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Why do Channels Matter to Alliance Managers?

Posted By Norma Watenpaugh, CSAP | Phoenix Consulting Group, LLC | CEO & Founding Principal, Wednesday, May 18, 2016

Today, increasingly channels are becoming the preferred route to market for technology alliances with new models of converged architectures, such as cloud computing and big data analytics. As a result, each alliance relationship needs to redefine the sales engagement models that make sense. One partner can be a route-to-market for the other or they can meet in the channel or they can take the traditional influence channel model and collaborate on joint selling.  More often than not, it’s a combination of all of the above.  

What we have seen in the 2013 Go-to-Market Alliances Research is not only are alliances employing multiple routes to market: channels, OEM and co-sale, but the top performing alliances are more heavily invested in an indirect route vs. relying on just joint sales for revenue. This is an ongoing trend with 65% of alliances choosing direct sales in our previous 2010 survey. Given what we are hearing in the industry today, we would expect to see even more business shift to the channel were we to conduct this survey again in 2016.

What this implies is that it is not feasible to keep partners neatly siloed and alliance managers need to be as sophisticated about enabling channel sell-thru success as they are in sell-with.  And in this time of technology convergence and business model transformation, alliance managers need to be solidly grounded in what is happening in the channel and how to equip channel partners to succeed with alliance offers.

 What do alliance managers need to know about channel sales? 

Well it starts with tried and true partner value proposition but viewed through the new lens of “what is the value the channel partner brings to the customer?” What is the value or business proposition that is recognized by the channel partner? What is the value that you, as part of an alliance, recognize? The key principles of success being how do WE create value for customers and how do WE make money all together? That would be the inclusive WE meaning channel partner, your alliance partner, your company and even your customer.

Starting with the customer experience will give alliance managers some perspective on the best route to market, whether direct or with a channel partner. How does your target customer prefer to buy? Do they work with local heroes to recommend and implement your proposed alliance offer or do they rely on global system integrators to act in the trusted advisor role? With the confusing array of converging technologies and digital transformation, going to market through a channel partner that acts as a trusted advisor makes sense. Your channel partner absorbs the complexity and connects technology features to business relevancy for the customer. One channel marketing professional raved about her favorite VAR. They specialized in the Health Spas. They knew everything about the business of operating Spas and could help Spa owners and operators with turnkey technology that would create better experiences for spa customers. And in her words “They were making a killing!”

Another building block of success in understanding how to go to market through channel partners is understanding the driving economic model for the channel. Gone are the days when VARs could make a tidy living on resale margin. Cloud solutions are putting even more pressure on the channel as the cloud margins are even thinner and recognized as monthly recurring revenue. The survivors are developing new skills, new services, and IP, such as API extensions to create complementary revenue streams. In other words, your joint offer may have just become the razor.  Savvy alliance managers will examine the profit model around their joint offer for the channel, being mindful that they need to compete for the best channel partners. 

Understanding the channel partner economic model, gives you insight into how to enable profitability for those partners and you have to do that at scale. You will need many channel partners who are capable of selling, marketing, provisioning, implementing, configuring and supporting your offer. This means working with your channel organizations to build the enablement program that supports not only the joint offer, but also those new revenue streams.

Yes, there are many moving parts and lots to think about, but the trend is clear. As technology buying shifts to the line of business buyer, it takes a partner in the ecosystem that understands the buyer’s business and has that vital relationship required to sell solutions that build their business.  That partner is a channel partner.   

Author and guest blogger Phoenix Consulting Group CEO & founding principal Norma Watenpaugh, CSAP was named 2015 Woman of Influence in Silicon Valley and is a seasoned  volunteer leader for ASAP. She is a member of ASAP and her company is an Education Partner Provider to our members. 

Tags:  alliance managers  channel  channel marketing  Channel partner  cloud solutions  Economic model  Education Partner Provider  go-to-market alliance research  Norma Watenpaugh  Phoenix Consulting Group  sell-thru  VAR 

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