Channeling

Channel Partner Relationship Management.  If it sounds complicated, it’s because it is.  You might think it is a game for big companies, run by a Senior VP, somebody who has a lot of experience with that sort of thing.  However it is exactly when you are a fledgling company that the channel partners are so appealing to you.  You haven’t yet built out your own Sales staff, you haven’t gotten in front of enough people to really get your messaging down.  A guy comes along, “I like what you’re doing here.  I think I can sell this.”  You go back and tell your team “I have found the solution to our Sales!  I have the guy who’s going to make us all rich!”

Your new Channel Partner (two months ago, you didn’t even know what that was!) says, “I’m already in the market talking to everybody.  I can use your product.”  (Everybody wants another arrow in their quiver.)  So you say “Sure!  Great!  All my problems are solved.  I don’t have to worry about Sales anymore.”  The Channel Partner is out there rattling around for several months.  Every now and then you get a call and answer some questions.  “This is going great—lots of prospects in the pipeline.”  After a while, you realize nothing is really happening.  You ask the Channel Partner how he’s doing.  He’s selling alright, just not your product.  You wonder, “What’s wrong with my product?”   During the next phone call with one of his prospects you suggest to the Client, “I think you should really switch your focus.  It makes more sense to buy my product first, then from that platform your staff will be better equipped to use Channel Guy’s product.”  You’ve just stepped into Account Control Hell.  Now your Partner is upset because you’re trying to take control of his account.  Forget it.  It is not going to work. chaneling

If a Channel Partner looks really good to you, there’s a good chance it is probably because they have a Sales staff and you don’t.  They have client relationships and you don’t.  They’re most likely bigger than you.  They think you should be satisfied with being along for the ride.  If it will be a good relationship it’s because they actually need your product to sell theirs.  You have managed to have a product that they cannot easily reproduce.  That is going to bother them forever.  And when you don’t do what they say (because it is your product after all) they are going to get angry with you.  Here you are, helping them sell their product, a product that is clearly missing key functionality that the client needs.  And they’re mad at you, primarily because you exist!

The Channel Partner’s Sales staff don’t really understand what your product does.  You find out they’re saying that your product does things that it doesn’t and that it doesn’t do things that it  does!  When you ask “Why didn’t you sell this option to the last customer?”, your contact replies, “I didn’t know you had that!  Why didn’t you train my salesmen properly!”  He’s right, you should have.  In fact, you would have provided training if the Channel Partner had allowed you time at his last national sales meeting, but the agenda was already full with their products.

Pretty soon you have three or four Channel Partners out there, all rattling around, talking to the same accounts.  A highly motivated Client Prospect calls to you to ask, “Which of these Sales people represents you?”  You don’t know.  You’re just excited that he cares!  You manage to work through the confusion by engaging the Buyer directly.  He buys!!  (You decide on whose “paper” it gets contracted, whether it’s yours or one of your Channel Partners’, more on that later.)  Now three Channel Partners say “You owe me a commission.”  If your commissions are typically 20% for the first year revenue, 60% (!) of your top line is going to pay off your channel partners.  Probably none of them really closed the deal.  You had to sort it out at the end and close it yourself.  You lose money, nobody’s happy and you had to do most of the selling work anyway.

Bottom line:  Channel Partners don’t save you any time or effort.  All the hard work of figuring out what happens in your product’s Sales Cycle, what it takes to buy it, what Buyers need to know, and when they need to know it, all comes down to you if your product is ever going to get sold.  You might have an excellent Channel Partner who is perfectly complementary and non-overlapping with your product and has an excellent sales force.  Even then, you still have to do all your own work.  The Partner is just funding the Salesmen, not you.  It is their investment in the Sales organization that you have the opportunity to leverage.  But proceed with caution.  You don’t control those people.  Sales people follow their compensation plan rather than what their manager tells them to do.  With the stroke of a pen, the Partner can change their compensation structure and now your product is not getting sold.  They have focused on something else.  You don’t control them.

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