Channel partners are central to the success of high-tech vendors, helping to generate more than a trillion dollars in annual sales.
To help maximize partner relationships, and ensure partners remain loyal, vendors are implementing voice of partner (VoP) programs, which help companies collect detailed data and feedback from channel partners.
However, a new study from global sales and marketing consulting firm ZS Associates indicates that despite having these programs in place, many vendors are struggling to keep pace with emerging partner business models.
“IT vendor-partner relationships prosper when they both communicate openly with each other,” said Erik Long, Principal at ZS Associates, in an interview with Channel Marketer Report. “That’s why many vendors use formal VoP programs as a part of their strategies. These programs support effective communication between channel partners and vendors and gather insights on partners’ needs, perceptions and preferences.”
Based on a survey of channel partners regarding 492 vendor-partner relationships, 64% of traditional VARs and MSPs are satisfied with how their vendors gather and react to feedback. However, less than half (45%) of VARs in the cloud services field are equally satisfied. Most ISVs also were dissatisfied with their experiences with VoP programs. Most did not believe their vendors valued feedback, addressed top concerns or kept their interests in mind while revising channel programs.
Traditional hardware channel partners also were not completely satisfied (47%) with the VoP programs they participated in. Even while grading “best-in-class” hardware vendors, only half of respondents said their “best” vendor “considers my input and takes steps to address my concerns.”
In the below Q&A, Long shares additional takeaways and best practices based on survey results:
Channel Marketer Report (CMR): Why do you believe communication is such a challenge in the channel?
Long: We’ve studied customer engagement in both direct and indirect business-to-business selling environments for more than 10 years in industries such as high-tech, financial services, transportation and industrial goods. We consistently see that manufacturers lean on their channel partners for business success. And nowhere is this truer than in the high-tech industry, where two thirds of a vendor’s sales flow through indirect channels.
Our recent study of channel partners for both hardware and software vendors found that not all channel partners feel vendors understand or listen to their concerns. This is because recent innovations in cloud computing, Big Data analytics, social media and mobility are rapidly transforming the IT channel. As a result, channel partners’ needs continue to evolve — and vendors have a hard time keeping up.
CMR: What components and/or factors are critical to channel program effectiveness?
Long: In our work with channel programs across industries, we’ve noticed that it is extremely important to take a data-driven approach to channel partner management. For companies with dozens, hundreds or even thousands of partners, investing in the right programs to drive their performance is critical.
“Channel chiefs” realize they can no longer manage their indirect channels based on anecdotal information and rules of thumb. They need a data-driven approach that leverages analytics to answer tough questions:
The potential of a “channel Big Data” approach isn’t only about adopting more technology or new processes — it’s about cultivating a new set of skills and capabilities within channel operations. Companies must commit to a new competency model — and recruit and train channel operations professionals suited to analytical thinking and decision-making.
The payoff of this transition and advancing channel operations capabilities is a significant competitive edge. Companies can fine-tune their channel programs to drive increased ROI and share these insights to help partners grow their businesses. By paving the way for partners to generate more business, companies boost their top line while strengthening and cementing their partner relationships.
CMR: Based on results from the study, what are a few key best practices that vendors should take with them regarding their partner programs?
Based on our study and experience with technology vendors’ VoP programs, we don’t see a direct solution for all types of vendor communication. Still, we identify the following best practices to improve partner communication and understanding:
1. Ask a variety of different questions for each partner type
There is an explanation in the questions vendors ask different partner types. While vendors query traditional value-added resellers, managed service providers and independent software vendors on operational, support and training matters, we see that vendors ask cloud VARs for feedback on financial topics, including incentives, marketing funds and pricing. Though vendors know that cloud VARs have different needs — and try to determine how to best support these new business models — it’s not clear if they ask the right questions.
2. Allow the partner to decide how it would like feedback collected
Vendors should use a vast range of listening channels to collect partner feedback. Some may ask questions through surveys and customer advisory councils and observe feedback and sentiment on social media, but these same vendors do not establish a two-way dialogue with their partners.
A rightly managed interactive listening program consists of a community of partners asking questions and providing unsolicited feedback — and vendors just letting the conversation flow. This type of discussion allows the vendor and channel partner to both benefit.
3. Share the results
It’s not enough for vendors to ask channel partners for feedback – they also need to share the results. This is not only fair, but also highlights the importance of the VoP program and demonstrates that vendors value channel partner insights.
Vendors should share feedback that reveals both strengths and weaknesses with channel partners. They can then show ways they use this feedback to change how they manage their partners. Finally, different channel management mechanisms can meet each channel partners’ needs.
Click here to access the executive summary from the study.