We’ve said it before, and we’ll say it again: Channel conflict is one of the top complaints partners have about vendors’ channel organizations. Their livelihood depends on their ability to close deals they’ve been working, and when the vendor comes in with either their direct sales team (more likely) or another, bigger partner they want to give the deal to, that relationship sours fast. It isn’t just that that partner have a grudge against the vendor; don’t forget that channel is a small industry where everyone talks to everyone else. If you get a reputation for channel conflict, it will spread like wildfire. According to a BCG study of partners, 59% of participants believed that their annual revenue could increase by 11% to over 20% if channel conflict weren’t an issue. So how do you avoid it? Let’s dive in.

Clear Channel Partner Agreements

It’s a headache for legal, but it’s an essential first step. The foundation of any successful partnership lies in clear and comprehensive agreements. Start by establishing well-defined agreements that outline the roles, responsibilities, and expectations of both parties involved. These agreements should go beyond the basics and include specific rules and guidelines for conflict resolution. By setting clear boundaries and expectations from the outset, you can significantly reduce the chances of conflicts arising.

Effective Communication

It still amazes us how many vendors need to be told that open and transparent communication is the lifeblood of any healthy partnership. Establishing clear communication channels with your channel partners is essential. Regularly update them on product launches, promotions, and any changes to your business strategy that may result in them having a deal stolen. Keeping your partners in the loop prevents surprises that could lead to conflicts. Furthermore, encourage your partners to provide feedback and share their concerns openly, fostering a culture of trust and collaboration. That feedback loop will not only help you serve your partners better, it will also make them feel heard and appreciated.

Deal Registration 

Your partners don’t want to spend months developing a relationship only to have it stolen out from underneath them at the last minute. So how to prevent it? Deal registration is a critical component of conflict prevention. You can manage this with spreadsheets and manual processes to a point, but eventually, you’ll need to implement a Partner Relationship Management (PRM) system that allows your channel partners to register their leads and deals so the rug isn’t pulled out from underneath them. This not only provides visibility into the sales pipeline but also protects the interests of your partners. It’s crucial to ensure that the PRM system is user-friendly and provides real-time tracking, making it easy for partners to use and stay engaged.

Rules of Engagement

We can’t overstate how important a rock-solid rules of engagement (ROE) is to solidifying trust and loyalty with your partners…assuming you’re incentivized enough to make people stick to it. These rules should dictate how conflicts are resolved within the partnership. For example, you might prioritize the partner who registered the deal first or assign a mediator to handle disputes. By having predefined processes in place, you can address conflicts swiftly and fairly, preventing them from escalating. It’s essential that your direct teams understand and abide by the ROE, otherwise, what’s the point? Executive air cover is so important when dealing with channel conflict. You need buy in from the top levels to say, “This type of deal goes to a partner.” Most of the time, it’s deal size. Why would you spend your direct sales team’s time going after smaller accounts than attacking the big boys? This is why you built a channel. 

Regular Training and Enablement

Education is your most valuable weapon, particularly around ROE and deal reg. When you short-shift training and enablement, you’re setting yourself up for big conflicts down the road. Investing in the training and enablement of your channel partners is a proactive step in conflict prevention. Ensure that your partners have a deep understanding of your products, target audience, and market positioning. When partners are well-informed, there is less room for misalignment and competition within the channel. Training also helps partners identify opportunities for collaboration rather than competition.

The Win-Win Scenario

Who doesn’t like to be rewarded? There are two paths here: partners co-selling with direct sales, and (perhaps more importantly), partner working together to close a deal and make it work for both parties. We’re seeing more and more partner-to-partner collaboration these days, and it doesn’t take a genius to recognize that such collaboration can only be a good thing for you. Incentives can be powerful tools for shaping partner behavior. Implement performance metrics and incentives that encourage collaboration among your channel partners. Consider rewarding partners for working together, cross-selling each other’s products, or helping each other achieve their sales goals. When partners are incentivized to collaborate, conflicts are less likely to arise.

Market Segmentation

As we alluded to earlier, it’s imperative to determine who gets to go after which customer types. Maybe direct sales and enterprise partners only are allowed to go after the big fish, with all other partners snagging the SMB opportunity. Maybe you’re expanding into a new geo and want direct sales to be the only ones representing your brand. Or maybe you want to tackle a new vertical that a few of your partners have a solid track record in selling, so you feel most comfortable throwing the deal to them. Whatever the case, market segmentation can be a valuable strategy to reduce overlap among channel partners. Assign specific territories or customer segments to individual partners or your direct sales team. This approach minimizes the chances of partners targeting the same customers, reducing the potential for conflict.

Escalation Process

You aren’t going to be able to navigate this without someone complaining, and that’s okay – that means the partner is invested in your solution. Despite your best efforts, conflicts may still arise. In such cases, you have to have a clearly defined and communicated escalation process in place for resolving disputes that cannot be resolved through standard channels. Define a path for disputes to be reviewed and mediated by higher-level management if necessary. This ensures that conflicts are addressed promptly and fairly.

Legal Counsel

If worse comes to worst, have legal counsel on hand. You probably won’t need it, but better to have it and not need it than need it and not have it. Legal experts can help mediate disputes and ensure that channel partner agreements and rules are legally enforceable. While involving legal counsel should be a last resort, it can provide a final resolution when all other avenues have been exhausted.

The Bottom Line

Don’t be the vendor that everyone trash talks at conferences and in peer groups. You have to address channel conflict at the very beginning, or you’ll be stuck in a sticky wicket where no one knows what the rules are and how to avoid breaking them. Remember that preventing conflicts is not just about avoiding problems but also about nurturing stronger and more productive partnerships that benefit all parties involved.