Joint Marketing Programs can Help ISVs Jump Start Channel Sales Programs

Early stage ISVs can find themselves competing against systems integrators who may be prospects for channel partner relationships. It takes no more than a couple of bruising experiences to sour a potential partner. Joint marketing opportunities can present a more favorable channel partner introduction option. Product marketing should pursue joint marketing opportunities with complementary businesses that already have a distribution channel in place.

One of our clients recently landed an opportunity like this one. During the meeting, the other party expressed some interest in actually reselling our client’s products. It makes sense to keep the two conversations separate. Blurry lines between topics in this type of discussion can lead to lost opportunity and lost revenue.

How best to handle a Joint Marketing discussion with channel building potential?
If your business lacks expertise managing channel partners, you should defer to your joint marketing partner on how best to introduce your product to their channel partners. They have already gone through all of the turf wars associated with migrating competitive relationships with integrators into complementary ones. They will know far better how to handle this opportunity for you.

But what about the syndication opportunity?
Keep in mind that syndication is a completely separate subject from joint marketing, or how to use someone else’s sales channel to get wider distribution for your product. Your joint marketing partner may be introducing the topic to try to blur the lines, to establish a favorable negotiating position. We think the best response to a syndication opportunity is to address it only after the actual joint marketing opportunity has been thoroughly discussed and assessed for its value.

In the next post to this blog we will talk further about syndication opportunities.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


ISVs do Well to Nurture Productive Partnership Relationships

Partner relationships broadly breakdown into two types:

  • an affiliation that benefits both barties or
  • an affiliation that serves a purpose, usually with regard to fulfillment, for both parties

ISVs should appropriately respond to either opportunity.

An Affiliation that benefits both parties
In this scenario an ISV produces products or services, which are promoted, directly, to an end customer by a channel partner. When these scenarios bubble up, ISVs should look to nurture them to capture what will likely amount to a much lower cost of product promotion. Usually this type of partner has a clear understanding of how products or services fit into a larger offer, saving an ISV the time and effort required to build a compelling case for target customers to implement products or services. The tacit recommendation represented by the partner’s effort produces a higher level of positive momentum for the prospect. The result is a shorter sales cycle for this type of opportunity.

An Affiliation that Serves a Purpose, Usually with Regard to Fulfillment, for Both Parties
When an end customer is required by procurement policy to go out to bid on any/all technology purchases, an ISV needs to work with whomever lands an order. Under no circumstances does it make sense to try to impede this process. The best way to look at an order of this type is that, without the partner who landed the order, there would be no sale to the end customer. It makes sense to have a pricing policy in place prior to contending for this type of business. This type of partner rarely expects a substantial margin. ISVs should be careful not to extend one.

Sales personnel at ISVs should have experience working with channel partners. Inexperienced personnel can make costly mistakes with either type of partner. Where management is not clear as to how to handle partners it makes sense to proceed very slowly on these opportunities. Better to be guilty of taking forever to finalize a sale, than to inadvertently make an obstacle out of a firm that can otherwise be a productive partner.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


A Transformed Enterprise IT Buyer has Transformed the Business Model of the Services Companies that Provide Support, and More

Much has been written over the last several years about the characteristics of a new enterprise IT buyer for 2013. We have written about this new buyer in earlier posts to this blog, for example in a post on the possible Obsolescence of Outside Software Sales Teams [as a result of] a Combination of Factors.

The bottom line on this new buyer is that she does almost all of the work required to research, specify, and identify likely solutions for “bleeding wounds” online before ever lifting a telephone to call on a sales organization.

Further, she is likely to be a survivor of a number of failed IT projects. We have written on this topic of failed IT projects earlier in this blog in a post titled Buyer Skepticism must be an Underlying Assumption for Enterprise IT Sales in 2012. This experience, where lots of money was expended on IT projects that failed to deliver a return on investment (ROI), as anticipated, has fed the enterprise need for so-called “portfolio management,” which amounts to an activity undertaken to ensure that, for future projects, all efforts will be made to capture as much of anticipated ROI as possible.

