Vendors: How Do You Choose Which Partners To Invest In?

I took part in a webinar recently which talked about the power of the channel and how partnering has become so important. On this call, Jay McBain, analyst for Canalys, described the last decade as being the ‘era of the ecosystem’.

He talked about how Microsoft have leveraged their ecosystem to make them one of the most valuable software businesses in the world. With this, he said, they were ahead of the curve in recognising the importance of partnering. He also described how changes in the data and cookie laws have meant that through partners was now the only way to access end customers.

But if you’re a vendor looking to develop or invest in your channel, how do you choose which partners to invest in? I think there are four key attributes to consider.

Purpose – My first question would be, what is the purpose of the channel for you? Are you looking to grow your revenue, attract new customers, go deeper with your existing customers, or break into new markets or geographies? And what sort of partner makes the most sense to do this with? It might be strategic alliances, large resellers with sophisticated in-house sales and marketing capabilities, other vendors with adjacent or complementary technologies, or managed service providers. Maybe it’s a mix, but it’s important to realise what each of the partner types you want to invest in does for you – and what you can do for them. What’s your joint goal going to be?

Value add – What do the partners you invest in bring to the sale? In most cases, they own the final client relationship so obviously that’s important. But how do they do this? What value are they adding to that end customer that you can’t bring? Maybe it’s an in-depth understanding of their business – they know the people who make the decisions, and importantly, why they make them. Maybe they know the infrastructure – so they know how your product or service will fit and why it will help. Perhaps they can offer in-field servicing, maintenance, updates and proactive reviews that you don’t have the time or capability to deliver?

As with purpose, it’s crucial to understand why end customers would rather deal with your partner than with you direct. Channel conflict is still a huge problem, with tech vendors wanting the channel to deliver new leads, but then trying to source the best customers direct. This leads to distrust and disincentivises partners to work with you – why should they invest the time and the money involved in making a sale to have it taken away by the vendor direct? Even if you think this won’t happen in your business, enough partners have seen this happen to be wary of it, so you need to reassure them by your words and actions that this won’t be the case!

Alignment – How aligned are your respective businesses? This could be as simple as you’re in the same space and so both specialise in different aspects of the same, or overlapping areas – for example, cybersecurity networks and edge, IoT and AI – but usually it goes beyond this. What’s your approach to the market? If you’re a ‘pile ‘em high, sell ‘em cheap’ vendor still heavily reliant on selling hardware in volume, you probably don’t have much room to manoeuvre on margin. If you have long sales cycles however you need to invest more upfront in getting to know the end client and their business. How do your sales teams work – are they aggressive, having to hit ever increasing quarterly numbers, or are you a new market entrant, so every sale is a good sale? It will be hard for vendors to work with partners that are not aligned in their approach to market, to sales, marketing, even things like events and product to work together. Which brings me on to the last, and perhaps the most important point, because without this, none of the above really matters.

Relationship – There’s a reason the old adage ‘people buy people’ hangs around – it’s because it’s true. We all like doing business with people we like. It makes it feel like less work, and who doesn’t want to feel like that? But importantly, having a good relationship in a partnership sense doesn’t just mean working with people you like. It also takes into account all the other elements I mentioned above – purpose, value add and alignment. In these days of AI, automation and scale, why the hell am I still banging on about relationships? Because I believe that they are still the glue that make even the biggest, most expansive global partnerships work.

An understanding and shared goals at C-level, a commitment to working together that comes from both sides, and structures and teams in place that facilitate that relationship and partnership are still crucial to success. Think of politics as an example – the UK and the US only developed their ‘special relationship’ on the strength of a strong personal relationship between two global leaders. While of course countries and companies have to work together, it’s much easier when there is a genuine, authentic connection and relationship.

So to summarise, all the budget, systems, teams and automation in the world won’t make a partnership work – only people and relationships can do that. That’s why, when choosing which partners to invest in, I believe people and relationships are where you need to focus first, and the rest will follow.