Leading up to the Cloud Comm Alliance event this week, I have been thinking a lot about why partner programs don’t work. Two years ago, one speaker talked a lot of nonsense about “The Channel”. Quite a few CEOs of cloud comm providers were angry at channel partners and cheering her on. Doesn’t make what she said correct.
Channel Chiefs don’t last long and there are viable reasons for that. Not enough time to execute on a strategy. Not enough budget. No control over operations to improve things that partners complain about.
Programs take at least two years to bear fruit and that is with services that have a short sales cycle. If your services take a year to sell, it could be 4 years before the channel works for you.
It takes time to (1) recruit partners; (2) train or on-board them; (3) partners to start introducing prospects to your services; (4) then your sales cycle kicks in. Steps 1-3 can take a long time.
You might have the wrong partners. Maybe you have the wrong partner type or just the wrong partners. Who is your Buyer? That is usually Problem # 1. CEOs have no idea who the Buyer is. They don’t have an ICP (ideal customer profile).
Unless you are a top 8 vendor – MS, Cisco, HP, Dell, AT&T, VZ, Comcast, Charter – your customer is NOT Everyone. In fact, if you think it is Everyone, go look at your billing.
Most products & services are like the potato chip aisle.
Only Frito-Lay brands advertise and drive demand to that aisle. Every single SKU pays for placement in that aisle though. In the case of UCaaS, RingCentral, Zoom, Microsoft and maybe Cisco Webex drive demand to that aisle. If you are not one of those brands – Teams, Zoom, RingCX, Webex – there is a price to be paid to get in front of the Buyers. Zoom did it with a great video product that was free during a pandemic – the brand became like Kleenex – but the direct sales teams drove free to paid and mid-market sales.
Most UCaaS providers do not have a Brand. The services are not as easy to use or popular as Teams and Zoom. You need direct sales, but that isn’t producing the results you want. I have had dozens of execs come to me thinking the channel was their answer to sales. They think it will be easy. Pay a TSB, fund some happy hours and Bam! sales in 90 days. Only it didn’t work that way. It never works out that way.
Buyers prefer brands because no one ever got fired buying IBM.
So as a UCaaS provider or even a CyberSec vendor, how much branding or marketing do you do to the Buyer? Most of you – NONE. Maybe you get a booth at some buyer oriented expos, but real marketing to Buyers with 6% of your revenue, very few.
You plow through sales people, because you have a ridiculous quota that is not supported by real numbers or marketing or product design or operational excellence.
Then you turn to the channel – the coin operated channel partners that you look down your nose on – and hope and pray that they will sell your shit. Most of you know that RNG and others pay Big SPIFFs – those bastards! – and fat, evergreen commissions to the TSBs along with MDF. As Craig says, RNG is ruining the channel for everyone. To my knowledge, no company has gone broke due to commissions. Well, maybe one data center/cloud loser.
Let’s look at your company. Is it Channel-ready?
Do you have an ICP? Do you have a Value Prop? Can you explain Why You instead of Zoom, Webex, Teams, RingCentral, Vonage or OneTalk? Do you have Reference Customers?
Those are fundamentals that the partner is going to need to know in order to convince a business owner to buy your shit.
SPIFFs work to get attention. There are over 1000’s of vendors in the channel. If you don’t have a Brand, then you better have another way to raise your awareness. BTW, SPIFFs help to offset payroll for the partner, so they can do the pre-sales and post-sale work. SPIFFs also work if your churn is low. If you churn 2-3%, no SPIFFs don’t work. At one time 8×8 had customer retention at 50 months. You can pay back CAC, SPIFFs and on-boarding with that.
My favorite activity is to go to a conference and walk from booth to booth asking Why You. The nonsense you hear. Very few providers have a formalized reply. And so the partner facing a Buyer won’t either. And for the partner it is far easier to walk into a business with Zoom or Cisco or Microsoft than it is with an unknown provider. Partners have to stake their own reputation on your company.
In that meeting, the partner has to sell not just your company as a viable provider, but that the service will in fact benefit the customer and work. That is a leap of faith – because Trust is required for any sale.
So when CEOs of providers whine about the Channel, I know it is because they are doing a lot of things wrong.
Office Depot jumped into the Channel and hired a big name to run it. It closed the program in less than 2 years time. I surmise the reasons were aplenty, but it just goes to show that even a Big Box Brand can struggle in the Channel.
Do you have a Buyer Profile? A customer profile? A Partner Profile?
I have written about this extensively in Channel Myths, in Kindle format at Amazon or in paperback from Lulu. Or you can hire me to help you fix the partner program so you can stop being angry. (813) 963-5884 or catch me at ITEXPO in Fort Lauderdale or Cloud Comm Alliance in Delray. Vonage and Verizon and 100+ other service providers have hired me, why wouldn’t you?
BTW, on SPIFFs. Private Equity acquired B2B cableco WOW and launched the PE era with SPIFFs: 6X on network is unheard of. So please, stop whining that you can’t afford SPIFFs. You can IF you can retain a customer, deliver on your promises, bill correctly and have a modicum of customer care. Even AT&T is paying a 2X SPIFF on DIA in 1H2026!!!
