Many of my posts have some information on how to design a program to attract a certain type of partner, but to truly differentiate your program you need to start with the end in mind. Don’t jump into creating a differentiated program without first deciding a) your target market, b) the type of partner you want to recruit to reach that target, and c) what that partner would want or expect out of a partner program.
For instance, if you create a program that is all about one-on-one support of your partners – sales, marketing, technical – but the type of partners that would be best suited to sell your product or service are completely self-sufficient, then your differentiation is totally missing the mark.
Once you’ve identified your target market, decided on the partner profile that would best serve your target, and figured out what they want out of a program, take a look at your competition and see how they have differentiated themselves. Are they providing excellent pre and post sales support? Do they have the largest margins? Will they help you sell services to increase your margins? Whatever they are doing (or claiming to be doing) find something else that you can do better. That’s important, don’t claim to do something better if you can’t. If a feature of your program is not on par with other vendors in your market segment, don’t claim it as your value proposition. Don’t say you have the best technical support if you have two guys sitting in a room reluctantly answering the phone or responding to emails withing 48 hours. 48 hours?! Do you know how much business an end-user and thereby your partner could lose in 48 hours? Now, if you have 24 by 7 technical support as well as partner message boards with assistance, and your support team uses chat THEN you can say you have the best technical support.
All this seem like a lot of work? Well that’s why only a few companies have what they claim are “world-class” channel programs and even fewer actually have them.
How are you differentiating yourself? Are there programs out their claiming to differentiate something they shouldn’t be?
Contributing blogger Heather K. Margolis, the Channel Maven, has led channel programs for major IT companies. She also has extensive lead generation and marketing experience. Follow The VAR Guy via RSS; Facebook; Identi.ca; Twitter; and via his Newsletter; Webcasts and Resource Center.
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I hope manufacturers read your article, as you do not forget the profit margin component, because small VARs have to sell at the street/online retailer price and make a healthy margin or they find something else to sell.
I had a call recently with an enterprise client whose Novell tech quit, as the company is migrating off of Novell. They still have a half dozen servers running Novell and all their PC clients are loaded with the Novell client. They are expediting their migration now, and I realized why:
First, they do not buy Novell from the 4 online retailers Novell recommends on their website: CDW, Insight, Softmart and Softchoice.
Second, they have no integrator/consultant/VAR that has a vested interest in the customer staying on Novell. Why would any VAR go to the trouble of putting a quote together if they are not positive they are going to get the deal, especially knowing that if they quote something else they will get the deal. A VAR will not go through the time to put a quote or recommendation together if there is a chance that the enduser will go online and find an online retailer that will beat the quoted VAR price.
Third, they have no mechanism thereby which the manufacturer covers the sales activity in the absense of local VARs. If your channel is weak, then you have to handle the brunt of marketing and sales because your online retailers won’t.
In summation, a VAR must have confidence that if they do the work on the deal that they will get the software order, at a good margin. If there is a disconnect there, then uncertainty reigns over the deal, which is something a reseller will avoid at all costs.
Absolutely HurdyGurdy, can you give an example of a vendor that is doing this right? Would love to look at them more closely.
Heather, manufacturers that I sell that understand the small VAR needs to sell products at the street price and make a healthy margin are listed below:
HP
Microsoft
Watchguard
Symantec
Granted, there are more manufacturers that I sell that have high margins, but these are the major four I sell. We also work closely with IngramMicro, as they know if my customer goes to an online retailer that bests our price by a considerable amount, we both have a chance to lose the deal.
Keep in mind too that my firm invests in training, both sales and technical training to meet the manufacturer’s partner requirement. This money is well spent due to high margins we receive on the sale for these manufacturers.
If I go to IngramMicro/HP and inform them of a large opportunity that I am working on, they provide me the tools I need to match the pricing of competitors like Dell. HP does not like losing server orders to Dell, and I must say that with the disti and manufacturer’s help, I don’t.
I agree that building a successful partner program starts by aiming squarely at a target market, profiling a typical partner and then determining what benefits are necessary to recruit them.
A widely differentiating factor is, however, the brand draw and its exsisting distribution strategy and how that may impact your channel program. Many small vendors get overwhelmed by what they determine to be extremely high thresholds of entry into a channel when, in fact, they have a perfect market niche. Having a market position that is attractive to resellers is far better than MDF or SPIFs.
Limited distribution of a new product is worth a great deal to a reseller, as well. So many vendors build a direct sales force first, and turn to a channel as a secondary move because they can’t make the numbers on one channel. Vendors that have some forward planning can open markets with several channels and not saturate geographies. Resellers find limited competition very attractive.
So, my point is: the program development is an interesting part of building a channel. The critical components of success, however, begin even before that.
Colbert said:
‘Limited distribution of a new product is worth a great deal to a reseller, as well. So many vendors build a direct sales force first, and turn to a channel as a secondary move because they can’t make the numbers on one channel. Vendors that have some forward planning can open markets with several channels and not saturate geographies. Resellers find limited competition very attractive.’
I agree.
Thank you both for a view into your relationship with specific vendors and what is truly important. Is brand important enough that you would put up with a less than stellar program to sell the brand?