By Diane Krakora, CEO
The IT channel has seen many shifts over the past few years as technologies change, market drivers gain influence, and customer segments evolve. But perhaps one of the most impactful is the recent and ongoing shift of empowerment among partners. With empowered partners changing how they evaluate their vendor lines, will you still make the cut and remain a top-value supplier for them?
This isn’t an overnight shift, but it is seismic and it is having a progressively more distinct impact on the vendor/partner relationship. Vendors are finding their traditional dominant role slowly but surely eroding as more partners scrutinize their profitability with their vendors and whether it’s worth their time to engage with those vendors.
How are partners changing their vendor evaluation?
As noted in our most recent webinar, “The Vendor/Partner Power Shift,” partners have become more sophisticated in measuring their profitability per vendor line. It’s one of the four drivers empowering partners to take more control in their dealings with their vendors.
The other three drivers I noted were the move to a cloud and on-demand consumption model; customers’ expectations of solution providers delivering a business outcome; and the question of customer ownership, as more solution providers build cross-vendor solutions to deliver those business outcomes.
All of these are happening now, and all of which are conversations I’m sure you’ve had at least once with most, if not all, your partners.
If we look at the drivers, we can see each one is a game-changer for solution providers, and no single one is more or less impactful to their business. Their business is changing, impacted by market forces, and that means they need to change the way they do business with their vendor partners.
How one partner is taking a closer look
Atrion is one solution provider who has taken control of its relationships with vendors. The Warwick, RI-based company a few years ago turned the tables and created a “reciprocal loyalty program” in which vendors—or, as Atrion calls them, “supplier partners”—must be certified to do business with Atrion.
Like a vendor’s partner program, Atrion’s program offers two levels to vendors—gold and silver—each with different growth strategies and commitments. Paul Cronin, senior vice president at Atrion and one of the guest speakers on the webinar, noted this holds both vendor and partner accountable for the other’s success.
“Traditionally, suppliers have not been put in the position where a partner is holding them accountable and requiring them to know as much about their organization as a supplier might expect for the partner to know about their products and services and their organization,” he said.
Atrion has five supplier partners in its reciprocal loyalty program and evaluates each member yearly to ensure it’s creating value for Atrion and its customers, Cronin says.
The firm categorizes all of its supplier partners in four ways:
- Traffic builders: those it doesn’t always expect to have highest profitability with but they bring value
- Fulfillment partners: former traffic-builders that no longer are the focus of customers but there is still a need for their technology
- Sleepers: those that enable Atrion’s services and lead it to other areas of opportunity, and
- Winners: managed services or other technology that helps Atrion deliver the highest level of value it can.
Otherwise, “I can’t afford to have a huge stable of suppliers that are draining my ability to give the attention to the others,” Cronin says.
Of course, not all your solution provider partners will take this tack, but you can bet they will scrutinize your value proposition to them moving forward. And they are getting more particular about which companies they want to work with.
What should you be on the look out for?
The question, then, is whether your company would make the cut with your partners. To find out, ask yourself the following questions:
- What kind of value am I providing to my partners?
- What is my company doing to help my partners transition their business to meet changing customer needs and expectations?
- Do I have a robust technology vendor ecosystem to help my partners build solutions?
- How am I helping them create their value proposition to their customers?
The relationship between vendor and partner is certainly changing, but that’s not necessarily a bad thing. Some partnerships will end and others will be forged, as solution providers and vendors both determine what is best for their business model. The result holds the promise of better alignment and deeper, stronger commitment on both sides.
Diane Krakora is CEO of PartnerPath with two decades of experience defining the best practices and frameworks around how to develop and manage partnerships.