The success of any business is largely dependent on the quality of people it recruits. Similarly for vendors, the success of a channel program is largely dependent on the quality of partner it recruits. However, few vendors really devote as much time to their partner recruitment strategy as they do to their staff recruitment. In general, vendors “collect” partners, rather than “select” them.
For example, you’d never dream of talking to complete strangers, asking them what they do, and then deciding whether or not you’d hire them. And you certainly don’t hire people just simply because they showed up on your doorstep telling you they really want to work for you. But for many vendors, that’s pretty much how they recruit partners. Their partner lists are full of resellers who are not in the least bit qualified, but just simply showed up and asked to be a partner.
So how do you select the right partners?
As vendors merge or acquire new technologies, their existing (and currently successful) channel may not have the skills or the capability to sell the new products. Add to this the fact that very few partners radically change their business model or their product/services offering from year to year, and it becomes clear that the vendor may need to find new partners. And if you’re one of the lucky vendors who have a new market-leading technology, there’s usually a line of companies falling over themselves to become your partner or reseller.
In rare cases, you may have a product that is so ubiquitous and requires so little support that the more partners you have the better. But typically, the challenge for most vendors is not finding more partners, but rather finding more of the right partners. That is, partners who bring complementary skills, deal with customers in at least one of your target markets, and for whom a relationship with you will be mutually beneficial. Note the word “mutually”. In the same way that a vendor’s success is largely dependent on their partners, resellers are also faced with the task of selecting vendors who will help them grow, rather than just being a distraction.
Which means the process is similar to process of recruiting staff.
Clarify what you want
Normally if you’re going to hire someone, you will have sat down and written a list of skills you’re looking for, created a description of what the person will do, and defined how much money you expect that person to make in a year.
The process for recruiting partners is the same. We need to know what skills we are looking for that will complement our product, what activities we expect of them, and how much profit they will make (for themselves, not just for the vendor) if they executed those activities.
Yet the most common mistake vendors make when recruiting partners is not having a clear vision of what they want. Ask most vendors what they look for in a partner, and it sounds something like this:
We’re looking for partners who
- will sell a lot of our products
- have access to customers we don’t or can’t reach
- will promote our products over the competition
- add value and don’t discount our products
- are fairly self-sufficient and don’t need to much support
The problem is that Channel Account Manager go in search of new partners without much more detail than the bullet points outlined above!
Compare that to the following:
We’re looking for partners who
- generate revenue in excess of $2M, of which networking makes up 30%
- have a customer base of which at least 30% are sized between 50-250 employees
- are located in Sydney, Melbourne or Brisbane
- have a 1:1 ratio of sales:technical staff
- focus on security and carry brands X, Y and Z
- specialise in virtualisation, and have engineers certified in A, B and C
Now we have a list of requirements that enables us to have an intelligent conversation with a partner without being sidetracked into a wishy-washy fact-finding mission.
Get your priorities right
Once we have defined our ideal requirements, it is important to decide what’s “crucial” and what’s a “nice to have”. For example, it may be crucial for a partner to have technical sales people to demonstrate your equipment, whereas a demo facility may be less important if (for example) your distributor can provide that.
So the next step is to assign a “weighting” to each of the requirements on our wish list. The reason this is so important is that we almost never find the perfect reseller. They nearly always have some elements that are very desirable, and some that are not. In effect, what we are trying to do is to add a sense of importance to the selection criteria so we can be more objective about why we chose to select (or not select) a partner.
For example, we may want a partner with a sales, marketing and technical capability, but we may overlook their weakness in marketing because they have such a strong sales and technical capability. This means that the weighting for sales and technical skills should be greater than that for marketing. It’s a bit like your final mark in University - some assignments were worth 30%, while others were worth 5% - the more important the criteria, the greater the weighting.
Think about the mix
The final step is to think about your preferred mix of partners. It’s obvious that your partners are not going to look the same or behave the same way - there will be different types for different customer segments.
For example, to reach a diverse customer vase, you may need a mix of different partners with different skills; VARs (technical capability, sell complementary products, small base of large customers), Retail (high volume, geographical spread, ability to stock product) and SMB (specialists in key vertical markets, relationships with medium sized business, offices in regional locations).
That means the process described above needs to be repeated for each different “partner type” In other words, you will need to develop a different set of section criteria for each type of partner that you intend to recruit. While this may sound onerous, it has enormous benefits in forcing you to clearly think about why you want certain partners, and what it is about them you like.
If you are not sure how to go about this, please feel free to contact Chanel Dynamics - we have developed a number of tools and frameworks to greatly simplify this process.
Clarify what the partners get
The final step is thinking about recruitment from the partner’s perspective.
Generally, partners are driven by profit. Not revenue, not discount percentage - profit. And that means they want a vendor who has the right mix of growth and margin, without requiring excessive investment, to make this worthwhile for them to make a commitment.
A vendor who offers a high margin but a very low revenue stream is not attractive, nor is a vendor who has so many partners that margins are eroded. Similarly, a vendor who offers a great profit stream but requires the partner to invest heavily in certifications and equipment may not be compelling if there is not a good return on the investment.
In effect, partners are looking for an IDEAL vendor. That is, a vendor who helps them:
- Increase Revenue
- Decrease Costs
- Enhance Cash Flow
- Leverage Assets
- Minimise Liabilities
We’ll explore the concept of the IDEAL vendor further in out next newsletter, and provide you with some ideas on what you can do to present a compelling value proposition to partners and increase the effectiveness of your recruitment strategy.
Recruiting partners is like recruiting staff. You need to know what you are looking for, what you expect them to do, and what they’ll make if thy come on board. Spend the time up front to select the right partners, and you’ll save a lot more time trying to fix partner issues down the track.
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