Our recent interactions with the services companies that do business with this new enterprise IT buyer, meaning the systems integration businesses, development shops, and other consulting and even advisory firms, indicate that they, too, have been transformed to keep up with the times, and in a manner that increases the difficulty that most ISVs will likely face should these ISVs opt to pursue channel sales strategies targeting these services businesses.

Specifically, we think that enterprise IT market demand for turnkey systems integration work is a mere shadow of earlier years. The reason for this decline in demand is that enterprise IT organizations, generally, are shouldering more of the responsibility for all of the key aspects, meaning the actual answers to “who/where/how/why” questions for all implementations of solutions for core requirements.

Enterprise IT may not provide the actual human resources required to implement core projects, but they do, with increasing frequency, specifically direct all aspects of the implementation. Therefore, in this new world, the type of products that we discussed in yesterday’s post to this blog, specifically, products on the periphery of core demand, which, nevertheless, can play an important role in an integrated solution, will likely have to look to joint marketing opportunities with vendors of core solutions if they are to capture the attention of channel partners.

In the next post in this series we will look at how this constrained atmosphere necessitates a different set of themes for marketing communications efforts for these peripheral products in search of channel partners.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved


Important Points for Enterprise IT ISVs to Address as They Consider Implementing a Channel Sales Strategy

There are many reasons for enterprise IT ISVs to consider implementing a channel sales strategy for products. In our experience the most prominent of these are:

  • an ISV is supported by too few internal sales personnel, or
  • a software product requires a comparatively complex installation, which is usually accomplished with some significant amount of customer-specific customization, or
  • a software product (usually a commodity) is targeted to a market where customers generally work with a select set of prime vendors and have little to no motivation to change their buying preferences

Another very important reason for enterprise IT ISVs to explore the opportunity presented by a channel sales strategy stems from the distance between a software product’s typical application and the core driver of market interest.

It is worth taking a few words to explain this last notion. Consider that products designed to satisfy peripheral market needs are, necessarily, located at a distance from the core market driver. Examples of these software products on the periphery include, but are certainly not limited to, applications designed to enable wider use of specific features of the core application. These products are usually captive to the core application and intended to meet the needs of specific market niches.

If one considers Microsoft® SharePoint® as a core solution designed to address a need for enterprise content management, then a product like the Outlook to SharePoint connector offered by Colligo Networks can be seen as a means of enabling users to extract better performance from SharePoint, itself. We note that Colligo Networks’ solution provides SharePoint users with a seamless method of storing email data to document libraries, in other words the system works without any need for human intervention, thereby ensuring that a substantial proportion of documents sent by email, as well as email messages, themselves, will be correctly stored in SharePoint document libraries.

While gaining assurance that most email messaging is recorded in SharePoint document libraries may not be critically important to lots of businesses, for those businesses operating in highly regulated industries, where adhering to compliance regulations is an ongoing imperative, gaining such assurance is, in fact, very valuable, and, more often than not, worth the cost of acquiring a solution like the one offered by Colligo Networks.

In our experience, products positioned at a distance from core market drivers, which, nevertheless, can be used, like Colligo’s Outlook to SharePoint connector, to deliver a tangibly more valuable solution to users, are particularly well positioned for a channel sales strategy. After all, for a range of service providers, including businesses offering users system integration, or custom development, it makes sense to include these products in project implementation plans for the strategic role they play in ensuring that the end customer receives optimum value.

Therefore, one could argue that the task of attracting channel partners, for peripheral products correctly positioned, should be a rather easy one for sales. But, as we will show in the next post to this blog, in 2013 some other factors are at work that act as repellents, regardless of how successful a product market message may be.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved


Does a Channel Sales Strategy Still Make Sense for Enterprise IT ISVs?

We think that the recent, well publicized pivot on the part of Microsoft® Corporation with regard to its channel strategy should give enterprise IT ISVs reason to carefully review their assumptions about where and how it makes sense to build a channel/partner component for marketing and sales strategies.

