Breaking up with a vendor is hard to do

5. Going separate ways but living in the same house (The partial break-up)

Even after a split, customers are on the old vendor’s equipment, you’ll still have legacy skills (for a while) and the customer’s roadmap will take time to realign. So you might need to calve off the old business or transition it.

“A lot of partners will decide not to break up because they want the logo on their website,” says Iles. “A lot of partners will shy away from forcing the break-up conversation and that leads to the vendor pulling the plug.”

And as much as vendors won’t sit still and watch you take a customer off to dance with another partner, customers won’t want to raise new purchase orders, either. So it becomes necessary to take a longer view of the break-up and manage the old vendor out of the mix. 

6. I can’t handle your philandering ways (Your vendor poaches your customers) 

Vendors’ direct sales teams might conflict with indirect channel aims.  Moses relates the story of a reseller that had a relationship with a niche storage vendor acquired by a bigger vendor that had a hybrid, direct/indirect model. “This is a partner who sold a lot of gear and they like the product. [The acquiring vendor] gave every indication they would work with the partner but on several occasions has gone to the end user and put in a big offer, lots of services and discounts and said we’ll sell that direct.”

Yet it was the reseller who convinced the customer to buy the storage solution years before the acquisition. “That partner has lost the current deal and future revenue and services. Those things give you opportunities when you’re on-site to upsell other things like archive-as-a-service, backup or security and all the things around a storage solution.”

The vendor has damaged their partner because it “reinforces to the customer they don’t need to partner”, Moses says. Although the vendor has won a sale, it’s a pyrrhic victory because the reseller is moving its other customers off the vendor. “This doesn’t help anyone. When you screw over your channel they don’t just sit there, they have gone from being a partner to competitor.”

Despite this, Moses says, “you can absolutely have a direct model working alongside a partner model” but when rules of engagement are flaunted, resellers should go elsewhere.

De Leon says a reseller is unlikely to defect over a single misstep “because entering a program takes investments but a series of bad channel practices will lead to a divorce. Like any break-up, it’s a sequence of events”.

7. We should see other people (Seeking new vendors)

Smart resellers are always looking at new vendors to see how they affect their strategy or integrate into their offerings. Tech Research Asia’s Iles says many disruptive vendors are pre-IPO and looking to show quick revenue gains but, because they’re short of cash, need a strong channel so are willing to go further for business than incumbents.

And when such a disruptive vendor enters the frame, it’s not too difficult for a reseller to extricate themselves. “The reseller can’t drop the vendor outright; that’s bad business practice,” says De Leon. “They should scope out vendors and slowly start investing in the replacement vendor, meet revenue requirements, get the right competencies in that vendor program, assign and allocate staff.”

 Moses says contracts are no impediment to dumping a vendor. “All that happens is you sell less of the product, promote it less and when someone [on your team] leaves, you don’t hire with the vendor’s certification.”

Alert vendors will step up to save the relationship or face declining sales. But by now, the reseller wouldn’t care if they fall down the rankings because they’ve  already moved on. Moses says, “there’s no contract that says you must sell my product; the splitting up part is really easy.”