Customers for lease

Vendors and resellers would each dearly love to own their relationship with their customers, but most channel partners at the recent CRN Roundtable agree that relationship is only, at best, rented.

Whether rented or owned outright, how the relationship power is divided makes a difference to any relationship's politics and practice. In larger deals with 500 seats or more, vendors tend to want to own the relationship or at the least sub-contract the partner.

Vaughan Webster, national channel manager at telecommunications vendor Alcatel, says Alcatel relies on its channel partners to hold the reins in the customer relationship. 'We rely on the [channel partners] to understand the needs and sales cycles. I'm happy to engage with the end-user customer in conjunction with the channel partner,' he says.

However, Webster says Alcatel had two go-to-market strategies in Australia. Some customers dealt direct with the French parent company, while those dealing with Alcatel Australia dealt with the channel.

Peter Masters, general manager for marketing and operations at distributor Express Data, says he believes the vast majority of vendors were 'pretty clear' where the power lay. 'More successful vendors do understand the differences [between vendor and reseller responsibility for a deal].'

Kerstin Baxter, partner group director at Microsoft Australia, points out it is not always so clear cut, especially when the product sold on is complex, with effects possibly spreading into different corners of a customer's organisation. Microsoft considers itself an ERP vendor whose partners do the work with the customer. '[So] we have to look at the whole business model,' Baxter says.

She says that Microsoft deals often mean several partners and the vendor must work together to drive a 'strong' opportunity. 'There's not even one partner. Everybody thinks they own that customer, and there can be 10 or 20 people who think they own that customer.'

Yet it is the customers themselves who make that decision, suggesting 'ownership' squabbles can only be to the vendor's and resellers' detriment. 'The customer decides whom he or she wants to work with,' Baxter says. 'I'm not sure any customer would want to be owned by anybody.'

Steve Martin, channel relationship manager at Novell Australia, adds that it is increasingly the customer who owns the relationship. He believes the customers are learning they can dictate their relationships with both the vendor and channel partner, especially as products become increasingly commoditised.

Audrey Lyon, business development manager at specialist distributor Aquion, agrees. 'Customers are learning they can play off different parts of the supply chain against each other,' she says.

Further, says Martin, when more than one partner is involved there can be trouble. 'When you've got a second partner in the act, using that relationship, the first partner cracks an absolute nana. Customers enjoy playing them off against each other,' Martin says.

Phil Cameron, channel manager of IBM Australia's personal computing division, says vendors and resellers alike need to articulate clearly and communicate the rules of engagement to partners. Engagement behaviours need predictability, he says.

Colin McKenna, vice-president and country manager at distributor Avnet Technology Solutions, warns that vendors that dictate strict rules of engagement risk destroying reseller margins. 'If the discussions become around process as opposed to value then everybody loses,' he says. 'If the channel has a real value proposition to offer, then it can be very different.'

Webster and Cameron both say their employers work closely with channel partners to facilitate deals, an act they see as cooperative and collaborative, rather than indicative of a 'vendorian' attempt to wrest control from the reseller.

Ownership of a deal can depend to some extent on the complexity of the product sold, especially if that product is a service or multi-vendor package. If a deal is led by the brand, customer perception may be that the vendor of that brand owns the relationship when in fact the reseller holds the reins in the performance.

Channel partners sometimes do most of the work, only to find vendor salespeople come in and take control of that deal. How can a channel partner be compensated for such a 'drive-by shooting'? Perhaps such compensation, if fair, would remove the desire for vendors to take that deal in the first place.

Clearly, the right balance must be struck. Vendors understandably strive to maintain some ownership over the way their products are introduced to and understood by end-users.

Resellers sit in a privileged position -- between devilish vendors and the deep blue sea of customers, some might say. From where the resellers sit, it should be easier to get a more objective view of proceedings.

That can only be the case if resellers shoulder the burden of educating themselves -- as well as the end-user -- on what the technologies can actually do and what the customers actually want.

It would appear that the rules of engagement need to be transparent to both vendors and resellers.
Nick Verykios, managing director at networking gear distributor LAN Systems, says it is not about ownership of the relationship so much as ownership of the responsibilities inherent in that relationship. Ultimately, vendor and reseller depend on the customer, not the other way around, and that very dependence can be used to negotiate the terms of any engagement. 'Dependence is a bad word. But when it's multiple, you can't throw it away,' he says.

Verykios says the interdependence of vendor, reseller and customer relationships was a guide to delineating who was responsible for what. That was the only 'ownership' of any deal likely to count in the long run, he says. 'If everyone does their own bit of that, we can have it segmented not by technology or by customer, but by benefit,' Verykios says.

Express Data's Masters adds that the 'more successful' vendors understand the need for clear division of responsibilities very well – a task made easier by modern business process technologies.

However, he argues that earning and keeping customer loyalty is an ongoing process. 'It's more about earning their loyalty and how much you depend on that loyalty: if you call that owning the customer then I think that's a mistake,' Masters says.