- The Channel Sales Leader’s Challenge aims to promote awareness of the issues channel sales leaders face in 2020
- Channel partners present a complicating factor — execution in indirect sales is mostly influence vs. mostly control for direct sales
- The channel comp paradox frustrates channel sales leaders and is impossible to capture as a data point
As an analyst, I have the great fortune to meet with, listen to, share insights with, and talk shop with channel chiefs every day. These channel sales leaders represent myriad provider and supplier organizations spanning continents, industries, and revenue models. Some are industry giants with a mature indirect channel, while others are just dipping a toe in the channel water; most land somewhere in between. Although every channel chief’s story is unique, the challenges they face are not.
During these conversations, the Channel Sales Leader’s (CSL) Challenge involves answering a set of questions that promote awareness and expose truths about the challenges channel sales leaders face in 2020. Unlike popular social media challenges, no video is required.
In my first conversation with a channel chief, I always ask about priorities. What does he or she need to get done and when? Additionally, I ask what the organization needs to do to improve overall performance. Common responses sound something like this:
- “We need more partners, better partners, or both.”
- “We must find a way to gain partner mindshare this year.”
- “We need a few global systems integrators, a distributor, and 40 cloud service providers in 2H.”
- “We need to redo the partner program and fix partner compensation/margin/annuities.”
- “We need to enforce certification requirements.”
- “We are in the process of selecting a new portal/channel technology.”
In other words, these channel chiefs have a partner problem. They have external issues they need to address, and that makes sense to me. As a former channel chief, I know that partners present a complicating factor. They raise the degree of difficulty — execution in the indirect channel is 95% influence, while direct sales are 95% control. Partners don’t report to the channel chief. They have no binding loyalty to the leader or the company’s offering. They have options that often represent alternative or competing solutions (“better” partners have more options). Partners may not want to share sensitive customer data with the channel chief.
However, when the channel chief I’m talking to and I dig deeper, things begin to change. I ask many, many, many questions — think five whys — with the help of Forrester SiriusDecisions operational models and frameworks. Before long, we’ve built an awareness of a new set of challenges: the underlying internal problems the channel chief must overcome to improve performance. These are some of the most common:
- Unrealistic revenue goals. Sales goals guide channel sales priorities and affect internal morale and partner motivation. Often, I see that goals go no further than adding a growth rate to last year’s performance. Channel revenue goals must consider many factors, such as the corporate ownership structure, the supplier’s product, and service deliverables.
- Myopic channel operating ratios. The performance of the channel sales organization is measured the same way as the performance of the supplier’s direct sales organization. As a result, channel financial performance measurements misrepresent expense and are inadequate on their own as inputs for corporate decision-making; not considering channel maturity is the biggest miss.
- Overestimating the supplier’s inherent value to partners. This is as common as undervaluing the channel’s capabilities and efficiencies. Bad things happen when a supplier can’t quantify the value of its channel. Follow an objective, systematic assessment approach, and don’t select partners just because the competition uses them!
- The “channel comp paradox.” Possibly the most frustrating issue (yet impossible to capture in a benchmark) is what I’ll call the “channel comp paradox.” Far too often, top-level management believes partner compensation is a panacea — “Pay them, and they’ll sell our stuff because it’s the best.” On the other hand, however, these same managers are likely to say, “You’re probably paying them too much.”
So, how can you participate in the CSL Challenge? Take the following steps:
- Remember that you must be completely honest with your answers, or don’t bother spending the time.
- Write down (by hand) your top three priorities.
- List any problems or obstacles you foresee.
- Label each issue as internal or external.
- Dig deeper. Ask: “Why is it a priority — what defines success?” “Why do you foresee that problem?” “Is it a partner problem?” “What will you do next?”
Are you doing the CSL Challenge? Let me know by reaching out to me on LinkedIn!