Channelsales Worldwide

You have to admire Dell; they’ve been the poster child for the direct-sales only model since their beginnings.  2 years ago, Michael, the Board and a handful of execs embarked on radical approach to add the channel to their sales and delivery model.  Everyone was skeptical to pull this off on a large scale:  analysts, investors, employees and most importantly, IT solutions partners.

Well, fast forward 2 years and Dell has made some progress.  Dell reported today that has lowered its registration fee from $50k to $15k for partners; this is a remarkable step. http://tinyurl.com/ycwsc5m It doesn’t seem like a big deal, but it is.  It means that Dell has committed to use (new) tracking systems that on the direct side didn’t exist before; not just systems, but new policies to incentivize and monitor sales rep behavior, really, the whole go-to-market model.

In August, Channelweb reported at its annual conference in Washington DC, Xchange 09, that Dell was making positive and significant progress to creating and managing an effective, global standards channel program

But the animosity and skepticism of the channel vs. Dell is real and was readily apparent at Xchange.  When Dell’s Channel VP, Greg Davis got up to make his keynote speech, my immediate reaction was to make sure my program guide could be used as battlefield armor as I felt sure there was going to be a fiery exchange.  I was not disappointed.

In fact, I was quite worried when Greg opened up the discussion for channel partners to ask questions (which they did, in numbers).  I really admired Greg for getting up there and taking this heat.  His peers from Cisco, HP, Juniper, all of whom had spoken  the prior 2 days had a cake walk with Partner of the Year trophies, fancy videos, lots of laughs and enjoying advantage of their channel success.    Greg really had a tough draw to speak after all of that fun stuff and just before lunch on the last day.

The tension in the crowd was palpable; I was expecting a few tomatoes from that mornings breakfast buffet to go flying; seriously, I really thought it might come to blows.  But Greg took the heat graciously and sincerely.  He talked about how Dell is ‘walking the talk’:  sales reps that don’t follow new indirect policies are put on a performance plans and in fact have been fired for protecting direct deals.  Dell is serious about the channel.  They still have a lot of work to do but I concluded that they couldn’t remake the eggs they broke with a direct-model only and so instead, are putting together the ingredients to make a fine omelet.

As Dell moves more heavily into the Data Center, I think they realized that they couldn’t go anywhere without partners; so they had to unbreak some more eggs and make a omelets that is going to take several years before it is ready.

And what is happening with the large ISVs, SaaS and channel partners?  Traditionally, the large software companies have thrived with their complex, on-premise solutions that lead to mutual washing of the hands, with their long time companions, on premise SIs.  But now with SaaS, how do these large ISVs ‘break’ the eggs with their, almost in bred channel partners, SIs?

Large ISVs players are adding robust SaaS applications as I write this.  Just look at SAP, SAP Business Objects, Informatica (Ok, Salesforce fans they are behind but they are catching up).

I’m ravished and I can’t wait to see the recipe that the large ISVs are  creating to co-opt their on –premise SI partners, come SaaS ‘delivery’ partners.  It’s going to be a great brunch to enjoy when  ISVs follow Dell’s path to break some eggs and create a SI-base frittata for their SaaS solutions.

How do you make your partners productive in a Sales 2.0 world?

Sales 2.0 (http://sellingpower.typepad.com/gg/2009/09/the-sales-20-movement-accelerated-in-chicago-part-ii-.html) has many facets, one of which is the discipline of more science in sales, that is, there is more measurement, analysis and predictability of the sales forecast.  In addition, Sales 2.0 encourages (almost mandates) a tighter level of cooperation and participation between Marketing and Sales.  HP’s Kevin Hooper reports that Sales 2.0 in his environment means that Marketing takes 15% of his quota — Get ready Marketing for the next forecast review!

But what is happening externally with Sales 2.0?  Almost by tradition, partners are recruited and trained (and in the non-SaaS they typically pay a fee as well) and they are off and running.   They are then left on their own.  Partner metrics (if there are any) are usually one-sided (vendor only); they are rarely shared or co-developed.

What’s been the result?  Well, you can’t treasure what you measure; more often or than not, everyone is disappointed and well angry.   Partners feel deserted and see nothing for their investments.  On the flip side, the partner management team reflects their disappointed by not reaching out and instead hunts for new revenue with other NEW partners to try and make their quota.  All of that ‘feel good’ goodwill at the beginning of the partnership has faded.   No one is surprised, we (partners and vendors) just take it in stride; it’s what we always done (in the Sales 0.0 and 1.0 worlds).

Sales 2.0, however, give us a new start to address an old problem:  how do you make your partners productive, now in a Sales 2.0 world?

Although a great deal of the emphasis of Sales 2.0 is about Inside Sales; partners do and can plan a key role in joint success.  After all, part of the Sales 2.0 philosophy is building and sustaining a meaningful dialogue with the customer.  Who else knows your customers as well?   (even better?)  Who else knows the ‘gotchas’?  Who else has a finger on the pulse?

• So, first off, do you measure Partners?
• Do they know the metrics?  (Are they aware they are being measured in the first place?)
• Describe the partner’s sales roles; is this common knowledge with the partner?
• What measurements are jointly developed?
• What investments are both sides going to make to realize these goals?
• What’s the process to review the results and tack a new course?

Sales 2.0 is both a dialogue and a process (and in many cases. technologies).  There is a viable, if not critical role for partners in a Sales 2.0 world (yes, for both SaaS and On Premise).   A successful Sales 2.0 dialogue means shared metrics with partners.

Last week at Sales 2.0 several vendors described how they track and measure disqualified leads in the sales funnel.  It is an interesting concept because it implies that the company understands what a qualified lead looks and feels like in the first place.   It also hints at the growing convergence between Marketing and Sales but that is another subject.

On the channel side, how many vendors proactively qualify their partners (meaning are they actively culling partners that aren’t productive)?  This may mean a conundrum for SaaS companies, particularly those in the early stages of selling and deploying their applications.   How do you convince partners to invest time and resources when the sales model isn’t clear?

Most early SaaS companies take a more reactive approach and recruit partners with the HOPE of recurring revenue.  After a few months or maybe after the first year  of sales (multiple by 7 to get the equivalent in dog-years for premise solutions), early stage SaaS companies often find that their ecosystem is full of partners recruited because they were ‘friendly’ or ‘family’ but have demonstrated limited ‘sell through’ momentum and success.  They are left with the unfriendly and less than fun topic over the phone (not even over coffee or drinks) to politely ‘disengage’.

It is true that SaaS applications are easy to deploy and derive early value for customers.  It is certainly logical to have a low-barrier to entry from a partner model perspective.  It does, however, make some sense to at least develop the profile of the ideal partner.  Not only based on their geography or reputation but take a closer look at their business model, how they provide value to their (yours-to-be) customers and the shared domain expertise. The profile of the ideal partner is a recipe of some blend of these 3 elements.

Some up front, thoughtful work about aligning the vendors’ SaaS application, domain expertise and the partner’s capabilities will save some grief on the back end of partner ‘disqualification’.