Barely a month into 2018, Jay McBain, Forresters’ Principal Analyst, Global Channels, predicted that vendors would rethink their long-tail partner strategies this year and become more comfortable with the casual but generally profitable relationships they have with them.
Rather than try to encourage less-engaged partners to rise up in their ranking or take the more drastic action of eliminating ties with them completely, McBain wrote that more vendors are beginning to embrace the arm’s-length relationships many long-tail partners prefer.
Getting comfortable with the fact some partners “just aren’t that into you,” said McBain in a recent interview with CMR, hasn’t been easy for some vendors. “There were always the executives that said, ‘Let’s go to the partners that are active and growing with us. Let’s focus on a narrow set of partners at the top and cut off these long-tail partners. If they’re not that into us, well, let’s cut them off.’”
When given the opportunity to talk executives off that ledge, McBain said he would explain that there was “millions of dollars down this long tail, and in many cases, none of that business was special bid, so it all went through at full list price and the partners that executed those long tail deals didn’t collect the same amount of incentives either frontend margin, backend margin, et cetera.”
If companies could figure out a way to manage those long-tail partners even more efficiently – don’t assign a channel account manager, limit access to a rich set of expensive resources, and make all support flexible, automated, and self-service — they could rely on that annual revenue “at high profits with no touching and little cost.”
McBain believes that a growing number of partners are perfectly comfortable with that relationship. For example, shadow channel partners – cloud infrastructure players, industry firms, professional services and management consultants, ISVs, born-in-the-cloud organizations, and startups – might prefer to participate in less rigorous channel programs. “You may just be a bolt-on every now and then, but you might have 100% wallet share and mind share with these partners,” McBain said.
Low-touch relationships with these partners are the rule, McBain explained. “They don’t pay that much attention. They’re not actively coming to your portal. They’re probably not subscribing to your webinars, and podcasts, and newsletters, and all the other things you do to communicate with your core partners.”
What they do want, said McBain, is a program that’s flexible and automated. “They don’t want a bunch of people in the way every time they sell your product. Instead. make it as easy as possible for them to either resell or refer your product.”
Jamie Mendez, director, channel marketing at IBM, agreed that making it easy for long-tail partners to engage with vendors is vital. IBM is “focused on is investing in self-service,” she explained, to engage with the growing number of digitally-savvy partners. “Their expectation is they’re going to engage with you digitally,” she explained. “If you’re not up to par digitally, you’re not someone they want to work with anyway.”
In addition to investing in a self-service model, IBM is providing long-tail partners with greater access to its technology “so they can really experience IBM without us being intrusive,” said Mendez. “Our whole dynamic of marketing and selling has changed from us targeting, going, and finding the partners. We want to put ourselves out there so they can find us.”
While converting long-tail partners into top performers is not a priority, said Mendez, she does see the potential for some of them to blossom into larger revenue drivers. “I do believe that from this community is going to emerge the next big sellers, the next big partners who influence the way the channel works,” she said. “The long tail represents the opportunity or the development ground for the next big set of guys who are going to change the way we do things.”
Randy Sasaki, channel marketing consultant at A Fluent Vision, which offers specialized resources to recruit, on-board, nurture, and grow strategic channel partners, agrees that the majority of a vendor’s long-tail partners are not going to evolve into top performers. But what companies need to recognize is that their long-tail partners might be making big contributions to the bottom line of other businesses, maybe their competitors. “As some point, you have to consider building an engagement model that wins the mind share of more partners to move them away from you competitor.”
Sasaki equates long-tail partner programs with professional baseball’s minor leagues. “The job in baseball is take those Double-A guys, find that diamond-in-the-rough and move them to Triple-A. Eventually, some of them get to the Majors.”
While the rule that 20% of most vendors’ partners drive 80% of their indirect sales will persist, “the more we go through digital transformation, ‘value partners’ – many of them generally in the long tail – will emerge as the catalyst for transformation and become a critical component of any vendor’s growth strategy,” said Deb Broderson, CMO at Perks Worldwide. “As the pace of change from digital transformation increases exponentially, traditional notions of a channel ecosystem may need to be redefined and, in many cases, flipped on their head.”
“Attributes that used to be important in ranking partners (think volume) are fading in favor of more important attributes (think value),” she added. As a result, channel leaders will have to consider these disrupting trends when designing and structuring partner programs — including incentive and loyalty programs — to engage the right partner types.
McBain cautions that vendors can easily jeopardize the arm’s-length relationship long-tail partners prefer. For example, vendors need to be careful about creating programs that limit significant services only to higher-tier partners. Long-tail partners “do need the full round of services to win the deal, much like a gold partner needs that kind of services to win the deal,” said McBain. “But they just don’t need them that often, so you’ve got to set it up in a very cost-effective and predictive way.”
The next opportunity “may be months, quarters or years until another comes back again,” added McBain. “But that’s okay because during that time, that partner is zero cost to you. You keep sending out your digital program information, but you’re not heavily covering them through those down periods.”
Lisa Masiello, CMO and founder of TECHmarc Lab, a B2B technology marketing firm, cautions against relying too much on program automation. “There is an ebb and flow to all sales cycles and different ways that channel partners do business,” she explained. “If the vendor does not investigate how the channel partner does business – if their business is seasonal, if they focus on non-technical buyers rather than a company’s CIO, etc. – they risk missing the opportunity to be involved in the sales process when it does appear.”
Creating marketing materials, placing them in the partner portal and walking away, hoping that partners will find the materials and use them on their own, can be risky, she said. “Nothing will replace the long-term personal relationship that any vendor should have with their channel partners.”
Sasaki advises that companies to be careful in their assumptions about how little contact long-tail partners might appreciate. He cited a conversation with one partner who explained that vendors should rethink how they engage with long-tail partners. “We don’t do the same revenue that the big partners do and we probably never will,” he told Sasaki. “But if you look at the things that we do, we deserve the same amount of attention.”
“They’re still getting certifications. They’re still doing marketing. They’re still attending summits,” said Sasaki. As the partner explained to him, “Revenue is not the only measurement for our commitment or our loyalty to a manufacturer.”