Channel to vendors: Show us some love

Vendors are spending up to 6 percent of their revenue on partner programs, but 80 percent of these programs are not driving incremental revenue for the channel or changing partner behaviour, according to research conducted by Channel Enablers in conjunction with CRN.

Speaking at a recent briefing attended by approximately 60 vendor representatives, Braham Shnider, president at Channel Enablers, also said that up to 85 percent of channel programs are not measured for return on investment. The research was conducted using CRN data and from interviews with channel partners.

'It's a big expense on everyone's P&L [profit and loss] but it has no impact on revenue and doesn't change your partner behaviour - it's a frightening and damning number. If it [money] doesn't drive a behavioural change, I don't think you're spending your money as well as you could.

'It's all about ROI - if you deliver ROI, you get a behavioural change. Most vendors don't match it [programs] back to what their partners want. What's required from the owner of a business is different to what's required from a [vendor] salesperson,' said Shnider.

Vendor volume discounts came under scrutiny in an analysis of the VAR channel, with Shnider claiming that the higher volume, bigger discount structures create bad behaviour in the channel and prevent 'up and comers' kicking goals - meaning volume vendors would be 'stagnant' with the partners that they have today.

Partner manuals, distributor account manager meetings and computer-based training and testing were considered a total waste, according to the research.

What would differentiate a vendor's offering in the VAR channel would be easy access to the vendor's brand. 'Everything you can do to give them access to your brand will be of great interest to them,' he said.

Other issues such as providing managed vendor account management and new account development incentives were also important to the VAR channel, the research found.

For integrators, services revenue opportunities, end user account planning and differentiated certification programs were considered to be the major differentiators for a vendor channel program.

Partner manuals, trade shows, price protection and sales targets were considered by integration partners as a waste of time, while end-user brand awareness and quality technical support structures stood out as compulsory requirements for a vendor program, the research said.

'Often people are driving revenue from services-related [sales]. Product rebates are not important [to integrators],' he said. 'Increase the margin by one or two points, they don't care [but] if you can drive a higher fee per day, partners will be interested in your program,' he claimed.

Distribution channel respondents considered below-the-line rebates, access to a vendor's brand and marketing funds as major differentiators for vendor channel programs. Sales competitions, on the other hand, do not drive any real value for distributors, but will bring business forward at a cost, Shnider said.

'Blitz days don't work - sales competitions is not an area where you should be spending money - the cost doesn't justify the expenditure. Many distributors are too removed from the customer,' he explained. Joint sales visits and brochures and marketing collateral were also considered a total waste by respondents in the distribution channel.

In addition, stock rotation, price protection, easy-to-use configuration price guides and product updates in existing sales meetings were compulsory aspects of a channel program.

Other research found that partners get invited to events that are not correctly targeted.
'Partners hate unmanaged activity - often they feel channel account managers aren't skilled in business planning, they're skilled in products.'

Also, he claimed that partners are going to be less responsive to unqualified leads; specifically, smaller, hungry partners are always going to work harder to convert those leads [into business]. 'Over 40 percent of leads sent to partners have nothing to do with their [geographical] territory - so what do they do with them? - nothing', he said.

Joint marketing programs present another area that partners perceive vendors are performing poorly. 'One of the biggest frustrations for partners is ad hoc product updates - they receive hundreds of emails per day related to product updates. Ad hoc product updates never get read,' he said.

Co-engagement and pre- and post-sales integration will be the differentiators that will make resellers want to sell a particular vendor's product, he said. He added that there is also not enough clarity in who does what in the sales processes. 'Clarity builds trust,' he said.