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In today’s economic environment, times are perhaps nowhere tougher than they are for the channel: squeezed on one side by the customer’s need to cut costs, to win a better deal, and on the other by vendors who may also be reluctant to relinquish their margins.
While pricing pressures are expected to continue, a well-structured, strategic approach to doing business, which effectively deploys channel capabilities and focuses on the end customer, can help everyone to ride the storm.
Fifteen years ago, Alcatel, Nortel and Lucent ruled the telecommunications roost. Everyone in the channel worked with them. Because telecoms offerings were similar, and because there were no alternatives, they called the shots – both to the channel and to the end customer.
Fast forward to today: the situation is very different. Market choice being so much greater means that the days of the vendor one-stop-shop are effectively over. And today, most customers simply are not looking for one vendor, but instead look to a hybrid of best-of-breed technologies to cater to their specific networking infrastructure needs. The one place they can still legitimately find that is in the “infrastructure supermarket” afforded by the channel.
Hold onto that thought.
As the market has evolved, so must those that operate in it. Smart vendors have realised that, while selling direct may be suitable for certain vendors and markets, overall it is not a viable way to meet the complete infrastructure needs of the customer.
In the current economic climate the only efficient way for a vendor of complex business-to-business telecommunications solutions to interact with the end customer is by remaining focused on what they do best and engaging the channel’s expertise in providing the totality of the customers’ needs.
The alternative, trying to be all things to all people, dilutes a vendor’s expertise and sets them up in direct competition with the channel.
The idea of a approaching a reseller for a total network solution, as alluded to above, is not a new one. Barely a decade ago, channel partners sold primarily network services to large enterprises and network users. But today, networks are complicated enough that many smaller businesses need managed services to run them, and partners have had to learn to provide these to avoid missing out on potential business.
This has had ramifications on sales efficiency, since it is no longer possible simply to make a sale and then move on to the next customer. Conversely, this evolution opened the opportunity for repeat business and upselling, which has kept the relationship profitable for those willing to adapt.
The long-term dream for the channel has surely got to be to retain the brand they have created, with all its promise of quality and reliability, while building up as big a customer base as possible in a cost-effective manner.
No matter how broad/deep the partner experience base is, however, certain elements of a deal or contract can only be brought to the table by the vendor, meaning that the direct relationship between vendor and customer can never be fully erased. This means that striking the right balance is the trick.
“Balance” in this sense depends on many factors, from the industry the customer is in to the bespoke requirements of the specific customer in question. But when all is said and done, it is key to note that the customer eventually dictates where that balance must be to create an appealing solution. Historically, most channel sales models are simply not flexible enough to deal with this – even in times of economic certainty.
From the vendor’s point of view, a channel-centric model makes sense: if a salesman makes a deal on his own, all his time is tied up in managing the deal and subsequently servicing the customer to make sure installation and ongoing requirements are met. But if he has the channel supporting him, his time is freed up to enhance and expand relationships within the customer organisation to increase new business opportunities and to make more new sales calls and, which ultimately means more money for himself and for the partner.
True, margins may not be as big as with the direct sale, but the additional number of deals that can be made – both with new customers and through organic growth – more than make up for this. The channel partner can sweeten the deal through its knowledge of solutions and products that the vendor has limited expertise in, but which the channel is set up to manage efficiently and profitably.
Thus the customer benefits from finding a (channel) partner to meet all their needs, the vendor benefits from a more satisfied customer and more time to generate new sales, and the channel partner benefits from the original sale and the opportunity to up-sell other vendors’ solutions.
Exactly how much vendor involvement is needed in a deal is something that can only be judged on a case-by-case basis in close consultation with the channel partner and the customer, and that is really where the partner-specific, channel-centric sales model comes into play.
The high-touch salesperson’s job is to talk to all levels of the customer organisation, not just the networking or customer service manager. By doing this, he ensures that the customer’s business decision, not just the technology purchase, is effectively supported.
Salespeople are better able to understand political considerations, deal with these smartly, and to assess where and how support is necessary, all the while keeping communications between all parties open and clear to ensure a smooth installation, customer satisfaction and, through this, a long-lasting relationship of repeat business for all.
Turning a sales model on its head like this will be complicated, requiring constant training and fine-tuning, not to mention changes to service operations, marketing strategy and logistics: in short, the whole vendor organisation needs to change the way it lives and breathes.
The returns, however, more than justify the changes required. What the channel-centric model brings to the table above all else is flexibility – the ability to tailor each and every transaction to the bespoke needs of the end customer. This is, after all, what business is all about.
The channel-centric approach promotes increased deal sizes, repeat business and, moreover, increased customer satisfaction, and makes everyone in the deal chain more productive and agile (customer, channel and vendor), all the better to cope with the ever-evolving market.
Ultimately, channel centricity results in more opportunity for everyone.
Most vendors will never relinquish the ultimate ownership of customer satisfaction: if they are our solutions, the buck can and should always stop with us. What partner-specific, channel centricity means is that the partnership between vendor and channel becomes just that: a partnership. It means early involvement of all parties in a deal but equally long-term support and stability in the after-sales and ongoing sales relationship.
Meeting customer needs
It is an evolution of the ecosystem that brings the flexibility to meet the needs of each and every individual customer both now and in the future.
The customer is always right, and it is the companies that realise this and adapt to the new business reality that will steer their way through the current downturn to a stronger future. Together, we can truly work to “tune” the channel from top to bottom, gaining better reception – and creating better business for all.