“If someone can take a customer away from you, they were never your customer to begin with.”
May seem like an interesting place to start a discussion about rules of channel engagement, but nothing is more important to remember. In today’s channel, rules of engagement (ROE) vary widely depending upon many factors, some of which we’ll discuss here. Nothing says your competitors will observe those rules. Truth be told, some vendors also ignore them resulting in channel conflict characterized by disappointment, disillusionment, and potentially wasted time, energy, and funds.
Setting Expectations: Understanding the Rules of Channel Engagement
Vendors invest heavily in partner recruitment programs to select the best possible partners to represent and sell their products and services. Then, they invest even more in onboarding those partners effectively, and enabling them with all manner of training and coaching. Some also provide extraordinarily talented channel account managers (CAM).
Then they drop the ball by neglecting to set everyone’s expectations clearly and decisively in the “engagement” section of their channel partner program.
ROE are nowhere near “one-size-fits-all.” As the channel matures and evolves so do the relationships between different types of vendors and different types of partners. This article will offer guidance on how to create an ROE statement but will focus even more on the critical importance of publishing one so everybody knows what to expect. Not everybody may like everything about your ROE but knowing what they are goes a long way toward building and maintaining trust in your channel.
Trust: Core to the Definition of “Partner”
Without trust there can be no partnership. If a channel partner were to suspect that their CAM was sharing any part of their sales strategy with their competitor, even inadvertently, they would avoid working with that CAM, which ultimately translates into not working with that vendor.
The channel has used the term “partner” for so long that it may have lost some of it’s meaning. Those who take the term seriously invest heavily into their relationships and work hard together toward common success. For others, a CAM may simply be someone who provides clerical and administrative assistance or checks on pipeline occasionally. That eliminates the value of the role.
Concern for Customers
It’s far too easy to lose sight of the impact of channel conflict on customers. They do not think of things in terms of a channel. They see anyone who is selling them a product as a representative of that product’s manufacturer. Confusion arises immediately when multiple salespeople call on them selling the same product. They have no desire to be caught between channel partners and/or direct vendor reps, and everyone should be completely committed to avoiding that at all costs. Even more compelling reason to set everyone’s expectations effectively.
Different Focus, Different Relationship
One way in which the channel has diverged came with the emergence of managed service providers (MSP). Prior to that when everyone considered themselves a “reseller,” the focus was on selling IT products. Vendors expected their channel partners to push their products out into the market and rewarded those who did so most effectively.
They also wanted to protect their best partners. This prompted them to introduce formal “deal registration” programs which would assure the first partner who registered an opportunity that vendor resources would only be assigned to them and no other partner. This assurance would only last for a fixed period of time, and only apply to a specific sale, not all sales to a given customer.
Channel partners may never have appreciated the sacrifice this represented on the part of the vendor. Who’s to say that the first reseller to register a deal is the best equipped to close the deal? It would be in the vendor’s best interest to accord resources only to the reseller with the greatest likelihood of bringing home the business. Of course, some couldn’t resist breaking their own rules and helping their “favorites,” too. Or those who had direct sales teams found their direct salespeople conflicting with registered partners. Ultimately, this damaged trust in the vendor and their program sending resellers to competing brands or worse.
With the transition to MSP came a transition of focus as well. Where the primary goal of the reseller was to sell products, the primary goal of the MSP was to sell their own services. These services brought higher profit margins, but also served to differentiate and distinguish one MSP from others.
ROE with MSPs would be far more complex. With the focus off the product came less need for joint co-selling calls with customer-facing vendor resources in attendance. Vendors could provide back-end support to any partner asking for it with no visible cause for conflict. MSPs didn’t need “protection” as much as they needed high-level strategic and technical support.
While this diminished need for deal registration programs, it didn’t eliminate the need for published, agreed-upon ROE. There would be exceptions in which vendors might be called upon to contact prospective customers. Rules might govern things like what they could and could not discuss, including not recommending any particular MSP.
From the customer’s perspective, they see different professional firms with competing strategies vying for their business, which is welcome. The fact that more than one may offer the same component products in their solution becomes far less significant.
No MSP can expect other MSPs to restrain themselves from competing for any given customer’s service business. This is the appropriate nature of channel conflict in a free enterprise society.
Nobody can be compelled to play by the rules, but clear expectation-setting encourages everyone to do so.
5 Tips to Avoid Channel Conflict
- When writing an ROE statement, take into account what you expect your partners to lead with. If they’re focused on selling a specific product they should know to expect that the vendor may have also committed to working with someone else to close that sale.
- Partners will love you for helping them promote their company and their services. Funding their marketing activities that promote services that involve your product is the most proactive thing you can possibly do. However, if you’re going to actually recommend a specific MSP partner to a given customer, you need to figure out how to make other MSP partners aware of that. You may be able to write how you establish preference of partner for specific use cases into your ROE.
- Adopt a “no surprises” strategy. Nobody likes surprises, and nothing erodes trust more. Measure every action you consider taking on behalf of a partner against how other partners would react to learning you had done so.
- Consider including a do-not-reveal (DNR) clause in your channel partner program agreement to assure your partners that you will not reveal their trade secrets to their competitors who you may also partner with. This is probably a partner’s worst fear, so get in front of it.
- Be sure to clearly state what you expect from them, and what they can expect from you. What are all the ways in which they can expect you to provide support to them? What can they not expect from you? What must they do to continue their partner status and grow within your program? Remember as you write this that people partner with people.
Although each situation is unique and may require its own specific solution, by following these 5 tips, you’ll lay the groundwork for a solid ROE that will help you mitigate channel conflicts before they arise.
