The Channel Needs to Update Its Marketing Operations
One of the more perplexing and frustrating aspects of the channel is that vendors in one breath will extol the channel's critical role in helping them grow their businesses and then in the next complain about how backward channel partners tend to be when it comes to investing in the sales and marketing expertise needed to grow the business.
Much of the hesitancy to invest in sales and marketing in the channel stems from two fundamental issues. The first is that solution providers tend be very conservative when it comes to cash management. Closely related to the issue is the fact that the return on additional sales and marketing capabilities is often hard to quantify. Unfortunately, those two issues collectively conspire to limit the channel's growth potential.
While marketing has evolved over the years, it's still more art than science as far as the average solution provider is concerned. Emerging big data analytics applications and marketing automation platforms are changing that. For example, IBM has invested millions in marketing apps, and now predictive analytics tools for CRM applications are emerging that better identify which leads are most likely to close.
As accidental entrepreneurs with strong technology backgrounds, many solution provider executives are likely to put more faith in hiring an additional engineer before, alternatively, investing in a salesperson who may wind up doing little more than taking in-bound orders rather than driving net new additional business. As far as many solution providers are concerned, a lot of so-called salespeople turn out to be little better than an expensive customer support representatives, many of which are just as good at up-selling a customer as any salesperson. As for professional marketing, that's something most solution providers leave to vendors—only to complain about how bad it is later.
Pete Busam, chief balancer for Equilibrium Consulting, a channel sales and marketing consulting firm, said the core problem is that most solution providers don't have an effective, structured sales and marketing process. They have some formalized process, but no one is dedicated to nurturing the skills of the people involved in managing the process. Because there is no demonstrable ROI in six months or less, solution providers throw up their hands and revert to looking for additional revenue by mining their existing customers for more business. The result is a business with limited growth potential.
That's a shame because the one major upside is that cloud computing makes it easier than ever to serve a larger number of customers. The challenge, said Busam, is having the patience required to develop that new business, which usually takes several months of investments in everything from training to content marketing. The trick, said Busam, is to have a balanced approach that leverages content marketing to educate customers about issues that they would then want to discuss how to solve. Otherwise, salespeople are wasting thousands of hours making cold calls hoping to get lucky. Even then, it's hard to distinguish a true lead from a "prospect," who would say anything to get an intrusive salesperson off the phone.
Busam said that investments in professional services automation (PSA) platforms have improved the sophistication of many solution providers. But by and large, most of them are not taking the time required to build a sales pipeline that would truly scale the business. Naturally, that leads to a lot of frustration among vendors trying to leverage the channel to increase sales by, among other things, increasing both the overall size of any given market and their respective share of it.
In effect, this creates nothing less than a paradox. Solution providers are inefficient when it comes to sales and marketing. But if vendors try to compensate for those shortcomings, they inevitably wind up being accused of trying to take the business direct—which, given the nature of salespeople working for vendors that are trying to meet a quarterly sales goal, is all too often the case.
The only way to resolve this paradox is for solution providers to modernize their sales and marketing operations. Only then is the business going to scale in a way that allows the solution provider to maintain control of the business.
Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.