How to Get More From Your Strategic Technology Partnerships

Scott Karren, the "Channel Pro," reveals 'Lies Vendors Tell the Channel' and the tongue-in-cheek truths behind them.

I once created a list of 'Lies Vendors Tell the Channel.' Providers and vendors both enjoyed it because it presented some of the common promises we hear around the channel with the tongue-in-cheek truths behind them. One of my favorites is the vendor promise: "Our program will help you grow your business." Often, what the provider hears is: "If in addition to selling our products you jump though all the right hoops, we will give you the same things you already get from every other vendor."

But the jaded channel provider who ignores these opportunities is likely to neglect to leverage marketing campaigns and underutilize vendor investments in their businesses. Programs fail not only because vendors package support, training and pricing into overly broad, one-size-fits-all programs but also because channel providers fail to create strategic relationships with key vendors.

Recently we facilitated a working session between a vendor and several of its key regional partners. Instead of the vendor telling the channel it needs to sell more and the partners telling the vendor they do not get enough support, this meeting focused on making the partnership more profitable and successful on both sides.

I'd like to share with you the five steps we focused on to build better relationships with your vendors.

Resource Library:

Next page: Use Your Rep

Talk business issues with your rep. Explain your business model and discuss real performance issues. Show them the metrics you use to manage your business and the financial impact you achieve by running your business on those numbers. Make your rep step up to a valuable, executive conversation every time you meet.

Get the facts – benchmark your business against the industry. Key metrics such as Sales per Sales Employee (S/SE) Return on Sales & Marketing (ROS&M), Time To Market (TTM), Return on Equity (ROS), Gross Margin (GM), and Sales per Customer (S/C) are critical to growing profitably. However, there's a problem when using these to monitor your business: While individual companies can calculate their own metrics, comparative data is very hard to find. At Channel Ventures, we're in the process of assembling comparative data in a Channel Performance Index that scores providers against their peers in 10 critical business areas with dozens of critical benchmarks and profiles.

We will be looking for about 100 brave channel businesses to pilot the new index. In the mean time, your rep can help. A typical rep manages about 20 accounts; they can help you see business trends and opportunities beyond your boundaries, but only if you raise the level of the conversation above individual competitors.

Use the rep's time wisely. Field sales personnel are the most expensive channel investments a vendor can make. They often account for one-third to one-half of the budget. Territory Account Managers (TAMs), Channel Account Managers (CAMs) and Business Development Managers (BDMs) will only be effective if you include them in your business model and planning. As shown in the chart on this page, high-value discussions are linked to business performance metrics while low-value discussions are linked to opinions and emotions.

Next page: Create Resource-Specific Initiatives

Create resource-specific initiatives. Talk is cheap. Without specific projects, even high value discussions yield no results. Channel providers cannot wait for a sugar daddy vendor to fix their sales problems. My advice to these business people is to do what is right for their business and then see how key vendors can help by offsetting costs, sharing resources, extending reach and/or improving returns. Even if the vendor does not invest in every initiative, they will respect you more for running a more professional business.

Measure results and then try again. Growing a business can be an imprecise and often messy process. When working with partners, it gets even messier. Not only will vendors be more willing to invest channel capital in your business if you can measure concrete results (e.g. ROI on marketing dollar invested), but you will also be more able to manage sales and earnings at your own business.

Programs are only a starting point. Like any other relationship, it takes active participation to deliver results.

Scott Karren, the "Channel Pro," is chief executive officer of Channel Ventures, a consulting firm and channel development agency that helps companies build profitable channel businesses. Read his weblog, The Channel Professional.

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