Embracing the Channel
Randy Seidl
Board Member | CEO | CRO | Executive Recruiter | Sales Community Leader | Advisor | Consulting
Embracing the Channel
Leveraging the channel has been a topic that has come up in nearly every conversation I have had recently with partners, customers, and advisors.
Frank Rauch , longtime channel leader and one of the best in the business, shares his best practices on embracing the channel and finding reliable partners.
Thank you Frank!
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“I, in large measure, learned how to sell right and learned the ways it means what it took to To, to close a deal, if you will. And so after college I couldn't be a car salesman. I went to college.
I had a degree in marketing and so I had to go get a marketing job somewhere. So I went to work for Volkswagen, Porsche, Audi, in their mid-Atlantic region as a marketing analyst. And it was a fantastic experience because I worked with 70 dealerships in a five state region and I also got to work with the, their ad agency, Doyle Dan and Bernbach, famous New York Madison Avenue Ad Agency where I was very early on in my career, I was schooled in something called the psychographics of the automobile purchaser.
Which has served me extremely well in my sales career in terms of understanding the psychology of why people buy and why they buy certain things."
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Randy's Tips to Sell More ?? Excerpts from Your Go-To Sales Advisor
Accelerating your Sales Career by Embracing the Channel
By Frank Rauch
What the Idea Is: Most companies do business through an indirect channel (i.e., a group of resellers and distributors who represent and sell your product). This definition has expanded through the years, but we will stick to this definition for this discussion. These resources can prove invaluable to help either new or seasoned sales professionals crush their numbers.
Why It Is Valuable: The first half of my career was more or less in direct sales. As a very junior sales rep right out of college pounding the pave- ment in my blue and grey suits for IBM, I realized sales was not going to be a cakewalk. I had the number one brand in the industry behind me, but I just did not have the contacts to be as successful as I wanted to be. So I found the channel. It was an amazing revelation and a point of acceleration in my sales career. All of a sudden, I had channel partners, many of whom have become lifelong friends, introducing me to top CIOs. This took months, maybe years, off sales campaigns, which eventually led to promotions, President’s Clubs, and of course more commissions.
How It Works: The question is how you find reliable partners who can not only execute sales campaigns but can also represent your corporate and personal brand. This is a task any sales professional has to take very seriously. There is no five-star guide to partner capabilities. The selection process requires research. The key attributes you should be looking for are peer and customer references, competitive positioning, resources, demand-creation capabilities, extensive customer base, and overall integ- rity. That sounds great; now all you have to do is find them. It may not be as hard as you think. Your channel team, peers, customers, and digital resources can help accelerate your success in this search?Congratulations! Now you have found a group of partners. The next step is to create mutual alignment. The easiest, most direct route comes from a quote from the movie Jerry Maguire: “Show me the money.” The fundamental hurdle is that your money is a different currency than your channel partners. Most producers of goods or services pay their sales reps on revenue, bookings, and now ACV (annual contract value). Your channel counterparts are usually paid on a percentage of gross profit, often referred to as gross margin. Your ability to understand, align with, and influence this concept is critical to your success.?
The gross margin calculation is a simple one, yet it is misunder- stood by many. Gross margin is calculated by subtracting the price (usually from a distributor) from the sell price by the partner to the customer, divided by the sell price to the customer. For example, you are selling a product to the customer for $100 and your cost from the distributor is $80. Your gross profit is $20, and your gross margin is 20%. It is not always as simple as this basic equation, but it is a good starting point for the conversation. The next point is how you, as a direct sales rep, can influence this outcome. You can increase the margin by allowing the partner to provide services, which typically is more profitable than product sales, or you can offer the partner deal registration (an exclusive discount increase to incent partner value). If you learn and practice this skill, you will thrive with a community of loyal and aligned partners.
The next question is how many partners you need. Your first instinct is probably to say, “As many as I can get.” This may not be the best answer, since an infinite model is usually a dilutive model, which will not produce the loyalty and results required. An easy way to think about this is by looking at the rules of five and thirty-three.?
This is a basic guideline to determine channel coverage. If you are an individual contributor/territory sales rep, you need 5x the channel reps and you need the channel to contribute at least 33 percent of your pipeline. This is also an easy way to create a dashboard and key performance indicator to manage your territory.
I have spent the second half of my career leading channels for HPE, VMware and Check Point. I have been humbled to have received a lifetime achievement award, have been recognized in the top twenty-five channel sales executives, have mentored over twenty people who are now leading channels, and have led teams to more than seventy channel awards. As I look back through both the direct and indirect sales lens, I realize it is not one or the other but both that contribute to success. Wishing you the best on an incredible sales journey. Don’t forget to celebrate with your channel partners, become a lifetime learner, and never lose sight of the people you met on your road to success.?
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