Conflicts between partners can lead to disastrous business results
In technology, there is always a way to solve a problem. It may not be simple, easy or cheap but you can come up with something that will work. Business problems on the other hand are harder, more complex, and don’t have easy solutions.
Channel conflict is a really good example of a complex business problem that doesn’t have an easy solution. In fact, if it can lead to a disaster. Channel conflict can be at times a Mexican Standoff where there isn’t a good strategy to create a positive outcome, but the outcome is more likely just failure.
What is a Mexican Standoff?
First of all we don’t condone the use of violence or guns, but we are fans of westerns, action movies, and the Office. If you are too, then you know exactly what we are talking about. A Mexican standoff is when 2 or more people in conflict have a gun pointing at each other. Here is a great image from the Office.
In this scenario, there is no easy way out. One wrong move and disaster strikes where everyone loses.
What are Channel Conflicts?
Channel sales is one of the biggest ways companies scale their revenue and sales. Channel partners include resellers, franchises, managed service providers, integrators, indirect sales and agencies. These are used by companies to scale and grow. Conflicts come between these organizations and even with the company. Conflicts can be with pricing, terms & conditions, bundling, product assortments and more. It’s an age-old problem.
Here is an example we experienced recently. Names have been changed to protect the innocent.
A large cyber-security company was vying for a contract that was worth over $100M that their direct sales team had sourced. The project was at a high profile company and the establishment of their technology would ensure leadership in the space. They also found out that several of their partners were also bidding on the same project. Strategic partners like Accenture and Booz Allen as well as mid tier and smaller partners. What should they do? Should their direct sales team try to win and make their strategic partners unhappy? Should they call off their direct bid and let their partners win and take a lower margin? Which partners should they support to ensure success; strategics, mid tiers or smaller? What path would ensure that their technology would not be
Key things the brand company considered:
- The strength of their bid vs. partners’
- Their partners’ ability to succeed in bidding
- The impact to their direct sales team
- Their relationship with each partner
- Who brought the opportunity first
Key areas the brand company didn’t have visibility but had a big impact on winning the deal
- Strength of the relationship between each potential bidder and the sourcing company
- Existing projects partners had at the sourcing company
- The relative success and failure of the bids
Picking a path was fraught with no win situations:
- Their direct sales team would lose out on their targets and commission
- Partners could end up using competitors to win the deal
- Supporting one partner over others damages their channel reputation
- Competitors taking advantage
Who would you support to win the deal? What do you think was the best course of action for the company? Is there a winnable scenario that you see?
Can this ever be resolved?
The exponential growth of competitors and alternatives is making channel partnerships more important. The leverage channel partners have is also growing. What we learned was data and information helped with the decision making process.
Digitizing the channel partners is to go beyond a partner portal. It’s about getting data and insights similar to what you get from Google analytics. It needs to help make informed decisions, create healthy channel partnerships and support your business objectives.
Are you ready to get transparency into your channel? Contact xAmplify