To answer the question, leadership teams need to understand partners’ value and how to leverage it to meet their objectives.
At Channelnomics, we field questions about best practices, partner strategies, and channel programs every day. In the “Ask Channelnomics” series, we answer some of the questions we receive most from vendors.
Question: We have a new chief revenue officer who asked this question: “Are we a channel company or a direct-sales company?” The channel team obviously supports being partner-focused, but how should we demonstrate that to the new leadership?
Answer: To channel or not to channel — that’s the question all vendors face periodically. Before offering guidance, let’s first address why this question arises.
A pervasive belief persists among those outside the channel that partners — resellers, integrators, service providers — don’t add value to the go-to-market process and instead represent a tax on margins and profitability. CROs, in particular, often will ask why a vendor should compensate a partner for a sale if the partner didn’t contribute at the same level as a direct-sales team.
As Channelnomics frequently reminds people, vendors pay partners nothing. Vendors offer discounts on products sold through partners to secure sales from customers who expect negotiated pricing. Vendors may also provide partners with rebates and back-end incentives to influence and shape behavior. However, partners earn nothing unless they generate a sale.
Vendors excel at creating and maintaining products, as that’s their primary role. However, they can’t meet every customer requirement or scale to cover the entirety of their addressable or serviceable markets.
Partners excel at performing tasks on behalf of vendors for their customers. Regardless of how capable a vendor may be, it can’t deliver everything a customer needs from a technology perspective. Partners provide professional and managed services that fill gaps in vendor capabilities. That’s where partners really generate their revenue.
Channelnomics developed its “ROCKER” methodology to help vendors identify the routes to market that best align with their needs and objectives. When evaluating whether to prioritize direct or indirect models, the channel team should begin with these two questions:
- What can partners do that you — the vendor — can’t?
- What can partners do that you don’t want to do?
The answers often include staging and implementation services, project management, technical support, managed services, user training, and credit management. Any function a vendor can’t perform, or can’t perform at scale, can be deferred to channel partners.
Not everything will fall neatly into this framework. Vendors must think carefully about how to allocate their limited resources and then assess how partnerships can fill gaps. Partners often provide an efficient means of deferring costs, containing expenses, and delivering greater value to customers.
For the new CRO — and for any leadership team evaluating the role of the channel — the real question isn’t whether partners add value; it’s how to best leverage that value in support of broader business objectives.
A well-structured channel strategy enables vendors to extend reach, scale services, and deliver comprehensive solutions that meet evolving customer needs. Demonstrating the channel’s ability to fill gaps, create efficiencies, and drive profitable growth is the most effective way to align with leadership priorities and secure long-term organizational support.
Have more questions? Our analysts have answers. Send your inquiries to info@channelnomics.com. And check out other Ask Channelnomics installments in the Channelnomics Insights section.
