In the early stages of a company’s existence, recruiting efforts often concentrate more on the quantity than on the quality of channel partners. Eventually, though, quality has to come to the front of the line. Analyses of the contribution of each channel partner tend to show that a 90/10 rule applies. In other words, 90 percent of the revenue is generated by 10 percent of your business partners.
To encourage great VARs and (potentially) motivate poor performers, it is a common practice to establish three or more levels of partners, as defined by revenue thresholds. The designations platinum, gold, and silver have become standard within the technology arena. The higher the designation, the better the treatment, which may include rebates, cooperative marketing funds, higher discounting level, more favorable payment terms, earliest access to new offerings, and so on. Many vendors using indirect channels realize that they could improve their bottom lines if they were able to focus on top-producing partners. Attempting to pare the list can be a delicate situation, though, especially if an underperforming partner was one of the early companies to agree to become a VAR.
Assuming success in recruiting a channel that will provide you with the desired representation in the market, you still face the following challenges when working through indirect representation:
Gaining mindshare about what percentage of resources to allocate to your offerings
Making your offerings easier to sell than other suppliers’
Achieving consistent positioning of your offerings within the marketplace
Qualifying opportunities before allocating resources
Forecasting top-line revenue despite being once removed from the salespeople
Once again, we believe that these and other issues can be addressed by integrating a sales process with Sales-Ready Messaging.
Both direct and indirect salespeople display a tendency to follow the path of least resistance. If a vendor can make the offerings easier to sell, with all other things being equal, it stands to reason that resellers will focus a disproportionate amount of effort on that product. Earlier, we discussed the challenge that a salesperson joining a company faces in positioning the offerings of his or her employer. For a VAR representing ten or more companies, the challenge is staggering. It would be virtually impossible for a salesperson to fully understand and develop positioning for more than a handful of offerings. In addition, of course, direct salespeople aren’t the only ones who are reluctant or unable—for example—to call on decision makers.
For all of these reasons, and more, we advocate finding ways to give the indirect sales force some (or all) of the same training that the direct sales force receives. The reasons should be clear by now: Once a reseller understands how to execute a Solution Development Prompter (SDP), he or she develops the ability to have conversations with targeted titles within specific vertical segments. We believe that companies providing
Customer Focused Selling training and customized Solution Development Prompters realize the following advantages:
They make their offerings easier to sell, thereby gaining mindshare.
More consistent positioning is achieved, and the manufacturer can influence the customer experience.
Product training becomes product usage training via SDPs and takes considerably less time, effort, and expense. By building Sales-Ready Messaging around new announcements, the channel is able to hit the ground running and consistently position those offerings. The prerequisite would be having VAR salespeople master the Customer Focused Selling vision development process.
After a VAR has been trained, there is now a consistent vocabulary and a set of debriefing questions that enable the channel manager to help decide which opportunities are qualified, and therefore worthy of sales support and resources.
If there is a sufficient level of trust that the VAR is providing funnel visibility, the channel manager has a way to more accurately forecast revenue.
If everyone is on the same page, it is easier to segment territories and to intelligently resolve the inevitable channel conflicts, either between VARs or between the VARs and the company they are representing.
Training can be used as a “carrot” for VARs that are producing sufficient revenue—a way to enhance their performance while being subsidized by the manufacturer’s cooperative funds. For underachieving partners, it can be used as a “stick”—in that to continue the relationship, they must invest in the training, perhaps on their own nickel.
Custom Sales-Ready Messaging for VAR new hires as well as for newly announced offerings can enable VARs to make effective calls with a shorter learning curve.
We believe that organizations successfully implementing Customer Focused Selling can turn the way their salespeople and their VARs’ salespeople sell into a competitive advantage. Extending that concept, we believe that Customer Focused Selling can provide companies using indirect channels an advantage that extends far beyond their offerings, margins, advertising campaigns, and so on.
Many companies have chosen to drive revenue through channels without fully understanding how to integrate product training and the sales process. From a senior executive perspective, the allure of lower cost of sales, fewer direct employees, expanded coverage, and so on has often proved hard to resist. But positioning offerings, as we discussed earlier, is well beyond the scope of a traditional salesperson, whether direct or indirect. A compensation plan reflecting a manufacturer’s objectives, Sales-Ready Messaging, and a repeatable sales process greatly enhances the probability of successfully leveraging channels.