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Channel Matters Blog > February 2015 > If Win/Win is the Goal, Why Does the Vendor Always Lose?

If Win/Win is the Goal, Why Does the Vendor Always Lose?

by Rich Blakeman
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Win-Win2.pngEvery channel organization I've ever worked with has faced this scenario. It's the end of the quarter. The funnel is filled with hot deals. When you total up the value, it looks like you'll come pretty close to plan...maybe even exceed it. Then you get the call from your channel manager...
"Hey, boss, it's Bob. You know that big deal with Company X? Well, the partner is asking for another 5 percent so he can offer a discount."
After Bob assures you that the deal will close if the partner offers the customer a discount, you do another quick calculation. Looks like you won't be far off plan, and there's still a month left. You can make it up. Plus, better to be a little behind than to lose this big opportunity. You agree and hang up the phone.
Then it rings again...
Leaving Quid on the Table
In sales, there's a motto that all direct salespeople know - quid pro quo. It means if I give you something of value, like a price concession, you need to give me something in return, such as a three-year commitment. Good salespeople know the value of their product. To keep the deal win/win they make sure they aren't always the ones doing all the giving. That would be like leaving quid* on the table. 
Channel managers understand the quid pro quo philosophy, too. The problem is that many of them believe they are at arm's length from where the negotiation takes place. How can they ensure they get something out of the transaction if they're not where the action is?
Partner perception is a challenge as well. Most partners who haven't worked as a vendor seem to believe that all vendors have deep pockets.  The partner is the one doing all the work on the deal, and the vendor is pocketing 40 percent. They don't always recognize that supporting a channel model incurs costs as well. The extra 5 percent the partner is asking for may be the difference between breaking even and losing money.
When Does Negotiation Start?
Negotiating with your partner when they're dangling a deal in front of you that could make or break your quarter is like negotiating with a five-year-old while standing in line at the market right before dinner time. You're not in the strongest of positions.
Strong negotiators will tell you the more you know about your opponent, the stronger your position. Clearly, your channel partner isn't your opponent, per se, even if they seem like it in the heat of the moment. In their case, the knowledge you need involves the levers you can pull to make sure you're not on the losing end of the win/win scenario. Gathering that knowledge starts with joint partner planning.
Let's take a simple example. The partner asking for the 5 percent has a number of sales professionals who haven't attended training. Some might even be selling competitive products. The partner has expressed a willingness to send them to training, but for whatever reason, hasn't gotten around to it. For that extra 5 percent, you might ask for a commitment to send two more people through the class coming up in two month. 
Maybe training isn't the right lever to pull. Maybe it's staffing up customer service, executing a new campaign, dropping a competitor's product...only you can determine what's commensurate value for that 5 percent. You can't know what to ask for unless your channel managers are planning with their partners long before that phone rings.
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*Quid - slang for British pound sterling.
Last modified on 2/20/2015 2:46:30 PM
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