A recent post on eWeek’s Channel Insider detailed Intel’s plan to offer financial enhancements to its marketing program for partners, and also provide enhanced marketing opportunities through a partnership with Google.

It’s great to see that Intel is making it easier for channel partners to mass customize demand generation. Providing Intel Marketing dollars to make that happen is a validation of just how important both the channel and online media have become to big tech business.

Intel seems to be realizing that all too often, partners lack the marketing resources to drive effective demand generation. Smart vendors, like Intel, are addressing this deficiency by helping partners to plug into programs to increase joint sales.aaaa

Ways to effectively manage Solution Providers or VARs continues to be top of mind for vendors. A recent story on Channel Insider and Digg now indicates that its not just vendors and distributors who are driving industry partner networks. Increasingly SPs are forming these communities by themselves!

The key question our clients (large technology vendors) are asking is, “How can our company leverage these networks without managing them or setting terms that hinder engagement?” Finding the solution to that question could be key as the social media approach continues to permeate and drive evolution in traditional business and channel models.

Distributor Ingram Micro Inc. just announced a program to enlist a dozen software developers to participate in a program designed to put VARs together with software makers to increase sales for both in niche application markets.

This is part of a trend that we are seeing where major distys and leading vendors are focusing on leveraging their VARs to help ISVs penetrate markets that the ISVs can’t cover geographically - a movement toward peer-to-peer networking that has been fed by the growth of social media. VARs helping ISVs with feet on the street and ISVs providing VARs with additional customer acquisition and penetration opportunities is at the heart of this P2P trend and everyone is talking about it in the channels.

You can read more about Ingram’s program on Channel Insider or on Digg

The Term VADs (Value Added Distribution) has been around for more than a decade. Sometimes it refers to broadline distributors’ (Ingram, Tech Data, etc.) offering value add on top of pick, pack and ship services, other times it refers to distys like Avnet who have historically focused on wholesaling complex hardware offerings.

So what’s changed? A couple of important things:

• Vendors are now ‘starting’ to see VADs as managers or co-managers of their extended channel. Companies like Cisco are now looking to distributors to manage a part of their SP/VAR channel. This role is in contrast to the distributors prior role as a wholesaler of the vendors’ products where the vendor still ‘owned’ the channel relationship.
• Distributors realize that they need to align their business models more closely with their tech vendors. This means that they need to help vendors enable, on-board, and create demand for channel partners through value added services vs. relying on back end sell through. Distys have always offered recruiting and marketing services, to attract VARs to a vendor and help them sell vendor offerings, but that’s not enough; now Distys get that they have to recruit, enable and ramp VARs (in partnership with vendors) to create a win/win/win. The BOTTOM line is that if a disty can’t show a VAR how a particular vendor offering will help them grow their TOP line, the VAD value prop falls apart!

Unfortunately, there are some broken pieces in these evolving trends, that Vendors and Distributors need to attend to insure collective success.

1. Vendors need to design the DNA of their channel programs FIRST and then look to distributors to execute against that blueprint. Its fine for distributors to be active partners in the creation of the DNA, but vendors still fall prey to fantasy that distys actually know what the vendors Go-To-Market and channel strategy should be and that if the vendor gives the disty its products, magically, VAR sell through will result. This fantastical thinking leads to disastrous results, because as good as a VAD is at the foundations of channel building, each vendor has a unique Go-To-Market and channel strategy that has to be clearly defined BEFORE a VAD can engage successfully with the vendor.
2. VADs need to create a more compelling demand generation foundation that vendors and SP/VARs can leverage. Ultimately, VADs need to help VARs build demand around multi-vendor offerings that combine a group of non-competing vendors. VADs execute pieces and parts of this machinery, but lack the right multi-vendor engagement models and a mass customizable back end to scale their VARs’ pipelines.

Here at Crimson we continue to be fascinated by technology vendors’ love affairs with their products and services and the disbelief that vendors have when their alliance/channel partners do not share their exuberance over the latest software release or hardware refresh.

Why are vendors and channel partners so far off? It all comes down to a lack of business model alignment between technology companies (vendors) and solution providers (the channel) as to how they view the world.

Vendors see their specific offerings as the center of the known universe. Unfortunately, whether software, hardware, or services, these offerings are (at best) a piece of the Solution Providers (channels) world view.

