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Interviewing Software & IT Leaders
Channels are a long-term commitment... a partnership marriage! Not everybody survives the post-Honeymoon period.
Ken Beam is an IT Strategic Alliances Consulting and Business Development Specialist, with 27 years in IT Industry and channel management positions for Oracle, Baan (now owned by Infor Global Solutions), Intergraph, Sun Microsystems, GE Access.
Ken is also president and founder of The VAR-City - a Channel Sales development, management and consulting company for the IT industry.
Delia Ene: You've been in the IT channel management business for a long time now. What has changed and what is more or less constant in this line of business?
Ken Beam: Let me start with the Channel constants and then we'll circle back to the changes.
What I mean by that is offering something the other guy can't offer and that something must be of importance to the buying decision maker. It may be a team of specialists who are trained and certified to address a unique requirement or circumstance; it may be owning the exclusive sales and distribution rights for an absolutely necessary product. More frequently it's somewhere in between.
Resellers, VARs, Systems Integrators, whatever handle you apply, have limited resources and are only looking for new products that do not cannibalize sales from existing products (a no-win zero sum game) and products that can be a catalyst for greater growth within their existing customer base and one that allows them to extend their established expertise into new and incremental business opportunities. It's also worth a couple of bonus points to you if your product compliments another high revenue product they currently offer.
Delia Ene: When is a software company ready to embark on indirect sales? I know you've contributed to a very useful Channel Readiness Quiz by Bruce Hadley (part 1 and 2). Is there a most essential requirement that no channel program should be initiated without?
Ken Beam: That quiz, even though a bit outdated, is still a good indicator of just how Channel worthy-ready you and your organization are. The included self-scoring is also a good way to identify (in) which areas you might be the weakest and how important those areas are in the big picture. Some are easily handled with minor modifications and others are, frankly, deal ending.
What I typically find is that the readiness factor is less about the product than it is about the people. Too many go into Channel sales believing that they're ready; but in fact they really are not. Their expectations regarding time to profitability, infrastructure overhead, their product's actual appeal to the reseller community, their allocated budget and so much more are completely out of whack and often self-deluding.
Delia Ene: I'm a channel ready ISV. Where and how do I start with my partner program to make sure I get it right?
Ken Beam: I'm going to assume that by "channel ready" you've at least done the basics. You've confirmed that your product meets the price point/services/sales cycle litmus test. Meaning that there is a clear and reasonable Business Value Proposition (BVP), remember that? Confirming these things are your Step # First.
You've identified your product's strengths and the "ideal partner profile" matching these strengths. And, you've identified your partner program segmentation - sales, consultants, developers, sales influencers, agents, affiliates etc.
Delia Ene: You are preparing a seminar with Software CEO on Navigating the Channel - How to on-board new partners for maximum performance, and faster cash results. Particularly when things are not smooth, what is best to do: on-board new partners or concentrate on improving the relationship with existing ones (something like file for divorce & re-start dating or go to marriage counseling)? How can you tell that existing partners are as good as it gets no matter how much effort you're putting into the relationship before you exhaust your resources?
Ken Beam: In this case I don't find the options mutually exclusive. An individual partner matter should be treated on a case-by-case basis with the firm understanding that if the partnership is not working out for one member then it's also not good for the other.
In the same way that I work through the reasonable expectation factors with my clients before giving Thumbs up on going forward with a Channel, I do the same with new potential partners before offering them an agreement to sign.
New partners can be qualified in the recruiting cycle in the same way that a prospect customer is qualified in or out during the sales cycle. The senior sales person knows when it's time to let go and move on to the next qualified target. The channel manager assigned to bringing new partners on board should do the same.
Delia Ene: Establishing a sales channel abroad - how much more difficult than expanding on the domestic market? Let's take the U.S. market as an example. Any useful pointers?
Ken Beam: It's tough, it's very tough. In addition to the usual establishing a new channel slew of issues we regularly face, we have now piled on more potential partnerships concerns for resellers and, by transference, any preferences or dissuasions their customers may also have.
Resellers are very sensitive to carrying products that, for what ever reason, may have some difficulty being accepted by their customers. For example, if a major software company is under investigation for accounting practices and there's even a hint of this interfering with their ability to deliver product or support that would be a problem for the customer buyer and, in turn, resellers who carry the product. This is an exaggerated example, but the reason for push-back does not matter, if there is push-back.
You will find online retailers like Programmers Paradise and others, but they are primarily order takers and charge a hefty amount for a variety of marketing campaigns that run blast emails into their customer base or give you a more visible position on their website under feature products.
Delia Ene: How can you define in one paragraph Efficient Channel Management?
Ken Beam: It's all about execution and follow through. Expect your partners to be spot-on responsive and by example you will be too. If the partner is not playing by the rules or they are becoming a disruption find gentle ways to remind them that being a partner is a privilege not a right. Resolve channel conflict issues on the spot - do not let them linger or fester. Take excellent care of your good partners and don't hesitate to show problem partners the exit.
Delia Ene: Thank you, Ken, for taking the time to talk to us.
Don't forget, on April 16th Ken Beam is holding a seminar on How to on-board new partners for maximum performance, and faster cash results and has generously offered a 40% discount to Avangate Digest readers - contact him directly if you're interested.
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