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Channel Matters Blog > September 2012 > To partner or not to partner?

To partner or not to partner?

by Stan White
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While vendors looking to expand their footprint and gain business efficiencies have continually increased their emphasis on finding channel partners to work with, there is a noticeable undercurrent of fear, uncertainty and doubt around how to grow channel revenues and remain connected to the end customer. CEO’s are challenging their sales vice presidents to grow the business and the question for many has been “Do I increase the size of my already hard-to-manage-channel to meet growth objectives or do I sell direct so I at least have a feeling of being in control of the result?”

What some forget is the reason they partnered in the first place! The decision to use channels is an economic one; Channels have to be about selling a more competitive 'whole-product solution' to more customers and doing it all at a lower cost of sales. We argue that if you can cover the market opportunity and provide all the elements of a solution that end-user customers in those markets need to make a buying decision in your favor, and do all of this at a lower cost than partnering, you should do so!

Most vendors begin using indirect channels when products begin to mature and volumes grow. The product entered a stage of the market adoption life cycle that demanded more effective and less expensive routes to market and partners provided this avenue. The transition is a difficult one for many vendors who are unprepared for the changes required to succeed. Many of the systems, processes and business practices that made them highly successful as a direct sales organization can limit their success, or even doom them to failure, in an indirect model. While some executives might nostalgically dream of a return to the way things used to be, this is not usually rational or even possible.

However, the choice of route to market must be an economic one and should always be appropriate for current market conditions. Depending on the product or service being sold some vendors now find it more cost effective to sell mature products through low-cost online direct sales channels. Some vendors have taken a hybrid approach where upgrades or additional licenses can be more cost effectively sold directly on-line and offer a better service to the customer, but partners are involved in delivering additional whole-product components such as after-market service or add-on's.

What's important is to regularly review your route-to-market strategy and look at what you have learned through both successes and failure in your companies channel evolution.

  1. Are your target customers covered by the best route to market and the best type of partners for you to succeed?
  2. Is your product channel ready from the partner and end customers' perspective? Which components of what the end-user-customer needs to make a buying decision do you need partners to provide?
  3. Do you have an ideal channel partner to select and benchmark others against?
  4. What have you done, or better need to do, to enable your partners?
  5. Do your sales and support programs help drive the partners business and behavior? Are they competitive and compelling?
  6. Is there a living plan with your partners to remedy sales performance issues?
  7. Are there anti sponsors within your own company that restrict the ability to partner effectively?

When you know which markets you want to target, and you understand all the components of what those target customers are looking for, it becomes a lot easier to answer the big question of "To Partner or Not!" Having made this choice for economic reasons you need to be able to answer all these other questions to effectively execute through indirect channels. Are you doing things right?........ And ........Are you doing the right things?

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