On Growth

Why the State of Vendor-Partner Relationships Is Good, But Not Great

In an informal survey, Mike tries to figure out what's causing the tension between software vendors and their partners -- and what they can do to alleviate it.

In the January edition of this column ("For Partners, the Cloud Keeps Getting Cloudier") I summarized some recent research that concluded, "The vast majority of channel partners are confused, disoriented and fearful about how cloud computing will impact their business." Of concern to the partner community, revealed in the research, is their belief that "they're not getting much help or guidance from their vendor partners."

Therein is the problem as we see it. Good enough will not be good enough for software vendors and their partners as they look to support each other and mutually benefit from the battles that lay ahead.

We wanted to find out just how widespread and legitimate these partner concerns were, so we conducted a brief, informal survey among IT services firms to get some idea of what's up.

This survey should be considered directional; a statistical purist would quibble about the size (38 respondents) and makeup of the responses (75 percent among companies $10 million or less, 25 percent among companies with more than $10 million), but it's very much in keeping with what other research reveals, and what we're experiencing in the partner community.

The highlights are:

  • 55 percent rate their relationships with their vendor as good, only 18 percent as excellent.

  • 55 percent say the support they're getting is "sufficient for our needs"; 26 percent say support is lacking; and only 8 percent say the support is "above and beyond the call."

  • Only 18 percent say their joint vendor/partner sales and marketing planning is conducted regularly and is mutually productive; 39 percent say they're marginally beneficial; and a whopping 42 percent say they're either just going through the motions or they're not beneficial at all. Ouch.

Specifically, some of the issues revolved around:

  • Vendor incentive programs: Only 8 percent concluded that their vendor program was very effective; 34 percent said adequate; 59 percent said either minimally effective or not effective at all.

  • Vendor lead-generation program: Again, only 8 percent rated this program very effective; 16 percent rated it adequate; and 76 percent said it was either minimally effective or not effective at all.

  • Because relationships are a two-way street, we asked how often partners registered their leads into the vendor's lead-tracking system:

Only 13 percent said they registered their leads all the time; 29 percent said most of the time; 34 percent said some of the time; and 24 percent said never.

Clearly there's some level of angst out there among partners -- notably the smaller partners -- which is what you might expect. It's probably not too far-fetched in the IT industry that the Pareto principle applies, in that 80 percent of vendor revenues come from 20 percent of the partners, or something close to that. The partners that do the most command the most attention and resources. It's an all-out, ferocious battle for corporate budgets and only getting more so. Vendors are looking for players.

So, the issue is what to do about it? What can and should the partner community do to enhance their relationship with their vendors? In a nutshell, vendors help those partners that help themselves. In other words, partners who position their companies for success. That means they invest in the business. They have a clear, well-defined position in the market they serve. They have a disciplined, aggressive sales and marketing apparatus. They deliver what they promise to their customers and their vendors. They wear their ambition on their sleeve. They're on the same page.

Finally, and probably most importantly, there's mutual respect and trust, which is the foundation for any relationship. Like most relationships this respect and trust has to be earned...on both sides. It starts with doing what I've outlined here.

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About the Author

Mike Harvath has spent his entire 30-year career advising partner companies on implementing winning growth strategies and facilitating mergers and acquisitions. As president and CEO of Revenue Rocket, he and his team have advised over 500 partner companies on reaching their growth goals.