Microsoft underlines the need for reseller IP innovation

Microsoft's channel chief has used his slot at its worldwide partner conference to underline the need for resellers to develop their own

Microsoft has outlined just what it feels makes a successful partner and has encouraged those listening at day three of its Worldwide Partner Conference to develop more of their own IP.

Echoing the themes that he shared with MicroScope last month the vendor's corporate vice president, Worldwide Partner Group at Microsoft Phil Sorgen, said that it had called on IDC to help it work out just what was making its top partners so successful, so it could then share those winning ingredients with more partners.

"With the help of IDC we looked across out partner eco system and grouped them into two buckets. The first were doing more than 50% of their business in the cloud and the others were doing less than 50%. Those doing more than 50% were acquiring revenue at 1.4 times and 1.5 times more gross profit growth," said Sorgen.

He added that those that were at the top of the tree were also seeing their valuations increasing with a five times EBIDTA value versus two to four for those not at the forefront of the market.

Sorgen said that a closer analysis of the most successful partners revealed four characteristics that stood out: IP differentiation, digital marketing, customer acquisition and retention strategies and adjustment in internal measurements.

He said there were more partners developing their own IP and finding that there were benefits from providing something that customers would not be able to find anywhere else.

Sorgen pointed to IP that could be developed around cloud services, managed services or elsewhere in a business stressing that there was not just a single approach that the channel could take.

"We see today's successful partners building an annuity business based on multi-year contracts that is rooted in their own first-party IP," he added "It sets them apart from their competitors and it is a deep driver of profitability."

When it came to digital marketing he advised partners to become more digitally savvy using social media and other platforms to reach out to customers that might not be reached through traditional means.

Echoing some of the big themes in the market around the changing customer buying patterns and the growth in power of the heads of lines of business he said that resellers had to take advantage of all the tools available to get in front of an audience.

Some of the traditional buying intentions research that was happening on the web was now going on around social media sites and those could not be ignored.

"You have to move customers from marketing to web interest, to capturing the lead to quick and immediate connection to capture [the deal]," he said that as partners sold differently they needed to also have a different approach to customer acquisition and retention.

"The greatest value in cloud economics is the life time value of the customers that you secure and retention is critical," he added "Everyone of the partners that we studied had great customer retention strategies."

The final piece of the jigsaw was around moving internal measurement and a major piece was changing the compensation models to support a managed services approach.

"If your leadership and your front line sellers are not compensated for this opportunity, it is quite likely that your transformation will stall," he warned partners.

"When you build first party IP…establish a digital marketing strategy that exposes you to more customers and different buyers...when you have tuned your customer retention strategy and attuned your internal measurement you have a great opportunity for success." he said.

To underline its commitment Microsoft is providing its Cloud SureStep tool that will help partners identify where they are in the move to transforming  the business to be based on cloud/managed services and give advice on what's needed to take the next steps.

The vendor also used WPC as an opportunity to talk about making changes to its education programme to make sure that partners looking to get skilled up could do so more easily.

One of the changes involved the introduction of 'skills badges', which were based on a continual education approach rather than the more static certifications that sometimes did not keep up with the market.

Microsoft also has plans to practice what it preaches with investments in its own marketing strategy to help get the message in front of more customers and to share best practice and reseller success stories across the eco system.

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