The Critical Role of Channel Partners
Technology vendors rely on partners to expand their geographic reach and extend access to the expertise necessary to enable the use of their products. While many vendors form channel relationships to sell products, more than two-thirds (69.7%) of technology vendors use channels to sell, deliver and renew support and maintenance services.
Vendors that have active channel programs rely heavily on their partners for critical service sales and delivery functions. The majority (84.4%) of partners that sell service contracts are involved with the delivery of these services and nearly three quarters (73.4%) are responsible for renewing contracts. The success or failure of channel partners to deliver services can has a profound effect on a vendor’s ability to achieve strategic service objectives and financial performance (contract renewal, customer retention and revenue expansion).
Technology vendors that rely on partners to perform critical service functions must have a well-defined and executed channel strategy. A successful channel strategy for services requires several elements: a clear vision for the role that partners will play, an established program and criteria for attracting and retaining the right partners, the commitment and capabilities to support partner success, and the means to monitor the effectiveness of the channel program and the performance of individual partners. This article outlines the steps necessary to optimize services through channel partners and introduces several research studies for channel management best practices.
Success is a Shared Responsibility
Technology vendors must view partners as extensions of their organization and recognize that channel success depends on the level of support they provide. The vendor must make it a priority to assure that a partner has the skills, tools, and resources necessary to perform agreed-upon service functions. Nonetheless, success is not the exclusive burden of the vendor — the partner must have a stake in the relationship. While vendors can transfer knowledge and provide access to tools, the partner must make necessary investments to achieve a mutually agreed-upon level of performance. Successful channel relationships depend on the commitment of both parties and their combined skills and resources to meet the needs of the marketplace.
Communication is Key
Vendor channel programs typically provide a flow of information to partners in the form of training and access to knowledge, collateral and even to designated contacts.
However, while partners value these resources, they do not take the place of an ongoing dialogue with the vendors with whom they do business. More than anything, channel partners indicate that they want more frequent and proactive communication with suppliers. They express a strong desire to be kept in the loop with new developments and to feel that they are plugged into the processes that vendors use to discover, create, and disseminate information vital to selling and delivering services.
Pay for Performance
Using channels to sell and deliver services must be a win-win proposition for all parties involved. The vendor gains greater reach into new markets or extends its capacity to serve customers, while the partner earns an acceptable margin for the products and services it sells. The level of compensation partners receive must be commensurate with the level and quality of effort they bring to the relationship.
Success Starts with the Strategy
The term “partner” implies a symbiotic relationship where each party benefits from the efforts and actions of the other. A partnership also implies mutual expectations among those parties in the relationship. A channel strategy is therefore a formal declaration of how parties will work together to achieve a mutually agreeable outcome.