“Trust in each other.” “Commit to supporting each other.” “Provide opportunity to grow together.” “Make each other better.” Does this sound like advice from a marriage counselor? In fact, these are the common themes from a recent roundtable of 20 Fortune 500 Sales and Channel leaders on the topic of Channel Sales.
The discussion focused on how successful companies invest in channel partnerships. The group covered many topics such as how to identify and communicate a clear partner sales strategy, how to optimize channel programs, and how to clearly define sales engagement between direct and partner sales forces. However, as the session progressed, a clear and consistent theme emerged: Successful partnerships are rooted in a fundamental philosophy of established trust, commitment and opportunity.
The indirect sales channel is an important vehicle to achieving sales goals for many sales organizations. However, virtually all roundtable participants agreed that organizations struggle with their partner relationships. Where do things go wrong? Lack of trust was cited as the primary underlying reason issues occur. To bridge the gap and build trust between direct and partner teams, the following ideas were shared:
Be transparent on the expectations for the relationship.
– With partner programs and incentives: keep program up to date and clearly aligned to the company’s objectives for the partner.
– For individual partnerships that are “drawn up”: clearly delineate not only what each is providing to the other, but also the more difficult areas of customer ownership and risk sharing.
Use a data-driven approach to inform discussions on how each side is doing against expectations.
– As one VP of Channels mentioned, “…lack of trust is often rooted in a lack of information; for example, if partners don’t have access to the same customer or opportunity information that the company has, how can we expect them to contribute to the deal? How can we improve our relationship and ultimately how can we hold them accountable?”
Actively manage the partner program.
– As market conditions or company needs change, “adjust the dials” in a moderate fashion with strong and continuous communication.
– Abrupt shifts in strategy create uncertainty and wreak havoc with partners.
– Constant, small adjustments with advance notice work best, allowing partners to better plan their business thus improving the trust-factor.
As one experienced channel leader stated, “Demonstrating commitment to partners is a major contributor to building mutual trust, and ultimately a huge driver of success.” But how do successful companies demonstrate their commitment to their partners? First and foremost it starts with strong leadership that is willing to understand – and act on – issues from the partner perspective. Another channel leader added, “Attitude is important. If the partner succeeds, we succeed.” The attendee provided more context stating, “It’s a cultural issue – often related to how the management team ‘grew up’; if they grew up in a direct world, they often don’t trust the partner world… they don’t realize that they have to give up freedom and control in an indirect environment. Indirect channels may be less costly and more profitable but many leaders aren’t comfortable with it.”
In addition to partner savvy leadership, commitment to partners requires the following:
Over Communicate. Communication is critical during times of stress. As one participant mentioned, “Partners look for points of inflection to see how the company (management) will react. It only takes one gap and it ripples through the business – then partners question if the company is committed.” No matter the situation, create as many communication and feedback channels as possible, such as:
– Business partner advisory meetings and councils. Co-facilitate meetings (partner + vendor) and send out joint communication after
– LinkedIn. Sponsor private groups which you have some control over, and participate in partner-sponsored advisory groups
– Net promoter surveys with the partner community
– Regular (quarterly) leadership communications to broader channel community via WebEx or similar, and post output after
Minimize channel conflict. Ensure that the direct channel’s sales compensation plan does not encourage channel conflict. If possible share the structure of the internal sales plans with the partners. In addition, have a clearly communicated engagement model for how direct sales teams and partner teams work together. Most importantly, leadership needs to pro-actively manage situations where the engagement model breaks down, and follow up with the partner to ensure that both parties are aware that the breakdown has been addressed.
The attendees also stressed the importance of a mutually beneficial relationship between company and partner with a clear and strong value proposition for the partners. One attendee put it more succinctly, “Key to recruiting and retaining the best partners, a company needs both a customer value proposition and a strong partner value proposition.” How will the partner make money, and what value will the company provide to the partner? The partner value proposition should be evaluated continually with an eye toward the competitive landscape and the reliance on partners to drive the company’s business.
Clearly Articulate the Partner Value Proposition. As one participant noted, “The value proposition must demonstrate a clear market opportunity that describes the customers, products, services where the partner can participate.” Companies need to think comprehensively about the partner’s business and P&L statement.
– Provide economic value through clearly laid out financial incentives (discounts, commissions, rebates, SPIFFs). To make the value proposition real, address both partner revenue and margins based upon the sales and services that the partner provides.
– Enable the Partner to Execute. In addition to financial incentives, deliver other types of support that allow the partner to execute (training, MDF, certifications, etc.)
As with any salesforce, the two largest levers the company has to influence partner behavior are the incentive programs and the enablement programs. Another participant noted, “Treat partners as an extension to your own sales force, pay them well, train them well and they will produce.” Successful companies ultimately need to have their leaders put the same thought and effort into managing their partners as they do their internal organization.
A marriage between couples and the relationship between a company and its channel partners do in fact have a lot in common. Couples who stay together and live long and happy lives do so based on trust, commitment, and a reason for both parties to care for each other. The clear message from channel leadership is that the same is true for business partnerships. Yet, managing trust, commitment and opportunity within a large organization is difficult. Messages can become jumbled, individuals may act selfishly without regard for the partner’s interest, and misunderstanding will occur. What then should a company do to build successful channel partners? Just like a marriage, start by taking a look in the mirror. As a sales or channel leader ask what your company is doing to ensure trust, show commitment and provide opportunity to grow together. Then, like in all relationships, success will come through acknowledging issues, and working together to jointly address them.
Learn more about Alexander Group’s Channel Sales service.