In 1999, when I started as a BellSouth sub-agent under IEI, RAD-INFO INC had a direct contract with AT&T, Progress Telecom and a couple of other carriers. By the time 2014 rolled around, Level(3) and other carriers like XO had too many direct agreements. Both carriers decided to pick winners and roll everyone else under those 10.
By the time SBC merged back into AT&T, AT&T was revamping its alternative channels under one umbrella and also picking winners.
The carriers created the beast that is the TSD.
Some carriers treat the TSD like a Tech Data (distributor) and bankroll employees to ensure that the orders are clean and the order process is followed to a Tee.
This is how the top 10 carriers utilize the TSD model. Few contracts, fewer checks to cut, bigger players to deal with, cleaner orders. Roughly 85% of the orders that pour through a TSD go to the top 10 carriers.
The only thing a Technology Services Distributor (TSD) distributes are commission checks.
Most vendors unfamiliar with the Channel don’t realize it was designed to supply demand of the small business. Cisco, Microsoft and the Baby Bells couldn’t knock on enough of the 5-6 million doors of the small business, so the channel was used. The three vendors had controls: certifications. For Cisco and Microsoft, these classes became a billion dollar industry that spins off Brand Ambassadors into every business that hires them. Of course, it is real training that many community colleges across the US provide.
The Baby Bells fudged their certs and classes. Quota was more important. Bonuses and President’s Club beat integrity. Which is also how the channel got its reputation snudged and labeled “coin-operated”.
So what about the other 300 vendors that aren’t in the top 10? Usually they flounder because they didn’t understand the game. Think about Office Depot who was in and out of the channel in two years, dropping a couple of million. They just didn’t know the game.
Think about the POTS Replacement vendors. They did not create the demand. Verizon, AT&T and Lumen did – the Baby Bells. They did that by closing down wire centers, decommissioning switches and turning off the copper lines. Yet there is Demand, especially in small business, and the Channel will supply that demand.
UCaaS providers (2000+), CX providers (1000+), Agentic Voice AI (2400+), MSPs (42K+), MSSPs (5000+), cloud providers, hosting companies, and data center companies all want customers. Some think that the Channel is a free sales force. You only pay on success. True, but not.
So much goes into a Partner Program. There are ingredients needed just so the vendor looks like they are serious about the Channel. Like the ability to see order status and commissions. That’s a baseline.
In Red Oceans, partners pick 3 vendors to work with. They vet them. They test them. Then they Partner with them. Then the magic happens: Sales!
However, if you are not one of those three, you are like the ugly kid with braces sitting on the bleachers at the high school dance. And that’s where the work begins.
The TSD does not hand you partners. It may provide an email list, which as a vendor, you will proceed to spam, because no one has ever read Permission Marketing! No one gave you permission to email that list. The TSD handed it to you — usually without telling the partners that is what they do. So the partner gets hammered with spam. And I mean it is SPAM: unsolicited commercial email, but it is really just ads. If vendors just improved how they handled email lists from TSDs and expos they would be ahead of the game. But vendors are lazy and in a hurry and are, oh, so important! With this Purple Cow that every business has to find out about and buy because it is so much better than the other 200 on the market!
That is sarcasm, by the way. If you are in the cloud comm space or AI or CX or CyberSec or MSP, WHY YOU? Why you and not the next booth? Answer that truthfully, to start.
But back to the TSD.
Mr. Co-Founder/CEO hires a consultant who tells them to get in the Channel. Pick a TSD. Go Bronze at least! Orders will flow in 90 days!
All of that is bullshit. It doesn’t work that way at all!
The TSD just holds the partner contract so you don’t end up like Windstream with 132 different partner agreements. With or without a TSD, you need solid structure around your partner program, a budget and the patience to wait 2-3 years for a pay off. If not, go through the pain of hiring SDRs and sales reps. At least that way, you have control, a feedback loop and if you pay attention, you might learn something.
This is where you either (A) buy my book; or (B) hire me to make your channel program work.