In just the last few months, two of the leading technology providers in the systems integration industry have switched from a hybrid go-to-market model (having a direct salesforce and a dealer network) to committing 100% to the dealer channel.
I’ve been fortunate to help both organizations through this transformation and observe the challenges and results. In both cases, it was a struggle – but both companies are very happy with the decision.
A well-managed channel program is the most cost-effective and service-minded approach. I have the numbers to prove it. In these two situations, an existing direct salesforce was repurposed to become channel partner managers. The headcount was reduced and is now focused on the integrators in the territory more than the end-users. The first step was learning what to do … literally. It’s a far different job to sell products to end-users than to build relationships with systems integrators. In both cases, building trust was the obstacle – they were often serving as a vendor and a competitor in prior years.
Some of the Challenges
Lead generation: What is a lead anyway? It’s not putting a white paper on a website and then forcing someone to fill in a form to download and read it. That is a digital marketing ploy used to capture contact information … not a lead. A lead involves a human being speaking with another human being about his or her level of interest in a product or service.
Lead follow-up: In both these cases, this part isn’t dialed in yet. In a recent channel partner council meeting, it was described by an integrator as “we don’t do small well.” The leads being captured from the manufacturers’ direct marketing campaigns generated a lot of small-ticket-item leads that were often ignored by the integrators. That became very frustrating for the manufacturers and created second-guessing on the channel strategy. Integrators need to manage this with a simple philosophy: Any “qualified” lead is an opportunity to visit a new or existing client. It could be one display, camera, or control panel, but it could turn into one classroom, school, or school district. We need to think in those terms.
Exclusive vs. Semi-Exclusive
We have precious few manufacturers left that offer an exclusive territory for their entire product line. So the majority of our work is done through manufacturers with limited distribution. The key to success in a semi-exclusive (limited distribution) model is communications and honesty. The most effective channel strategies align the market focus of the vendor with two or three integrators (at most) that also focus on a specific vertical. Managing overlap is an art and science.
The Role of the Field Salesforce
Deciding who a lead should be distributed to is one thing; forming a lasting relationship is another. I have seen a definite shift from our integrator members on vendor selection: it used to be all about the product to being mostly about the partnership. The technology, product line, and service are still very important, but the channel strategy, distribution method, relationship goals, business philosophies, ethics, and values are even more important. My advice to manufacturers: Talk about how easy you are to do business with before talking about products. That’s easier said than done. Not everyone can be as effective in relationship and account management as they were in direct sales.
It’s really hard to keep up with technology advancements and be experts in everything our manufacturers provide. The people we need are changing and are costing us more; solutions are becoming increasing complex and end-users are becoming more demanding. This puts a lot of strain on the manufacturer/integrator relationship. Integrators need to advance their skillsets in unison with their best vendor partners. Manufacturers have to invest in their channel partners by sharing their knowledge for the mutual benefit. When we have good alignment, we all win. When we have separation of capabilities, we tend to let that erode the partnership. Be mindful of that dynamic; if you see it going the wrong direction, allow me to help.
In managing an effective channel sales strategy, manufacturers have to be willing to win or lose with their integrator partners. They have to support them, educate them, and provide value in winning projects. In turn, integrators need to respect the partnership by sharing forecasting information, expected orders, delivery date requirements, lessons learned, etc.
I’m certainly quite biased and opinionated on the channel management subject because I represent the systems integration community. I feel strongly that it is the best business practice for manufacturers to be represented locally by “A-team” systems integrators. Fortunately, those are the people I associate with and have gotten to know. -Chuck Wilson, NSCA Executive Director
Image by: Stuart Miles