Companies deploy indirect channels for a variety of reasons, such as reaching untapped markets, providing value-added services and offering innovative solutions. Indirect (i.e., Partner) channels can provide companies with routes to market that are better, faster and/or cheaper. If an opportunity exists to create competitive differentiation through partners, it behooves leaders to explore the options. According to a recent study¹, B2B companies expect 15% growth from partners this year, which is higher than the expected overall industry growth, indicating that leaders are exploring channel relationships at a heightened rate. Companies are asking more of their partners. Michael Dell sums up the situation as follows, “We’re going to be relying a lot more on channel partners; as we focus more on solutions and services, it changes the nature of the relationship¹.”
But the partner channel is a complex organism, constantly evolving and changing to adapt to the market. Keeping up with channel trends is critical to developing and maintaining a profitable channel strategy and execution model. To inform the focus of our Channel Trends Study, we interviewed a dozen executives and channel leaders across the technology and manufacturing industries. These interviews confirmed the trends we are seeing with our clients. More importantly, they confirmed the increased role of partners and the need for sales leaders to get their partner strategy “right” in light of these trends. This article explores three sweeping trends in channel sales today.
Trend #1: Services as the Differentiator
Customers want end-to-end solutions that work, without headaches. In an ongoing effort to provide these solutions, companies often seek channel partners who can help deliver these solutions by providing value-added services. The addition of value-added services was reported as the number one change companies are seeing in their existing partners². Channel partners who are able to meet this need are becoming increasingly relevant to their suppliers and their customers. Some partners are faster than others at creating, offering and enhancing their value-added services. This is driving companies to aggressively evaluate their current partner portfolio and determine where to place their bets – leaving behind those partners who are not adding or enhancing their services fast enough. Leaders we spoke with indicate that next year there will be clear winners and losers based heavily on partner’s ability to evolve in this area. All channel leaders should analyze their current portfolio to determine which partners will be able to provide the desired value-added services, and aggressively recruit additional partners required to fill in any gaps that might exist. Best-in-class partner programs are also incenting the enhancement of existing partner services by freeing up additional but focused co-op and development funds for partners making the shift.
Trend #2: The Rise of the B2B e-Channel
The internet has opened up new opportunities for buyers to self-educate long before they engage with a sales rep or traditional partner. As more products move to the cloud, purchasing these solutions online through self-service is logical and easy for corporate buyers. The growth of large aggregated e-commerce sites and Digital Marketing Resellers (DMR’s) provides an increasingly easy, self-service way to purchase bundled products and complete solutions online. Suppliers are realizing these market trends and acting. Channel executives identified the e-channel as key to the future of an omnichannel sales and marketing effort directed at B2B organizations. This leaves channel leaders challenged to determine how the e-channel fits into their go-to-market model and the impact it currently has and will have on their other existing channels. Leaders also indicated they are testing how they can leverage e-channels not only in SMB but also as a route to market in the mid-market and enterprise. Companies who have already prioritized the e-Channel within their B2B go-to-market are trying to figure out how to prioritize the different e-Channel portals available, whether it is the company’s own branded website, the 800 lb. gorilla also known as Amazon, or a number of other valuable retailers. All companies should challenge themselves to expand the e-Channel as a revenue generating route to market. Once the role of the e-Channel is determined, there is also a critical yet often overlooked step to communicate its role to all existing partners. Without taking this critical step, companies can create conflict that can unnecessarily diminish the value of existing partnerships that could actually be complementary to the value of the e-Channel.
Trend #3: Non-Traditional Partnerships
In order to maintain go-to-market differentiation, companies are also supplementing their traditional partnerships with innovative routes to market. Executives indicate this is manifesting in two ways. First, companies are working with non-competing companies that have reach in desired markets. Take, for example, a financial services firm partnering with a large food distributor to gain entry into the SMB restaurant industry. Second, companies are partnering with next generation OEM companies, who provide their end solutions as a service provider as opposed to a product manufacturer. Next generation OEMs are deploying their solutions as a service and managing ongoing provisioning, usage and monitoring; and looking to host their suppliers’ solutions as well. These non-traditional partners are providing new high-growth opportunities for suppliers to reach end markets. However, the incremental reach they provide may also create channel conflict with existing partners and the direct sales force. Companies must balance the value of these channels with the competitive pressures they can create.
Leveraging These Trends to Your Advantage
As with any change it presents both challenge and opportunity. What are successful companies doing in light of these trends? How are they adapting their channel strategy and execution models to capitalize on these and other trends? How will you leverage these trends to your advantage? Turn these trends into an opportunity by evaluating and evolving your channel strategy to realize the growth opportunity they provide. Contact us to learn how.
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¹ “Highlights and Insights,” CMO Survey sponsored with Duke University’s Fuqua School of Business.
² Vizard, quoting Michael Dell, “Dell Reshapes Its Channel Strategy,” http://www.channelinsider.com/tech-companies/dell-reshapes-its-channel-strategy.html