sell a complex solution.”

  • “We haven’t got ‘mind share’.’”

The problem is that none of the above addresses the fact that channel partners must make decisions affecting their  businesses on rational, economic and financial grounds. The symptoms of inadequate partner performance in any area  of sales, marketing, product knowledge, support and so on are, of course, symptoms of a lack of investment by the partner. However, it is the responsibility of the vendor to create an environment where that investment is more compelling to the partner than other investment options.

As with any business, partners make the decision on where to invest their limited resources based primarily on where  the greatest return can be found. Competing investment priorities may be as diverse as competitive vendor products,  non-competitive products, new service lines, general business investments (such as buying premises rather than renting)  or even personal investments, such as sending the kids to a better college.

How then does a channel partner compare these alternative investments? The certainty and clarity of the return are  factors, as is perceived risk. The more uncertain the return on investment seems to the partner, the greater their focus  on the risk, and the less likely it becomes that they’ll invest.

In this situation, vendor propositions to partners based on broad assertions of brand strength, overall market growth  and claimed market share are not enough. A typical partner response to this is: “Let’s wait and see what deals come in  (that is, what business the vendor will bring). We’ll get people trained when we get our first deal.” Similarly, setting a sales target does not itself represent a business case; the real issue is where those sales will come from and how that  number is related to the market opportunity for that partner. Look to your vendor to quantify the opportunity in hard dollars, with as much detail as is reasonably possible.

Successful channel partners focus their primary attention on their customers, not on their vendor relationships.  Therefore, the vendor must articulate clearly the business impact and value of its product on your target customers, and  how it adds value to the relationship.

Many vendors need to better understand that channel programs per se are sources of enablement; conditions and  incentives that support the business case are part of it, but do not themselves constitute the business case.

Vendors that provide compelling business cases to partners will recruit and retain the best channels in an environment  where high performing channel partners are a limited resource. This success is available to vendors of all types and  sizes; the test is whether a vendor can attract a higher proportion of partner investment than its current share of partner ‘wallet’. Such investment now will lead to future growth.