Picture this. You are flicking through your daily paper one morning and you spot the following nestled among the lonely hearts advertisements: “Are you the partner of my dreams? Successful, well-proportioned reseller, 25 (staff), a little target shy, but with v. attractive customer base, WLTM genuine, well-to-do vendor for channel fun, profit and maybe more? GSOH (good selection of hardware) and smoking marketing support essential. Hurt by bad relationships in the past, so no direct sales teams please. Reply with big picture to box no. 51138...”
OK, so channel players taking out adverts in the personal columns is an extremely unlikely eventuality. But with the lines fast blurring between where the vendors stop and where their channels start, the rules of the partnering game appear to be changing too.
This would not be so bad if your average reseller was in a position to experiment - speed dating perhaps - or to sow a few wild oats before settling down. But when it comes to partnering, most channel firms simply do not have the scope, the resources or the money to be able to afford to do anything other than get it right first time.
So what makes for a channel marriage made in heaven these days? How can the spark be kept alive in the relationship beyond the honeymoon period? How can resellers make sure those idyllic first few months do not turn sour and end up in acrimonious divorce or worse?
According to Grant Notman, UK general manager at RAD Data Communications, the first thing to remember is that while the rules may be changing, the secret of a good channel relationship is the same as it has always been: both parties have to put an equal amount of effort into it.
“If one side feels that it is doing more than the other to keep things going, cracks will soon appear and the business will stop,” Notman said.
“Senior-level reviews that place commitments on each party are a good way to m anage the relationship. If it stops being important at the top, everyone will know.”
When it comes to new relationships, he says it should be just like any other kind of courting: resellers should start with those partners to which they find themselves naturally most drawn.
“They should also stick to partners that are in their main area of business,” he explained. “Going into a new business area with a new partner is like a blind date. It is more likely to fail than fly.”
However, Mike Mernagh, Avnet Partner Solutions business unit director of IBM Hardware, takes a quite different view.
Insisting that opposites attract, Mernagh says channel players need to look beyond their comfort zones and areas of expertise when expanding their partner rosters, allowing for greater potential growth.
So which is really the best course of action for channel players?
Both and neither, according to Barrie Desmond, business development director at value-added distributor VADition.
Desmond thinks it may be time to redefine the terms. He suggests that the very word partner has been hijacked and turned into a caricature of itself, and that a fresh look at what partnering is really all about needs to be taken.
He explained: “In my opinion, the word partner is used far too loosely these days to describe relationships that are really little more than a commercial convenience. A true partnership should be based on adding value to both parties, and on common objectives and trust. Only then will both parties achieve mutually beneficial business success.”
Balancing both parties’ objectives is, of course, rather easier said than done. Steve Cornish, UK sales and marketing director at PineApp - a recent entrant to the UK that is currently building a channel for its Spam solutions - believes it is becoming even more difficult as the respective roles of vendors and resellers continue to shift and as margins continue to shrink.
Here, he says, not one but two vicious circles are at play that can make forming partnerships all the more tricky.
“Falling margins brought about by increasing product numbers have led in turn to direct competition between resellers and vendors,” Cornish said.
“And because few products now stand out in their own right, price has become the key differentiator. This makes it even more difficult for the channel to make a reasonable margin.
“This downturn in margin has in turn meant that the role of the channel partner has changed from being a marketing-lead partner to a logistics-lead partner, with the vendor providing the marketing either directly or indirectly by providing marketing funds and expertise.”
The next consequence of this continued price pressure, according to Cornish, is that many resellers and distributors are consolidating their product lines because they can no longer afford to support a wide portfolio. They are also tending to play safe in their product choices, choosing a low-risk strategy that, ironically, leads to more competition.
This also runs contrary to the suggestions from some quarters that resellers should look to add value to their offerings by adding to product and partner rosters.
Gary Fowle, marketing director at Fujitsu Siemens Computers (FSC) said: “We do not see resellers looking to work with more vendors than they do today. In fact, I would say the opposite is true.
“Increasingly, they want to work with partners they know they can trust and that are totally committed to the channel. They want them to deliver dependable solutions and a high level of consistency, both in terms of overall approach and product lines.”
However, Cornish warned, another consequence of this play-safe approach is that large sections of
the channel are no longer working in an advisory capacity, and are instead merely acting as a fulfilment channel.
“This has caused many vendors to question the need for distribution and resellers, particularly for software products,” he said.
For this reason, said Desmond, allowing resellers to access a broader product set without the customary headaches, strong distribution relationships remain essential.
“By vetting new vendors, testing emerging technologies, and validating the market potential, distributors can take the risk out of the business opportunity for resellers,” he said.
“Furthermore, by providing the appropriate support services and market development resource, the distributor can provide all the expertise and knowledge of a vendor without the reseller having to forge additional vendor relationships. After all, two’s company, three is a ménage à trois.”
