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The Important Differences Between Managing Sales Teams and Channel Partners

 
Working with channels is certainly a sales function, but every sales leader needs to understand the differences between managing his or her own sales teams and managing channel partners. During my 15 years at Cisco, I designed its channel program and led worldwide channel and partner strategy, experiencing firsthand the challenges and nuances of channel sales. Here, I’ll share key insights for sales teams to keep in mind to reduce frustration and develop better relationships with their channels.

Partners face unique competition.

Vendors often think of channels as merely an extension of their sales force and expect them to behave accordingly — this is fundamentally wrong. For example, a company’s own sales force never competes within itself for the same transaction. And multiple people are also compensated for the same dollar of revenue. This is definitely not the case on the channel side because only one partner wins the transaction and others lose out. Remember that the channel isn’t part of your own organization, and you can’t expect the same behavior or performance.

Partners should have a level playing field.

A key benefit of using channel partners is that the customer gets to choose different types of surrounding value from different channel partners. Although the core vendor offer may be exactly the same, each partner puts its own unique wrapper around it. In a well-designed channel model, multiple partners, representing the same vendor, should be trying to win a specific opportunity, albeit with differentiated value-add. It’s very important for the vendor to create a level playing field among partners so that customers can choose the best solution to meet their needs without any unfair advantage given by the vendor to a particular partner.

Partners can sometimes compete with you.

Similarly, unlike a company’s own sales force, it is important for sales teams to recognize that their channel partners often carry competing products. All partners are independent businesses with their own objectives. They want to provide what is best for the customer, and may sometimes decide that another company’s offer better fits the needs of the opportunity.

This can be very confusing for the typical sales executive, but you must learn to accept it and not penalize the partner if objectives do not align on a specific transaction. Hopefully, another partner whose objectives did align will win the current opportunity. And perhaps the partner that lost the opportunity with a competing product will support the company’s offer in the next transaction.

Partners may have a longer sales cycle.

Successful sales executives are often driven to quickly close a transaction with just their company's offer while their channel partners are instead focused on their own value-add that surrounds the offer. Partners have to differentiate themselves in the eyes of the customer by their own unique value because this is what is unique to them and it is where they make most of their money.

It’s important to understand that partners must strategically position their differentiation, in addition to selling the vendor offer itself. This can cause a longer sales cycle and frustration on the part of many sales teams that are trying to meet their weekly commit numbers. Learn to be patient and recognize that the partner’s value lies in the surround and not force a premature close that minimizes any value the partner is trying to establish for its surround.

Partners need to be profitable too.

Finally, most IT vendors pay sales commissions largely based on revenue or bookings. Cisco Systems realized in the fall of 2000 that partners do not directly align with this because they mostly care about their margins. At that time, none of the company’s channel programs were driving partner profitability and instead merely focused on rewarding revenue. This is why the company changed its entire go-to-market model and revamped all of its channel programs in 2001 to focus on partner profitability.

Based on these changes, revenue through partners increased fivefold over the following 12 years — from 38% of $19 billion to 80% of $49 billion. This allowed Cisco to establish the strongest channel franchise in the industry, which was even recognized as a competitive advantage by financial analysts. And many other IT companies then adopted portions of the Cisco model based on the company’s channel success.

You must understand the drivers of profitability for your channel partners. If you create programs and policies to support your partners, you and your channel will both win.

In a well-designed channel model, multiple partners, representing the same vendor, should be trying to win a specific opportunity, albeit with differentiated value-add.”

Surinder Brar | Independent Consultant

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