By Diane Krakora, CEO of PartnerPath
I talk about recruiting, enabling and managing indirect partners all the time. The goal of 99% of all technology companies is to leverage indirect channels for increased sales reach, market penetration and customer satisfaction. But there has been a shift that greatly affects the traditional channel model and some vendors are feeling the change.
This shift is driven by customers. Yes, cloud-delivered solutions play a part, but that’s not the whole story. New buyers, a focus on business outcomes and the acceptance of transacting directly with the vendor are, “creating the most important change to the channel we’ve seen in a long time."
Why Buyers Are Changing
There are two realities that are changing the buyer’s journey as it relates to channel engagement. The first reality is that everything can be researched online. Information about anything is just a Google search away. Buyers can research products, options, costs, analyst opinions, user reviews, and even pricing quickly and easily. There is so much more transparency in product and services offerings, costs and experiences than ever before, which leads to well-informed buyers. We used to say, “there is margin in mystery.” But much of that mystery is gone thanks to Google, Facebook, Twitter, and dozens of customer feedback sites like G2 Crowd.
The second reality is a buying preference for subscription (cloud, anything and everything as a service). From DocuSign to Netflix to toiletries – the subscription model is here to stay while the traditional capital purchase model is waning.
New Buyers Have New Ways of Buying
Together, these realities have changed buyers which brings big changes for the channel in both who they sell to and how they sell.
- The traditional channels’ buyers are changing – from IT departments to line-of-business professionals. In a business-to-business transaction, line-of-business buyers are able and willing to buy software, services and even hardware on a per-seat basis, on their credit cards without a lot of input from IT. Forrester Research indicates that in a cloud world, 65% of all technology decisions are now driven by the line-of-business owner with 29% of those decisions not involving IT at all.
- And those line-of-business buyers are expecting specialized solutions that produce business outcomes. Whether it’s a VP of marketing, sales, operations, finance or HR – they are all looking for specialized skills that help them produce the outcomes they need to be successful. For example, skills may include the ability to drive new leads, increase sales closure, reduce costs and/or increase productivity. Jay McBain from Forrester commented during a webinar with us, “it's at least seven pieces of software stitched together, and every situation is a different seven pieces. So [the customer] needs you to be in-depth in each of those and have a resume that you've done this five times before, successfully, so you're not learning on [the customers’] dime.”
- These new buyers are able and willing to deal direct. They don’t mind buying from the seven different vendors that the channel partner will stack together. It's okay that each part of the solution is $9 a month per employee since it will all go on the corporate credit card. Buyers want a direct relationship with the vendor but they don’t actually know how to make the licenses productive for them. That’s the channels’ job now. For every dollar of licenses, the new line-of-business buyers spend $4 on consulting, implementation, adoption and optimization services.
Jay McBain with Forrester says these line-of-business buyers are not inviting traditional resellers, VARs, solution providers, or managed services providers into the room. If they do get in the room, they're not staying for long, and they're not providing the level of detail and specialization that these new buyers want. The new buyers are looking for business outcomes – for somebody who can drive their KPIs. A marketing director may say, “I’m going to get fired if I don't drive patients in the door of my clinic this year, so how can you stop me from getting fired?” It's not a discussion about hardware and it's not a discussion about services or software. The new discussion is how to take the best practices of the industry, implement them and get going, bringing in new clients.
How are you enabling your channel partners to be successful with the new buyers?Diane Krakora is CEO of PartnerPath with two decades of experience defining the best practices and frameworks around how to develop and manage partnerships.