Channel Partner Business Models In The Age Of The Customer
I’ve been invited to present at several partner conferences this year on the topic of how channel partners should transform their businesses, specifically in light of declining discount margins and digital transformation. Yes, you heard me right – declining discount margins. It’s not happening across the board, but the general trend in the tech industry for the past couple of years is that vendors are reducing the discounts they are offering to partners (but some are rolling out programs that can boost partners’ profitability in other ways).
To more than compensate for shrinking discount margins, I posted last year that there is a new wide world of value-added services opportunities for channel partners – particularly “away from the box” value-added services (as opposed to “close to the box” services involving installation and configuration), driven largely by the upsurge of line-of-business buyers: planning, adoption services, change management, risk management, multi-vendor management, and benchmarking, to name a few. For example, we just interviewed a Google partner who is seeing significant growth with its customer success program.
I mentioned digital transformation as the other factor looming over the channel. Too many channel partners are stuck in an analog world, while in this age of the customer their customers are increasingly utilizing digital means to discover and learn about technology solutions before they ever engage with a salesperson. Some vendors are enabling their channel partners to engage with customers digitally, equipping their partners with digital customer engagement technology like through-channel marketing automation and through-channel customer service solutions. But if not, it’s no reason to wait. Channel partners can and should leverage digital technology to be more relevant to customers (e.g., by publishing their service catalogs online), just as vendors are today.
So my prescription for channel partners:
- Go “away from the box” with your value-added services.
- Go digital to meet customers where they’re at.
- And a third – go vertical. Customers today resonate strongly to solution providers that understand their vertical industry and the competitive dynamics and regulatory environment that dynamizes it.