The last two weeks I’ve discussed common misconceptions about Channel Demand Generation as part of a series called,
“Struggling with Channel Demand Generation?
- Maybe Your Partners Don’t Want the Same Things You Want…
- What Should You Do When Channel Partners Say They Need Leads? Run!
Today we will talk about the root causes of these differences in strategy and execution – and what tech vendors can do about it. This topic is a great example of the “boxed thinking and execution” that stems from long term practices that were developed in the past – but no longer apply or work in the current environment. I’ve detailed “the Four Boxes in previous posts and they are the root causes of many of the challenges the tech industry faces driving revenue for their products and partnerships.
The “boxes” relative to Channel Demand Generation are the differences in goals and business models of tech vendors and their channel. These differences stem from how the industry and channel have evolved over the past 20 years, and are depicted visually in Figure 1
Figure 1: Business Focus: New Customer Acquisition or Upsell?
So what are the underlying causes of this boxed practices and what can we do about it going forward? Let’s take a look at the perspectives and evolution of tech vendors and the channel in more detail.
- The Vendor Dynamic – vendors typically have a few products (or even one) that they are trying to sell to a customer, so new customer acquisition is critical
- Vendors can get some growth by selling more into their existing accounts, but a lot of their growth comes from expanding the customer base.
- To expand the customer base, you have to take share from someone who was selling something else (and for many vendors the something else is direct-replacement competitor)
- This direct-replacement mentality leads tech vendors to focus on how their product compares to the competitive product – which creates a stream of incrementally-better products, but rarely leads to innovation or a disruptive approach (and the lack of innovation we see from the large tech firms…)
- Internal focus (not customer focus) is something I’ve talked many times about how tech organizations tend to think inside-out, and “push” their products to customers, rather than connect to customer needs.
If you look at all these trends together you find that larger/older tech vendors often end with low innovation driven by the deadly combination of 1) Internal focus, 2) Product-pushing, and 3) Me-too followers of their competition – Ouch!
- Traditional Product-VAR Dynamic — is driven by the fact that partners (used to) sell mostly hardware that was expensive and relatively differentiated
- In this environmentVARs were actually more closely aligned to the vendor strategy – because they wanted to find more customers where they could sell hardware
- You can only sell the customer so many HP, EMC or IBM boxes for server, storage and networking and the account teams at major accounts left no stone unturned to land big $ deals and to make sure they got the technology refresh.
- Over time the channel began to think and behave in ways very similar to their biggest technology vendor and you had VARs that were wedded to HP VARs, IBM VARs Cisco VARs,
- But we’ve all seen what has happened to that strategy over the last 15 years. Big VARs began selling all the major vendors to meet customer requirements and differentiation was not significant enough for vendors to be able to influence customers to buy their brand over competition
As software began to drive most of the differentiation, product VARs were under tremendous pressure to differentiate themselves with “solutions” – but that was outside of their DNA and they struggled the same way that vendors have in connecting with customers beyond product push marketing and selling…
- Solution Provider Dynamic – is driven by selling multiple products and professional services to a small group of customers.
- These partners need to differentiate themselves based on how well they integrate the products provided by various technology vendors into something that works and solves customer problems (more than the products themselves).
- Just as the hardware-focused VARs began to feel pressure to differentiate and offer solutions through Software, software-focused solution providers have been feeling pressure the last 5-10 years to offer “outcomes” in the form of services. Professional Services was great, but evolving to Managed Services has been challenging for many and the prospect of customers moving to “Cloud Services” leaves many partners without a clear path to future profitability.
This solution provider model is not the reality for all, or even most VARs today, but it is the direction that most VARs are going – and if you try to market against the tide of the VAR transformation, you are not setting yourself up for success. For more on this topic, check out a recent guest post by Thom McAleer, a former executive at several VARs – What’s Next on the “Cloudy” VAR Landscape – What’s a VAR To Do …?
So What Approach is Needed?
If lead generation is not the answer for marketing with Solution Partners, what is the best practice approach? The key is to use a broader definition of marketing. A lot of folks in tech have a specific type of experience; such as thought leadership, analyst relations, corporate marketing / branding, lead generation, channel marketing or field marketing. These distinctions are the legacy of product-push marketing and selling and an era when many tech vendors primarily marketed and sold direct (and not through resellers). For the new era in the IT industry, vendors need to focus on two areas:
- Redefine what a marketing campaign means to recognize the role of channel in your sales process and that customers are buying solutions that include your products
- Rethink the boundary between sales and marketing and focus on how to collaborate with channels to sell more to the installed base with the channel.
One approach to go deeper in the installed base, that I’ve seen work well for vendors such as VMware, is to lay out a clear vision how customers can use their offerings to reach an ambitious destination (for example, ITaaS or SDDC), and then communicate steps /stages of adoption that create a path or “Journey” to this outcome. These stages can provide a roadmap to customers on the specific steps they can take to transform (and also can serve as modular sales plays for your field and channel to sell vendor offerings that enable this journey).
Of course, for this approach to work you actually have to have:
- A compelling vision (for customers!) that is credible for that vendor
- Products today that move customers forward to the destination
- A steady stream of product upgrades and new products deliver on the “how get there” question
That’s a very tall order, and one that seems well beyond many tech firms that are doing version 12 of their core products and marketing and selling based on product features… In addition, I’ve often seen sales and marketing teams struggle with lack of data and alignment, sometimes not knowing who customers are, what products/capabilities they are using/not using, and potential upset paths that enable attractive outcomes for the customer. This gap does not drive revenue for your products and partnerships…
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