For the last 10 or more years Microsoft has represented one of the last technology vendors to successfully utilize a broad channel strategy to add substantial revenue to enterprise IT sales. Given much of the recent press about the debut of the Surface tablet, we can’t help but conclude that this channel revenue has started to drop off and, perhaps, precipitously. After all, why else would Microsoft proceed on a very public about face on very high level OEM partners?

But the changes in Microsoft’s partner strategy are not simply confined to the Surface hardware tablet. If one considers how Visual Studio is now provisioned to developers who need to take advantage of a free-of-charge acquisition option, one notes, as pointed out by the Ars Technica blog site, that acquiring a free-of-charge version of Visual Studio is strictly limited to Microsoft Partners developing Windows 8 Metro apps. Evidently the value of further application development for Windows 7, XP, etc no longer delivers the benefits, for Microsoft, as it did in the past, else why restrict access to this free-of-charge development tool?

Enterprise IT ISVs, especially those with SaaS offerings, may not need channel partners at all. In fact, it may very well make sense to opt to develop SaaS products as a means of retaining margin that would otherwise have to be paid out to channel partners. Admittedly, many enterprise IT ISVs with SaaS offerings have also concluded that it makes sense to entirely dispense with sales personnel, altogether. For the record, we don’t see how a viable business strategy can, in fact, be created without a sales component. We had first hand experience working with one of these businesses over the last couple of years. We can attest that they successfully signed a very large customer as a subscriber to their offer, but we think they would be better off with a basket of customers of similar size, which they do not have. Bottom line: they need a sales team to put together a group of customers, which will provide them with insulation from the shock of losing one of these essential revenue sources.

If you are mulling over a decision about the type of distribution strategy that will make the most sense for your enterprise IT ISV, we think you need to carefully consider the changes implicit in Microsoft’s recent string of decisions. We can certainly help you frame a viable opinion on this question. You can contact us online or telephone us at +1 631-673-2929. The first 15 mins of any consultation is always on us.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved


Leverage Operational Incentives to Motivate Channel Partners to Work for Your Business Objectives

In the 1980s and 1990s it was en vogue to implement enterprise sales strategies on a “win win” basis with channel partners. This strategy was built on the premise that working with channel partners to achieve important, but differing objectives was a highly valued endeavor and, in fact, the best way to move solution sales forward to its next level of enterprise sales effectiveness within a channel partner model.

In 2011 this strategy of mutual attainment of objectives is passé. Now what matters is winning the business by delivering precisely what the channel partner needs–end of subject. Most products and services vendors have to make do with whatever they can get out of the sale, and make do without complaint. Of course there are astute marketers who, despite market conditions, still manage to sell products and services their way, thereby achieving their objectives, but they are clearly in the minority.

What kind of effect has this market shift had on Channel Sales? The Marketing Leadership Council of the Corporate Executive Board published a piece on November 22, 2011 by Shelley West on this topic on their “Wide Angle” Blog, Give Your Channel Partners the Right Incentives. Ms. West astutely points out that financial incentives simply based on purchasing volume don’t work: “While simple to administer and easy to track, volume-based incentives often don’t deliver what we want them to.” Ms. West goes on to refer to a complex incentive program which, she contends, empowers the manufacturer/services provider to directly manage four key points with regard to channel partner performance, including “Core Product Sales”, “Services Solutions Integration”, “Sales Growth” and “Partner Investment in Relationship.”

All well and good, but I have to ask the question, is there a real partner in Ms. West’s model, or are we providing incentives to prod a reluctant business into a partnership? I suspect the latter. I would rather see partnerships for my clients orchestrated around plain and simple operational assumptions (as opposed to financial assumptions), including:

  • We built it, your selling it
  • You manage the end customers, we have the right to influence them, meet with them periodically, but with you tagging along
  • We create our brand, you receive sales leads

Financial incentives ought to be derived from margin. End of story.