However, distribution relationships are also changing, according to Mernagh. He believes more and more distributors are abandoning their traditional roles and turning into something akin to dating agencies. Each matches one or more of the partners on its books to particular projects in order to provide the service and solutions that its end customers need.
In other words, it is more and more in the distributor’s own interest to match-make responsibly and conscientiously, rather than plugging any old supplier into the loop and hoping for the best.
“The distributor has to ensure the right introductions are made. For this to happen, its reseller relationships also have to be built on trust, co-operation and joint values,” according to Mernagh.
“The distributor needs to develop a community that cherishes the consultancy skills available from it to add value and build a win-win situation for all concerned.”
Having recognised that the dynamics of their partner relationships are changing, resellers need
to shift their expectations and outlook, said Anne Zink, founder and chief strategy officer of channel
convergence specialists, AZTech Strategies.
“Separating the wheat from the chaff starts with taking a realistic look at their business strategy,” she said. Resellers and integrators should start by asking themselves a number of important questions, she added.
“Who are their customers and what are the business challenges they face? What are their skills and competencies? It’s critical to be brutally honest here,” she said.
“If their sales people are order takers, they do not want to consider vendors with disruptive technologies and complex value propositions, no matter how cool they think the technology is.
“They then need to think about short- and long-term objectives. Do they envisage themselves continuing to take title, or do they see themselves evolving into an influencer focused on implementation and support services? Where is their margin growing and where is it falling?”
Zink added that it is important for resellers to be honest with themselves about how robust their internal operations and processes are.
They also need to think about whether there are any services or areas of the business that either their distributors or vendor partners could make a better job of, rather than stubbornly keeping them in-house simply because they have always done it that way.
Once these questions have been answered satisfactorily, she says, resellers should turn to practicalities, such as rationalising their customer targets against those of their vendors (despite perception, they really need not be the same), and pinning down when they are likely to realise some revenue. Between 30 and 45 days is the obvious and probably optimum lead time.
“Having a new vendor is like having a new toy,” Zink explained. “If VARs cannot learn to use it quickly it will go to the back of the closet and gather dust. Resellers should search their customer base for prospects they could sell to within 30 to 45 days of bringing on that vendor. Obviously, some sales cycles are longer, but this should be the goal. Our research shows that new partners that fail to generate revenue in 45 to 60 days have a 78 per cent chance of failing.”
Overall, though, Zink believes that resellers should listen to their instincts. “Do they click with the
vendor’s field and executive teams?” she asked.
“If it does not feel good right from the start, do not do it. They cannot roll their eyes every time their channel manager requests a meeting because deep down they cannot stand him. That will harm sales.”
As such, said David Ellis, director of e-security and professional services at Computerlinks, it is vital that the reseller and the vendor have similar ideas and clear expectations.
On a practical level this may mean reaching an agreement on such things as which markets to target, the levels of support each partner is expected to deliver, the commercial terms being offered and whether the supply route fits.
“Then, once the relationship is in place, both parties must continue to be clear on what they expect from the other,” said Ellis.
“In practice, this should be achieved through regular business planning sessions with senior management buy-in. This way, any problems can be resolved before they become unmanageable and new opportunities can be jointly evaluated in a structured way.”
Accordingly, prudent and profitable partnering can simply be a question of stepping back and applying some good old-fashioned common sense, said Fowle.
“There is no one single factor, no magic formula,” he said.
“From our perspective, it is about doing whatever we can to help partners build good, sustainable high-value, high-margin business. It is about generating leads, supporting them in the sales process and giving them powerful incentives to sell higher up the value chain. However, as a vendor you can never be all things to all resellers.
“What we try to do is retain enough flexibility to meet any special requirements and respond quickly when we need to, while putting initiatives and tools in place that partners can use in very practical ways to drive sales.”
Laura Harman, business unit manager at Horizon equIP Technology takes a similar stance.
“To achieve lower sales costs and extra margin, channel players want and need to form long-term, mutually beneficial relationships,” she said. “Resellers need to look for partners that really understand their requirements and can offer genuine added value that can be transferred to the end user.”
The extra knowledge, expertise, time and information transfer available through vendors and distribution - as well as the provision of valuable pre-sales consultancy - all play a significant role in this regard, according to Harman.
However, these days the most effective partnerships also comprise more holistic qualities such as trust,
loyalty and understanding, which
are essential to maintaining a crucial human element throughout the relationship.
“Access to in-depth, after-sales and technical support further enables resellers to focus their energy on new business targets and business development objectives, content that customer relationships are safeguarded in the event of technical issues,” she said.
However, Zink adds a cautionary footnote - the best partnership in the world will not turn a poor business case into a winning one.
“No matter how good a vendor’s channel support is, it will not make a reseller successful,” she said. “Only the VAR can do that.”
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