Channel chiefs diverge on partner growth vs value addition

80 per cent focused on partner acquisition, while 19 per cent opt for service enablement as a priority

Channel leaders at vendor firms expect partners to invest in security and compliance, certification and training, transformation and diversification, managed services and their SMB offerings.

According to research by The Channel Company, channel leaders are divided into two distinct groups with differing objectives.

The majority, (80 per cent) plan to grow their number of channel partners, while 19 per cent aim to maintain their current numbers.

Divergent channel growth approaches

Interestingly, in many cases these viewpoints can coexist within the same company, depending on whether leaders are responsible for software or hardware, or their specific roles in changing channel models.

These two groups have different perspectives on how the channel can add value and ensure revenue growth.

The traditional view believes that increasing the number of partners will lead to higher revenue.

Conversely, the alternative view is focused on having specialised, service-centric partners aligned with the latest purchasing trends to add more value to customers and drive revenue growth.

The first group is focused on basic channel enablement, such as certification and security compliance.

Their aim is to onboard partners and perform fundamental activities to make them productive.

The second group seeks to transform their existing channel by encouraging specialisation, managed services, and availability on cloud marketplaces.

To explore UK, EMEA and APJ channel chiefs' individual partner strategies in detail, check out CRN's 2024 Channel Chiefs list here.

Leveraging multiple strategies

Both approaches will likely continue to be practiced.

For many vendors, numerical partner growth will be both a goal and a necessity.

However, some leaders will need to find ways to develop existing partners, ensuring they are the best fit for specific customers.

This reflects the evolving nature of partner management, where vendors are moving from simply expanding their channel to enhancing the skill set of existing partners for greater productivity.

Vendors must balance these dual aims to avoid a lack of focus and improper resource allocation.

Those in a hyper-growth stage may expand their channel base, while mature vendors should solidify their existing customers.

This development-centric view will place more demands on partners around customer lifecycle, technology specialisation, and business model changes, ultimately making them more valuable and resilient.

Specialised partners will see their value increase, as vendors actively seek to create partnership models that favour them. This enhances their bargaining power, leading to better partnerships.

Innovation in MDF approaches

The research also highlights changes in market development fund (MDF) strategies.

The main themes include a focus on outcomes, increased accountability, and innovation.

Organisations with growing MDF budgets are significantly more likely to innovate their approaches compared to those with static budgets.

Innovation in MDF can be divided into three categories: stating the need for innovation, developing new capabilities to support MDF campaigns, and being more flexible with MDF to support specific sales orchestration and opportunities.

This reflects two major trends: the need for new and exciting approaches to secure additional MDF budgets, and the evolving business models that require MDF to facilitate multi-partner deals, support proofs of concept, and reward non-transacting partners.

Historically, MDF were used to convert demand into sales for large resale partners.

However, with the rise of SaaS and subscription models, partners now need to engage with end customers throughout the lifecycle, performing value-added activities before and after closing a deal. MDF are now often used to fund these activities and recognise eachpartner's role.

Distributors, facing shrinking margins in pure resale, are developing new capabilities to attract MDF, such as end-to-end marketing campaigns.

This shift in MDF investment reflects the current demands for innovation and broader definitions of demand generation.