The pollution in today’s channel partner programs, as I see it, stems, in part, from an effort on the part of some manufacturers and service providers to maintain direct selling efforts to the end customer while ostensibly operating a channel program. This pollution makes of the channel partner a rather useless component who will have to be cajoled and pampered into performing some type of service. I would rather remove the pollution and then address channel by crafting operating procedures that make sense for partners and manufacturers and service providers.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


Proceed on Channel Sales Strategies with Realistic Expectations of Value Add

It makes sense to provide leads to channel partners who can be counted on to follow up on leads. This assumption may seem costly, but it makes sense. Here’s why: One of the key value adds for channel partners is their position with regard to procurement for major accounts within a geographically local area. The days are long gone for most major accounts as to doing business with just anybody, let alone a company that is largely under the radar. The probable answer on this one is a very likely “no thanks.” So what’s a poor under the radar company with a channel strategy to do to get a critical foot in the door at that behemoth business down the street? Pass the ball to the channel partner on your team who is listed with procurement and fast track that order along your sales cycle.

Try this strategy and you’ll probably like it. Further, don’t be fussy about what constitutes an acceptable follow up on a lead. In some cases it may be no more than pushing the order through procurement or merely catching it when procurement goes out to the roster of approved vendors to see who can fill the order. Be happy that you had a mitt out there to catch the order and don’t complain.

All of the above is not to say that channel partners will not add value to sales development efforts. Rather, I am pointing out these factors to help you expand your concept of what actually amounts to value add to include just catching an order coming out of procurement. I have literally worked with clients who lacked the public financial credibility to pass a procurement review. Without a channel, there was no recourse but to look to wealthy partners to collect the order, else the business would have been lost altogether.

Of course there will be certainly channel partners who can be relied upon to make tons of effort to promote your product with each and every lead that you bequeath upon them, but be wary. A partner may make that effort to crack into a top account riding along your lead. I applaud a business that will go an extra mile to bring my product home to a new account. But I would rather stake my chips on a partner who is already a prime vendor to the prospect.

In sum, managing channel requires a certain finesse and certainly does not lend itself, at the onset of a channel program, to rigid policies and guidelines. Maintain flexibility to win at this game.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved


Selling Products & Services for Enterprise Business Through Partners

A method can be used to mitigate some of the difficulties related to the complex sale for enterprise business. Specifically, enlist the assistance of an intermediary who is already entrenched within the prospect business. Opting for a channel sales strategy should be a natural decision where some facts have been determined through prospecting calls or visit with the prospect:

  • Products and services are purchased by a central procurement organization
  • Central procurement maintains an approved vendor list and
  • There is either no opportunity for your business to be added to the approved vendor list (they are no longer “taking applications”) or
  • Your contact lacks the authority to purchase in a manner but through the central procurement organization

If the above factors are in place then you have no choice but to work through one of the approved vendors. This necessity is not necessarily a negative. Choose a partner who is not an “order taker,” but a business with complementary offerings who can introduce your product or service to other prospects. This type of partner typically is not after a discount on your product; rather, the partner has a relationship with the prospect that will be benefited through provisioning products like yours. Of most importance, your partner, an approved vendor, is already a trusted resource for the prospect. Leverage that familiarity to cut through gobs of time that you would otherwise have to spend building trust with your contact, his/her management, etc as you schedule meeting after meeting in an effort to push the sale forward.

Neither does including partners within the complex sale strategy remove the opportunity of maintaining a national sales effort of your own. I have substantial experience working with businesses where it made sense to simultaneously operate channel sales and national sales efforts. Invariably these two teams of ambitious sales people would collide within prospects, but our solution was to provide a clear incentive to our national sales teams to defer to partners where possible. In fact, we utilized a lead generation system of delivering these national opportunities to motivate partners to allocate substantial attention to us. We also experienced strong cash flow as these “approved vendors” fast tracked our sale through the procurement organization.

Where products or services are built for the enterprise computing market–meaning personal computers, local networks and shared access to larger computing systems (mainframes, etc), it is a pure natural to leverage a channel sales strategy, which has always been a familiar characteristic of such markets. Use the channel to your advantage.

© IMB Enterprises, Inc. & Ira Michael Blonder, 2011 All Rights Reserved