By Larry Walsh
We often hear about the channel’s long tail – the vast number of underperforming partners that, en masse, generate a tremendous amount of revenue despite being individually uninteresting. Wrenching more sales out of this large segment seems a rich opportunity except for one problem: the reason these companies are in the long tail.
The majority of companies operating in the channel aren’t well-structured or disciplined business organizations. The channel lacks maturity because most partners are technologists first, businesspeople second. According to research by The 2112 Group, four out of 10 partners don’t have strategic plans for growth or business plans governing operations. Another 45 percent don’t set annual growth targets, and more than one-half don’t have annual sales goals.
Vendors, on the other hand, incent too little as a part of their partner relationship. Most channel programs influence and reward partners based on revenue generation and training and certification. While revenue productivity is important, as is empowering partners with knowledge, translating that productivity into persistent and consistent sales and marketing activity is what drives long-term success.
Vendors may realize that the channel isn’t automatic, but they don’t pay enough attention to this fact. Partners don’t always have the same alignment, goals, or interests as their vendors. They’re often tugged in different directions by numerous vendors wanting higher product sales. They service diverse markets and customers with a variety of needs and expectations. Couple these factors with their lack of business focus and you get inconsistent results and return on channel investment.
Partners need the guiding hand of vendors to help with organization, management, governance, and, ultimately, performance. This guidance can’t happen just once; engagement needs to be persistent, with vendors leading partners, and partners completing periodic tasks and receiving corresponding rewards for performance that results in positive returns. This process is called micro-behavioral influence. 2112, in conjunction with Impartner, produced a complimentary white paper, “Micro-Behavior to Macro Results,” that details how vendors can use micro-behavioral influences to drive more productive partner outcomes, why guiding micro-behavior is more advantageous than current channel program frameworks, areas in which to focus micro-behavioral influences, and how to measure influence outcomes.
The issue isn’t whether vendors should influence partner behavior, but to what degree they should influence business practices, operational processes, and customer engagements.
The channel nominally operates at a 90/10 ratio, with 90 percent of the channel revenue flowing through the top 10 percent of partners. The 2112 Group has assessed channel programs in which the top 2 percent of channel partners drive as much as 90 percent of the gross indirect revenue generation. These ratios reflect unbalanced channel programs that put vendors at high risk of disruption due to inconsistent partner performance.
Our white paper details how vendors can define micro-behaviors, assign tasks to partners, and reward partners based not just on end results but also on the process by which partners arrive at those results. The goal is getting partners to learn and incorporate good behavior that generates consistency, not just opportunistic and unpredictable outcomes.