On the TSB State of the Channel webinar yesterday hosted by AireSpring and moderated by Josh Anderson of Acuity, the panel of brokers must have said Value a hundred times.
This was what they said about adding Value: lines of code, financial backing with low interest, demand generation, tool sets, catalog expansion and sales support.
If they are automating everything, what sales support? And how does a Channel Manager handle over 100 partners? That support does NOT scale!
These all smell to me like trying to hide the fact that deep down you know that you are just commission brokers holding the vendor contract and living off of MDF.
Here’s how: why do they keep adding vendors to the portfolio? Isn’t 200 enough? Or 300? You get into Long Tail vendors and regional players (like Logix or Callis who only have network in one or two states).
Well, here’s the reality of it: The TSB holds an event with 10 vendors paying at least $1000 a piece and -oops! — only 15 partners attend. The cost of the event is maybe $3K and the TSB pockets $7K! They pay 1% to the events person and use the rest to add that Value. They need to keep recruiting vendors because (1) you can only burn vendors so many times with the $1K before they stop paying; and (2) you need to keep the MDF coming in or the business model fails.
AppSmart said on the webinar that they have 450 engineers. That’s easily $30M in annual payroll. Then there are the commission teams, channel managers, sales engineers, sales support people and so on. That is a lot of payroll!
The commissions team doesn’t scale. The more companies in the portfolio, the more humans are needed to track and collect commissions. And this is the PRIMARY VALUE that a broker brings to the Partner.
The Self-Service options will improve things for the Partner. “Use the people & tech order to better serve the customers,” said one panelist. Providing certain tools to the partner, like fiber locator, so the partner doesn’t need to get a user license, is the value?
Again, the value lies in the commissions. It is also one of the main contracted sources of revenue for the brokers, since the MDF is not contracted or guaranteed.
On LinkedIn, there was a discussion about the Value of TSBs amid the merger between PlanetOne and Avant. Comcast’s channel head thinks they add more value than commissions, but wouldn’t articulate what. But since Drew at Avant said in the webinar that a Partner just selling Blue Chips (Comcast, Verizon, AT&T) is doing something wrong, what does that say?
I would agree with Adam that marketplace is a buzz word.
And I agree with Drew when he said, “Due to complexity Partners exist.”
From this panel I also get the impression that we aren’t seeing too many new recruits as selling partners. Yes, ISVs are growing. Adam said that Commercial real estate agents are going to be selling cybersec. Renee said CPAs are becoming influencers in this space too. That employees of Delloitte and Accenture are becoming selling partners instead of their six figure salary with benefits. Renee says that the Buyers changed, so the Sellers will as well. I shake my head at this, but I could be wrong.
This also explains why PE backed firms are buying the selling partners and locking them up. The sales growth is due to international expansion, the move up from small businesses to enterprise sales, and cross-sales.
What is the hot tech being sold? It Depends! Much of it is Rip and Replace – oh boy! However, panelists said that there is no emerging tech that is hot, but that if you are not selling cyber-security it is malpractice.
What resources do new partners get from their TSB? The software system like Pathfinder or Nautilus or SolutionVue; reports and analysis; support; business enablement conversations; and yet none said Training!
Sandlers suggested that those systems are table stakes. Telarus mentioned that an extra point here and there might be necessary. People, Tech, Tools, Process and yes commissions are what Avant bring to the table. AppSmart said that the tools help the Partners provide value to the customers.
As I replied to Ted @ PlanetOne on LinkedIn, miss a commission check and see where that partner relationship goes.
A couple of partners texted me about my comments. When I say be wary about PE backed TSBs, I am not saying they suck. I am saying that TSBs have only two income streams – MDF and commissions. When the PE firms want the money back, those are the only two ways to get the money back.
Personally, I am not Powered By a TSB.