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New Study Spotlights The State Of Channel Conflict

Vendors strive to offer channel partners an influx of funding, marketing tools and educational resources to ensure channel loyalty and optimal sales results. However a new study conducted by The 2112 Group reveals that conflict among vendors and their partners is thriving more than ever.

In fact, findings from the “2112 Channel Conflict 2012 Report” revealed that one-third of vendors would cut out their channel partners from sales opportunities if given a chance. Additionally, results indicated that approximately 50% of vendors’ direct sales teams are a source of channel conflict.

The survey, which was based on a survey of more than 200 solution providers, systems integrators, value-added resellers, managed service providers and telephony agents in the U.S. and Canada, was developed to spotlight the current state, sources and consequences of channel conflict.

According to the 2112 Group, situations leading to channel conflict include:

  1. Vendors competing with partners for sales, sometimes in violation of policies that define separation of sales engagement and territory;
  2. Direct market resellers and large account resellers operating on a volume basis and competing with value-added resellers;
  3. Partners competing with partners for sales opportunities;
  4. Vendors redirecting partner-generated sales opportunities to preferred or larger partners; and
  5. Customers driving conflict between vendors and solution providers to gain concessions.

Conflict between vendors and partners over sales opportunities and accounts is a necessary asset to channel sales operations. In fact, conflict may be used to keep vendors honest with partners, and moreover, incent solution providers to perform better. However, conflict that is poorly managed or left untouched may lead to animosity among solution providers and partners, and in turn, decreased confidence in vendors, according to Lawrence M. Walsh, CEO of The 2112 Group and the study’s lead analyst.

“Channel conflict is a fact of life; what we wanted to quantify is the sources, causes and consequences of channel conflict between vendors and their solution provider partners,” Walsh told Channel Marketer Report. “Solution provider rate the state of channel conflict as moderate, but that’s a deceptive rating. The reality is vendors aren’t doing a good enough job regulating conflict, and that’s causing their partners to acquiesce to vendor conflict. The result is a dampening effect on channel productivity.”

Deal Registration’s Role In The Conflict Equation

In order to ensure an effective and fair channel, vendors utilize deal registration, which typically operates as an automated application in a partner portal. Solution providers then submit sales opportunities, securing exclusivity and price protection. This allows specific partners to have first rights to specific prospects and customers.

Although 41% of respondents indicated that their vendors would honor and protect their partners’ interests once an opportunity was registered and accepted, 33% of vendors said they rejected deal registrations, only to have their direct sales teams take over.

Regardless of deal registration inefficiencies, channel partners surveyed in the study gave the tactic a 6 out of 10 in overall effectiveness in reducing channel conflict. Yet vendors and suppliers utilize other strategies to protect partner opportunities, including: general rules of engagement; certifications; and tiered benefits based on performance, business planning and co-selling agreements. Of all options, solution providers rated deal registration the highest.

 Other topics discussed in the “2112 Channel Conflict 2012 Report” include:

·  The current rate of channel conflict; 
·  Account segmentation and channel separation;
·  Go-to-market models: Direct vs. Indirect;
·  Channel conflict sources and causes; 
·  Resolving conflict: Who gets it done;
·  Best practice: Establishing rules of engagement; and
·  Recommendations to prevent conflict.

“Channel conflict, in and of itself, is not a necessarily a bad thing,” Walsh explained. “But unchecked channel conflict and uneven application of rules of engagement will ultimately hurt the channel’s ability to act as a conduit of sales, customer services and innovation. Vendors need to do a better job of controlling channel conflict, while solution providers need to understand and work with vendors to avoid conflict in the first place.”

Click here to download a complimentary executive summary of the “2112 Channel Conflict 2012 Report,” or to purchase the complete study.



About Alicia Fiorletta

Alicia Fiorletta is Senior Editor for Channel Marketer Report. Working closely with industry analysts and experts, Alicia reports on the latest news, technologies, case studies and trends coming to forefront in the channel marketing world. With a focus on emerging marketing strategies, including social, mobile and content for demand, Alicia hones in on new ways for organizations to market to and through their partner networks. Through her work with G3 Communications, Alicia also acts as Associate Editor for Retail TouchPoints, a digital publishing network focused on the customer-facing area of the retail industry.

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