How Channel Partners Monetize Vendor Relationships

By Howard M. Cohen  |  Posted 2017-07-25 Email Print this article Print
 
 
 
 
 
 
 
Monetize vendors

Marketing effectively to find new sources of income is challenging, but channel partners can leverage their vendor relationships to create new revenue streams.

"Who needs you?"

While it may sound curt, maybe even nasty, this is an important question to ask yourself when determining which of your vendor partners you can best leverage to generate new revenue.

While your instinct may be to focus on your largest vendors, you may find that your smallest vendors need you more and are willing to invest more in your mutual success. You may have to be more creative, innovative and aggressive about developing marketing strategies in partnership with them, but it will pay back in significant new revenues, new ongoing customer relationships, and new advantages with what you will come to realize are your best, most effective vendor partnerships.

How It Works When Done Correctly

Many years ago, a new vendor representative walked into my office and said something to me that no other vendor had ever said before.

The rep said he had a problem that I might be able to help him with. His problem was that he had a customer in my city that wanted to buy his software product, but he had nobody in town that could sell or install it.

Since his company had a "thru-partner-only" strategy, he needed to identify a qualified reseller to do the work, and he had heard that my company was very capable. The rep said that, if we were interested, he'd gladly have one of my people trained and would even provide sales training.

To this day, I still wonder if I was just the rep's first stop that day. Wouldn't anyone say "yes" to that proposal?

This is clearly the most direct way in which vendor-partners convey high value to their channel partners. Their own business development efforts generate leads, which are geographically distributed.

In contrast, some channel representatives will make first calls, introduce themselves, and then decide which partners would be the best fit for this customer. When I was running Business Development & Marketing, I would actively seek out such reps and focus more of my relationship-building on them. Demonstrating and clarifying our superior features and capabilities to them often turned into more incremental business—much more.

Getting Paid to Install and Service Products

Many vendors recognized that the presence of competent installers and servicers was uneven. So they actively recruited capable service-only providers and would pay them to install and service their products, which were sold by their direct sales force or by other channel partners.

Other vendors created enterprise-level sales agreements that included "credits" or "vouchers" that customers could use to pay for required services from authorized channel partners. Many partners have found it very lucrative to make these vendors their best sources of new business.

In some cases, these vendors have become the source of the majority of some partners' businesses, leveraging credits and vouchers to produce the lion's share of their revenue. The danger in this, as many partners have found out, is that some vendors don't recognize the smaller nature of their partners' companies and persist in paying exceedingly slowly. This can be severely damaging to cash flow in businesses that depend heavily upon a healthy cash flow.

Also, a change in representatives due to promotions, resignations or terminations often results in successful partners losing their lifelines to this ongoing business when the new representative prefers to use other partners. When that happens, these partners often have to scramble to find new business, since they haven't been actively marketing for what is frequently a substantial period of time.

Vendors can be an awesome source of new, already closed business. Just go into it with your eyes open, and never let your business depend solely upon it.

 

 
 
 
 
Howard M. Cohen

Howard M. Cohen has over 30 years of IT channel executive experience and now consults, presents, and writes extensively on IT topics including virtualization, infrastructure, cloud, and management.

 
 
 
 
 
























 
 
 
 
 
 

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