The channel has always been good at the moment of sale. That's what we built it for. Find the customer, close the deal, collect the coin. Everything else was somebody else's problem.
That model is running out of road.
Technology spending is growing at 10% to 13%, but that growth isn't spread evenly. Unless you're making semiconductors or training AI models, you're fighting for a smaller slice of a market that's more crowded and more confused than ever. New logos are harder to come by. Meanwhile, the customer you already have is easier to lose. Switching costs have collapsed. Platforms are increasingly comparable. A customer who isn't seeing value can walk, and the partner who brought them in loses the annuity they thought was permanent.
I think about the customer relationship in three stages: the pre-sale, where the relationship gets built; the engagement period, where the customer actually uses the product; and the renewal, where retention and expansion happen. Vendors and partners pour resources into the first and third stages. The middle gets almost no attention. Yet the middle is where the outcome is delivered, where value is perceived, and where the renewal is actually won or lost.
The math is unforgiving. Our analysis shows that the difference between 70% and 90% renewal rates is a 4.5x acquisition burden. For every customer the high-retention vendor keeps, the low-retention vendor has to go out and find four and a half more just to keep pace. That's an exorbitant cost to pay for ignoring the engagement period.
So the question for channel chiefs isn't whether to reward partners for outcomes. It's how. That means defining what a healthy customer looks like, measuring partner contribution during the lifecycle, and aligning compensation to the results partners actually help deliver. It also means getting closer to the customer's business. Vertical practices — real ones, with talent, integrations, and fluency in the customer's language — are how partners earn the standing to influence outcomes, not just sell contracts.
The incentive is shifting from what a partner can earn to what a partner stands to lose. That's the pivot. It's not easy, and it won't happen overnight. But the partners and vendors that make it will own the middle, and the middle is where the money is.
In this episode of “Changing Channels,” GoTo channel chief Mike Day joins Channelnomics CEO Larry Walsh to discuss.