Channel Not Selling Your Products? Should You Recruit? Enable? Or Both? How Do You Decide? (Part 4 of Series)

Part 4 of a Series: Channel Not Selling Your Products?

• Part 1: 3 Questions You Can Ask to Diagnose the Problem
• Part 2: How Do You Fit Into the Way They Sell?
• Part 3: 2 Steps to Connect Your Products to How Your Channel Sells
• Part 4: Should You Recruit, Enable Or Both? How Do You Decide?
• Part 5: Help Your Channel “Productize” Your Offering within Their Business

 

Over the past few weeks, I’ve written a series of posts about how to activate a channel to drive revenue.  But activation/enablement is often not the default strategy to drive channel sales for tech vendors.  I’ve found that the first instinct of many technology companies when they want additional revenue is “Let’s Recruit Some New Partners”. It can often make sense to add partners, but before you do that you should take a look at the productivity for your existing channel partners.  What approach would make sense in the example below?

• 100 partners in a region
• 10 partners drive an average of  $1M, or $10 Million total
• The revenue from these partners is growing, but not as fast as your overall business (or as fast as your executives want)
• The other 90 partners sell a total of $5 Million
• Of these 90 partners, 40 of them have not sold any of your product in the past 3 quarters
• That would mean that 50 partners sell $5 Million, or an average of $100K each

Option 1: Recruit additional partners. A growing company needs fresh partnerships, and there is always a good feeling of “newness” when you recruit a partner. You are excited by the potential (but have not seen any of the challenges yet). Option 2: Focus on Enablement for all or a subset of your current partners.  Sometimes your best opportunities are right in front of you. But if they are not selling now, what makes you think they will sell tomorrow? Option 3: Do a weighted combination of both approaches.  This could lead to under-investment in a clearly superior path, or to a diversified approach that has a high probability of creating revenue Let’s do some math to see what is happening in your channel today:

• In your current channel, 10 partners seem to be “PERFORMING” partners. By that I mean that they have found a repeatable formula for success, and have sold your product for several consecutive quarters.
• 40 partners are “INACTIVE and there is no reason to expect sales from them next quarter. It is true that a few of them may stumble upon a deal next quarter (perhaps that is why they became a partner in the first place) – but don’t count on that…
• 50 partners are ACTIVE, but could they sell more? You will need to look at these partners in more detail to answer this question.

So what would happen if you recruited another 20 partners?  The boring answer is “it depends, you have to look deeper.” My take on the data above is that if you recruit without understanding critical success factors, you will likely fail to generate significant revenue. Let’s look at the math again:

• If 10/100 of your partners are PERFORMING today, chances are that unless you do something different, you’ll get the same results with your new partners – so when you recruit 20 partners you may get 1 or 2 who eventually perform (after onboarding and initial sales calls, etc…, and another 3-5 who have a pulse…)
• Focused enablement of some of your existing partners looks like a good bet in this scenario.

o   There are likely some gems in the base of 50 partners who are ACTIVE – they already have some history and competency in your product, but they do not appear to have built you deeply into their business.

o   You could look at actions like creating a coverage model to focus some resources on these partners. If you can create an incremental 1-2 deals (or more) per quarter from some of these partners, you will drive some solid revenue – and you may even find your next top performer.

One of the most common mistakes I’ve seen is for technology vendors is to “bet on the biggest horse in the race”. I recall in my early days at VMware when we had <1,000 employees, many of out top partners were 30-50 person resellers.  These partners cared about selling VMware and they often were focused on “emerging solutions”, not selling big iron.  VMware had the top end of the VAR500 in their program, but was too small to be attractive to the big resellers. My point is that you want a partner who will invest in you, not a partner with the biggest corporate headquarters… Getting Started A good place to start is asking the questions posed in my recent post, Channel Not Selling?  3 Questions You Can Ask to Diagnose the Problem. Below are some additional questions to think about:

• What is similar about the partners that successful today?
• What is similar about the partners that are not successful today?
• What is the additional sales capacity that your PERFORMING partners and your ACTIVE partners to sell more of your product?  Just because they sell more than other partners, they may not be able to sell much more…
• Are there high potential partners within your base who you think have the potential to be a top partner?
• What resources would it take for your company to:

1. Recruit, Onboard and Activate new partners, and what is the expected revenue impact?
2. Enable a subset of partners, and what is the expected revenue impact?

You can make a good start by asking your channel managers and target partners these questions. My observation is that CAMs usually have a good sense of what is working and not working in the channel (but there can be political factors that prevent transparency).  As your channel matures, you also may want to consider setting up a Partner Advisory Council (PAC).  I’ve set up and run these for quite a few companies over the years and they can become a great vehicle to get deep feedback from your partners, develop executive relationships and develop mutual accountability. I welcome any comments below — And make sure you “Follow” our blog (look for the “Follow” link on the upper left) and have your say.  I’m also available as a public speaker, to support local and global events in Silicon Valley, or the rest of the flattening world… For more details, contact me via the form below.  

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