Beware the pitfalls of poorly policed partner programs

For the large, established vendors, the issue is that they have expanded the diversity of the solutions they provide, which has caused considerable channel conflict and then taken control.

With most emerging vendors, the challenge is that they start by directly marketing to all customers, then jump on the direct opportunities, then they palm those customers off to their new partners. Many times we have been working with the customer on a longer-term strategy, and a new vendor hits the market while trying to recruit us, puts competitors into our accounts when opportunity knocks.

Unfortunately, I have seen too many cases of bad vendor behaviour. Without being unfair to the vendors, the reality is that they are driven by revenue, not by partners and partner programs. When things turn south from a revenue perspective, all things can change.

There is no doubt that over the years, a number of vendor programs have been instrumental in helping the Somerville organisation grow, both in a sales and technical capacity. Let’s face it, our business is based on solutions developed around our vendor’s products. Being a certified partner has its benefits. Certifications benefit your technical staff and allow them to deliver better outcomes, as well as protecting the vendor from poorly installed solutions that would reflect badly.

Good sales certifications help enable our salespeople to actually sell. Good product sets enable us to build great solutions that customers benefit from. But these outcomes are the results of long-term commitment and partnership development over a sustained period.

 HOW TO BUILD THE PERFECT PARTNER PROGRAM

Any good vendor program should contain the following elements:

A strong ROI: The program should deliver sustained return on investment for both the partner and vendor over the longer term.

Loyalty to the partners who invest: Longer-term support of partners who invest in the partnership and drive sales for the vendor. Often the people change at the vendor, as do the associated relationships. Vendors need to maintain the support of the partner.

Long-term market protection: When a partner builds a market segment, we need vendors who support us through the next renewal or refresh, not open it to the partner base.

Consistency: Deliver a product suite and maintain the strategy and product development that is consistent. Investing in R&D to keep their products at or ahead of the game.

Good training materials: These can be both self-paced and instructor-led, and must always be affordable and relevant.

Marketing resources: Provide assistance with resources, people, funding to take the products, services or solutions to market.

The right distributor: Don’t forget the distributors, which have traditionally played a significant roll in the vendor’s go-to market. They can also assist in service delivery, easing the certification path if structured correctly.

Rebates: An integral part of many vendor programs. Unfortunately, it is often at the expense of front-end margin. I would rather the front-end margin.

DOING THE MATHS

The business case for certification is actually pretty simple. Let’s look at a typical entry-level vendor program, one that requires two certified salespeople and two certified technical people. The maths is straightforward (plug in your own real costs).

Technical preparation

• 40 hours for one tech staff (at $80 per hour raw cost): $3,200
• For two tech staff (direct cost): $6,400
• 40 hours lost tech revenue (at $200 per hour): $8,000
• For two tech employees (lost opportunity): $16,000
• Technical sub-total: $22,400

Sales preparation

• 40 hours for one sales staff (at $100 per hour raw cost): $4,000
• For two sales staff (direct cost): $8,000
• 40 hours lost gross profit per sales staff (weekly target): $14,000
• For two sales staff (lost opportunity): $28,000
• Sales sub-total: $36,000

Vendor fees

• Fee per staff to sell vendor’s products: $5,000
• Total cost for four staff members: $20,000
• Vendor sub-total: $20,000

CERTIFICATION TOTAL $78,400

Craig Somerville is managing director of Somerville Group, based in Sydney