Standing by Channel Principles, at Any Cost

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Vendors talk about their commitment to the channel, but not everyone has the integrity to stand by those convictions when real dollars are on the line. The test of any channel program is the willingness of vendors to stand by their partners under any circumstance.

CHANNELNOMICS PERSPECTIVES

By Fernando Quintero

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Every vendor in the channel talks about their commitment to partners. Channel programs are designed to give solution providers the opportunity to earn money and sustain profits. Program features such as deal registration are intended to protect partner interests. And rules of engagement define the working relationship and separation between a vendor’s direct sales and channel partners.

Ah, but this is the dirty secret of the channel: Vendors can and will violate channel principles when money is on the line. Many will sacrifice their partners’ interests to win deals. Better to capture a customer and revenue than risk losing accounts to a competitor.

To be fair, vendors don’t violate partner interests with callousness or maliciousness. In some cases, a vendor will compensate the losing partner if a deal is taken away in favor of another partner or direct sale. Compensation is nice, but the experience can leave partners feeling violated. Worse, such incidents tarnish the trust so vital to successful channel operations.

I recently had to deal with just such a situation. McAfee was involved in a renewal for endpoint antivirus with a large insurance carrier in the US.  The wrinkle was that the decision-maker was new.  Although he had experience with McAfee and liked the product, he also had a worthy competitor pushing a rip-and-replace deal at $1 million less than what we quoted.

Being a channel-centric company, we pulled in a partner that had a relationship with the decision-maker. With the partner on board and the deal registered, McAfee approached the company with a counteroffer. After a little negotiation, we struck a deal that was still $500,000 more than the competing offer. The difference-maker in the room was the partner’s relationship with the decision-maker.

Everything seemed cleared for closing, but that’s when we hit the new challenge: the procurement officer.

After reviewing the deal, the customer’s vice president of procurement nixed the arrangement because the registered partner didn’t have a pre-existing relationship. The procurement officer approved the deal, but wanted the pricing and delivery to go through a different solution provider – one that already had a master service agreement in place. The procurement officer threatened to take the competitor’s deal if McAfee didn’t extend the special pricing to the other solution provider.

This is where things got tough. On the table was $2 million in revenue over three years. Worse, we would lose the reputable insurance carrier to a fierce competitor, and the bragging over our displacement would sting. Conventional wisdom told us to flip the deal to the other solution provider and compensate the partner with the registered deal.

We didn’t budge. We wouldn’t have the deal without our partner. We refused to go along and denied the other solution provider the lower price. We pressed our case to the decision-maker, who recognized the role and value our prime partner brought to the table. After a little handwringing, the decision-maker pulled rank and compelled the procurement officer to make the deal happen.

Our partner was amazed. He couldn’t believe McAfee would risk that much business to preserve a channel relationship. Violating the partner’s confidence and deal registration was never a consideration. Our thinking was that it was better to maintain our channel relationships, which bring us thousands of deals a year, than damage our integrity over one opportunity.

Our partner’s reaction, though, is testament of this attitude being the exception in channel relationship management. Vendors need to do a better job maintaining consistency in channel management and preserving partnership integrity. Solution providers shouldn’t feel their interests are subordinate to those of vendors. If they are contributing value, they deserve to have their vendors’ stand firm with them in the face of competitive pressure.

Looking forward to 2013, vendors and solution providers should work together to ensure that partnership integrity is the cornerstone in their go-to-market relationship. Vendors and solution providers accomplish so much more with mutual respect than in a race for expediency.

 

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Fernando Quintero is vice president of channel sales and operations for the Americas. He is responsible for McAfee’s partner relationships as well as building strategies related to sales, marketing, operations and profitability, while promoting product and services growth for more than 10,000 partners in the region. He has been with McAfee since 2002, holding key sales management positions.

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