By Larry Walsh
Chief financial officers (CFOs) are skeptical people by necessity. They hold the corporate purse strings and the responsibility for ensuring the financial viability of an entire operation. They work for the CEO, but they have a fiduciary responsibility to shareholders and stakeholders.
So, it makes sense that I found myself in sessions about reporting channel contributions and value to CFOs. Yet, after 25 years in and around the channel, I’m continually surprised that we’re still having this conversation.
In these discussions, we heard the same advice about dealing with CFOs. The people dispensing it are sharing what they know and have experienced, and they’ll admit their results are mixed. Still, they persist.
Talk to CFOs in their language. Understand what they care about. Report only what’s germane to corporate performance: revenue, pipeline, cost avoidance, and market share defense. And don’t bring useless information — what Channelnomics calls “feel facts” such as portal logins, webinar attendance, event registrations, and certification completions — to the table.
The advice is sage. It’s all true. And yet it’s still hit or miss when it comes to results.
Some up-and-coming channel pros confided in me about the challenges they face in demonstrating value. It comes down to a simple proposition: People outside of channels don’t trust what they can’t see.
Metrics don’t change minds that are already made up. CFOs and other leaders in a vendor’s management team often discount the channel because they believe that direct sales are more controllable and predictable, that partners take a cut without adding much, and/or that customers would buy from the vendor anyway, with or without the channel. Often, those beliefs are based on real experience, such as past channel conflict, murky attribution, or a rebate program that never paid off. But when beliefs collide with evidence, beliefs tend to win.
And the evidence is often better than the beliefs assume. Consider price. Selling through partners often protects price better than going direct. When a direct rep discounts, the vendor absorbs the cost. When a partner discounts, the partner absorbs it, because their margin is a share of the transaction price. A higher price means more margin dollars, so partners have a built-in incentive to hold price. Of course, that doesn’t make the channel free, since rebates, MDF, and program costs are real. But price erosion has a different source in each route to market, and that difference rarely makes it into the finance conversation.
Channel leaders and their teams are always fighting a two-front war. On one front, they must cajole partners into selling more, tamp down partner grievances, and keep competitors at bay. On the other, they must defend every dollar, euro, and yen they spend supporting partners, and justify what partners do to deserve their cut of pricing and incentives. Whatever they say, it’s never enough.
But the second front isn’t just the CFO. It’s the whole organization. And that’s where the industry’s vocabulary works against it.
We call channel teams “overlays,” as if they ride on top of other departments and operations. They don’t. They operate underneath. The channel is an underlay, and it depends on the functions above it to work at all.
No vendor, no matter how strong its brand or great its products, can satisfy every customer need without other companies. No vendor, no matter how big and powerful, can cover the total addressable market on its own. Everyone needs partners to succeed. The same is true inside the vendor: No channel team can succeed alone.
Consider what the channel depends on:
When any of those functions is misaligned with the channel, the channel’s results suffer, and nobody sees the cause. The channel team just looks as if it underperformed.
What channel teams need is clarity, and it has to run in both directions.
Channels need to give the rest of the organization a clear view of what they do, what it costs, and what it returns. That means separate channel reporting, stable metric definitions, and regular updates that include misses as well as wins. It also means explaining how a partner-led sale differs from a direct one.
The rest of the organization needs to provide clarity as well. Channel teams need to know the company’s priorities and the operating plan, how direct reps are compensated when a partner is involved, who owns the customer, and what rules govern conflicts. They need access to the data that proves their value, from finance, sales operations, and the CRM. And they need to know who makes the call when departments disagree.
Without transparency on both sides, channel leaders spend their energy negotiating ambiguity instead of building partner performance.
When departments are misaligned about what the channel does, it’s the channel leader’s job to inform them and win their support, and to do it before the budget conversation, not during it. You can’t fix a belief you haven’t mapped.
That’s why we developed the Alignment Assessment here at Channelnomics. It maps where an organization’s view of the channel is strong and where it’s weak, so channel leaders know where to focus their consensus-building. The result can be clearer priorities, better internal support, and fewer surprises when budgets and plans are set.
Yes, I’m still surprised we need to have this conversation. But I’m no longer surprised why. Channel leaders have spent years learning to speak the CFO’s language. The next step is making sure the rest of the organization understands what the channel does underneath it all.
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Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.