Beware of Vendor ExclusivityBy Pedro Pereira | Posted 2008-01-30 Email Print
Solution providers too focused on a single vendor brand risk neglecting promoting their own brands and offerings to customers.
Any time a vendor asks you to agree to an exclusive relationship, you have to ask yourself why. Whom does exclusivity benefit the most, you or the vendor?
The answer, most likely, is the latter. Otherwise a vendor wouldn’t bother to concoct a channel program calling for exclusivity.
Channel-savvy vendors know that most, if not all, channel partners work with a variety of vendors, often pulling together products from different brands to build a solution. That is why you don’t often see vendors rolling out channel programs demanding exclusivity. Not that vendors haven’t tried this in the past, but most companies these days are more realistic about the channel environment.
So Mitel’s decision to launch a channel program calling for exclusivity caught my eye. The communications and VOIP vendor promises partners that commit 100 percent of new sales to its brand better access to sales and technical support and training.
No doubt, some solution providers will jump at the opportunity for better access to a vendor’s resources. If the vendor happens to offer a brand providers covet, the vendor shouldn’t have much trouble getting a reasonable number of partners.
But I suspect that many potential Mitel partners, especially channel veterans who through the years have seen IT companies try any number of schemes to get their products to market, would be more hesitant about agreeing to exclusivity.
Exclusivity demands that a provider build a business around the vendor’s brand, which carries serious potential to ultimately hurt the partner’s business.
The need to have technicians and sales people dedicated to the brand may prove unappealing to some career-minded employees. They may see a single-brand focus as limiting, and that will make it harder for the solution provider to retain quality staff.
In addition, agreeing to an exclusive arrangement with a specific brand inevitably will lead to forgoing potential business with other brands. And ultimately that will hurt the provider. To devote a disproportionate amount of energy to promoting a vendor’s brand, a partner most likely will neglect promoting his or her own company.
In the new channel order of leading with services, that is a mistake. Solution providers should expend more energy on their own brand and offerings when pitching customers. The vendor brands are obviously important, but the provider is more likely to get the customer’s business by demonstrating an understanding of the customer’s needs than by pitching a particular brand of technology.
Customers are less likely to ask for a brand than to ask the solution provider to solve a particular problem or fill a need. The vendor’s brand is secondary, and it is up to the provider to eventually push a brand.
Of course, Mitel understands the power the partner has in pushing a brand. But providers with their customers’ best interests in mind will not push a brand for the sake of the brand, but rather because it best suits the situation. Will a provider that has agreed to exclusivity with Mitel forgo a more suitable competing product so the partner can retain a privileged status with the vendor?
To its credit, Mitel is not taking an all-or-nothing approach. Partners have the choice of going exclusive with the vendor or retaining a multibrand strategy, though opting for the latter means forgoing some benefits.
The Mitel initiative may well turn out a huge success. Providers, after all, tend to stick with one or two favorite brands, but taking away choice changes the game. If I had to guess, I would say Mitel’s move will have limited appeal.