Former Microsoft Channel Exec Blogs on Dangers of Enterprise Focus

Ross Brown has been out of Microsoft for about a year. He marked that anniversary this week with a blog entry about pitfalls in channel sales that's interesting in light of the senior channel role he held in Redmond.

Brown now works at The Spur Group, a consultancy based a block away from the Microsoft campus in Redmond. When he was at Microsoft he managed incentives, among other things, as the vice president of Worldwide Partner Strategy.

The blog entry is called "Sand, Rocks, and Boulders: Is your focus on the enterprise hindering your revenue growth?" In his metaphor, he categorizes technology sales as sand, the run-rate of reorder business; rocks, channel-led projects that are departmental wins; and boulders, the large, high-profile enterprise deals.

What Brown is saying, without mentioning Microsoft by name, echoes what many non-enterprise partners have been arguing for a few years: The corporate culture at Microsoft has clamped down on expenses at every turn, especially investments and incentives that would influence revenues generated by smaller partners.

"A 1 ton boulder weighs as much as one ton of sand, and both weigh the same as a ton of rocks. Revenue is similar -- $1 million from small accounts, transacted efficiently, can be a better business than a $1m deal in an enterprise and similarly 10 $100k sized deals may be the best business for a technology company," Brown writes.

Describing companies' "almost genetic drive" toward focusing on enterprise customers, Brown outlines two common pitfalls in the approach.

One comes from retooling the sales force to capture enterprise deals. "The urgency to gain traction in the enterprise, the culture of direct account control with enterprise sellers and the external and internal focus on the big 'named' deals drive attention, often creating active conflict with the channels that created the opportunity in the enterprise or creating a scenario of 'benign neglect' where investments shift rapidly to the enterprise customer segment and away from channels and renewals," Brown writes.

Focusing too much on enterprise sales can also have pernicious effects in the SMB sector, Brown argues: "Many SMB vendors fall into the trap of imitating boulders -- they're still sand, just packed into a boulder shape -- by working only with distribution or internet retailers who do volume as a proxy for the smaller reseller and small business customers."

Brown's blog entry provides a valuable framework for analyzing any vendor's channel approach (although his recent experience makes it especially relevant to Microsoft). We'll be keeping an eye on his blog in the future.

Posted by Scott Bekker on September 18, 2013