How Opposites Attract And Stay Together — Or Not
This article originally appeared in VAR Insights.
If a channel sales partnership is to be successful, it’s all about the relationship between the vendor and the partner. There can be all kinds of fancy channel programs and spiffs but if the channel partner does not feel like they are treated as a legitimate business partner, the partnership will not work.
Part V: Stories from the channel sales trenches and final thoughts
There was no surprise the relationship between the NYC VAR and the vendor had ended. (Part I, Part II, Part III, Part IV) It was the best decision for the current situation. The VAR could now move forward, using the insight they gained, to develop an equitable partnership with a more appropriate vendor.
But no two vendor/partner experiences are the same. Some can be very positive. Take, for instance, US Dataworks and Lighthouse Payments. According to Marc Palombo, SVP of Sales and Channels for US Dataworks, a customer of theirs was looking for additional products and services their current channel partners did not provide. They conducted a search for a partner who had what they were looking for and found Lighthouse Payments. Tom Drunsic, CEO of Lighthouse Payments, said the key to accepting the partnership request was their shared strategic vision for the future. Both companies believe it is important to work together to help each other achieve the same business goals. Many things — entwined company cultures, employee support, and a high level of trust — contribute to their excellent working relationship, which has led to new customers and revenue opportunities. Says Drunsic, “The key to any partnership is that it needs to be win-win, and that was certainly one of the key elements in the partnership that was proposed with US Dataworks.”
But, for every story of a successful channel partnership, there are many more that illustrate some vendors do not understand that helping their partners to build their businesses and treating them with respect yields a profitable relationship.
Don Weir, CMO for Managed Computer Services, relates a story and a few words of wisdom about a potential vendor partner of theirs. “We just declined a partnership with a channel partner (who had a great product) because the agreement would have been bad for our business. Partner agreements should be thoroughly read and MARKED UP for discussion with the vendor before any agreement is signed. How flexible the vendor is on discussing your concerns with the agreement will show you how flexible they are going to be with you as a partner. Don’t sign any agreement you can’t live with for the long run. There are always other vendors with the same or similar products.”
Narrating the struggle small partners go through to be successful, Blake Cousins, owner of Titan PCs in Ontario, Canada, depicts what can happen in a David and Goliath relationship, “Unfortunately, the existence of exclusive supply and distribution contracts between Tier1 OEMs (original equipment manufacturers) and certain distributors in a given geographical area means that hardware (or software) resellers/VARs, etc., are forced to deal with a particular vendor in order to obtain a particular product or service. The small size of the Canadian market does not help this situation, as there is only so much capacity to be filled. It does leave us smaller VARs in a lurch when the relationship sours, with few options available.”
“Perhaps companies should also be more programmatic about taking on vendors in the first place — so they don’t have to fire vendors later. If a vendor takes on a reseller, in many cases there exists a formal structure of evaluation which doesn’t necessarily exist on the reseller or distributor side (small to medium disties),” says Bob Snyder, editor-in-chief, Channel Media Europe. “Beyond that though, one of my favorite concepts is that there should be a ‘vendor certification’ program where a vendor rep needs to be trained and certified to assure quality on that end of the relationship: just as vendors often insist upon this prerequisite from their resellers and distributors.” Will that novel idea move vendors and partners to a more balanced relationship? It is definitely food for thought.
Vendors spend a lot of time and effort creating and managing the channel to increase revenue. But is there profit when a channel partner is not treated as a business partner?
The secret to channel success says Greg Furlong, CEO and Founder, ChannelPace Pty Ltd, “is a mutually beneficial and sustainable business relationship.” What a concept!!