The key to unlocking the hearts and minds of the channel is for technology vendors to re-think their value propositions on the basis of the “Channel/Segment business models”.  ID the critical care-abouts in each of the SP Segment’s businesses. Perhaps that’s something as simple as, grow the SP’s sales pipeline, or offer a highly differentiated solution. But NOTE it has nothing to do with what product the SP might want to sell or market on the vendor’s behalf.

As the chart below depicts, the closer the vendor value proposition gets to the SP’s business model, the greater is the alignment (and ultimately share of mind and wallet) that the vendor will get by going to market with the SP.

The path to success is often to think of these partners as sales agents that act independent of company resources, most particularly a company’s direct sales force.

A better way to think about the resell/co-sell question is to figure out how best to optimize your company’s Go-To-Market and Route-to-Market opportunity through partners and THEN to figure out how to manage the sales engagement with partners as to how independent the partner can/should when the partner represents your offerings into the mid market or enterprise accounts.

Fundamentally, there are three possible sales engagement models that technology vendors can chose from when building their Go-To-Market strategies.  These are:

• Pure resell, where the SP acts as the front-line and the vendor provides behind the scenes pipeline sales or technical pre-sales support.
   
• Hand-off co-sales, where the SP either ID’s the business and hands off to the vendor to close or the reverse (which is more common) where the vendor develops the opportunity and brings the partner in to close/resell.
   
• Tag-team co-sales, where the vendor and the partner sell jointly to maximize deal size and partner/vendor account impact.

As I noted above, the key to designing the right partner sales engagement model is to let your Go-To-Market strategy determine the optimal contribution and coverage model based on the unique nature of the vendor’s offerings and the end use company who ultimately consumes your offering. 

A lot depends on the kind of offering a vendor has.  Here are some tips:

1. When selling anything complex into the enterprise when the vendor piece of the deal is significant, tag-team co-selling is the dominant model.
    
2. When selling anything peripheral that is not complex, even if the deal size is moderately large, pure resell is the dominant model.
    
3. When a vendor offering is a material part of a solution sales into the mid market, hand-off co-sales models predominate; if there is a significant back end services, the SP typically resells.

Also, don’t forget to factor in the unique business models of your partners.  Some partners are willing to sign up to (some even prefer) a co-sales model and don’t want to resell, others seek to sell without any sales involvement from their vendors.

The net-net is that you can look to SPs to provide sales leverage that yields a lower e-to-b than direct sales forces can provide, but the sales engagement model has to be matched and aligned as to the vendor offering, the end user dynamics and the needs/requirements of the SP.

I had the chance to chat with Michael Vizard last week of Ziff Davis eWeek in a Channel Insider ePodcast: Making the Most of Marketing and we agree, Vendors who invest in true joint channel marketing programs should be at the top of every (SP) Solution Provider’s Vendor list.

So how is an SP going to separate the wheat from the chaff to ID the Vendors who really get it and can make a difference? Here are our top 5 indicators that SPs should be looking for when evaluating current or prospective Vendor channel marketing efforts. Any Vendor doing at least 3 of the 5 items on the list below warrants greater investments from SPs at least from a marketing point of view.

1. The Vendor offers pre-packaged, SP-customizable marketing campaigns (e.g., email/telemarketing plays to for a particular offering to a particular customer segment). Pre-packaged means that the plays have be pre-defined, SP-customizable means that the SP can easily add its logo, general and specific messaging to the play so that campaigns are no longer generic, but partner-specific.
2. The Vendor has a centralized concierge function (and a process) that walks the SP through the selection and customization process. The concierge helps the SP coordinate mailing lists, integrate logos and text, etc.
3. The Vendor helps build traffic for the SP on the SPs website with processes and tools to improve the prospects experience (and desire to return).
4. The Vendor channel account managers (CAMs) are rewarded for promoting and monitoring the SPs utilization of these channel co-marketing processes, tools and campaigns.
5. The Vendor offers (and incentivizes) the SP to utilize a Lead Management System Portal that allows the SPs to automatically track and manage vendor-SPs common leads. The Vendor uses the system to track partner pipeline.

If they can’t meet this criteria, talk to your Vendors and let them know there’s a better way to market and you’re happy to provide input to the joint marketing plan.