How To Not Cannibalise a Channel Partners Revenue

A vendor and reseller relationship is very simple in a channel strategy - the reseller holds customer relationships, and the vendor wants to leverage these to sell their products. This is where the simplicity stops though, as breaking into these accounts via the reseller relationship is one of the biggest challenges, particularly where the reseller already has existing revenue streams with competing technology. The reseller simply wants to make money so they are unlikely to disrupt/cannibalise an existing revenue stream which, at this stage, likely requires less work in sales cycles - even more so if the new vendors technology will reduce the profit margin on those deals. Therefore, vendors need to approach these situations with care, the unfortunate thing is that vendors will sometimes expect the reseller to open these accounts just because their technology is good. Likewise, a reseller needs to be conscious that the vendor will take the prospecting into their own hands and potentially disrupt the revenue anyway - the vendor isn't going to sit around waiting for an introduction to the customer. As part of a blog series around sales, below I explore some ways whereby a vendor sales or channel team can approach this situation.

1. Educate the channel partner

Sometimes a partner seller may not introduce your technology to a customer because they simply do not understand it enough to articulate accurately. Therefore, ensure an education programme is run with the relevant people to bring them up to speed - help them deliver your elevator pitch, train their techies, provide collateral etc. A partner seller is more likely to position something once they have a better understanding of what it is and how it will benefit their customers.

2. Build a trusted and respected relationship

I have covered this in other posts but it is important enough to mention multiple times. Trust and respect are two of the most important things when working with a reseller. If you gain these then those buying accounts may well open up.

3. Do the maths

Once you have gained trust and identified the customer is a good fit, discuss the current business model with the partner. What is the current revenue, the margin profile, customer spend frequency, split of products vs services, what they are buying etc. Once you have that information work out what it would look like if the customer started buying your technology. If the numbers fall short and the reseller is likely to lose money then find a way to cover the gap. That may be through giving them another net new customer deal, or training them in new services to increase the profit.

4. Find complimentary vendors - build incremental revenue streams

Research what the customer is buying from the reseller, what they are not buying (possibly through another reseller) and gaps where your technology can compliment the existing setup. If you can find a way to add incremental revenue rather than taking it away, the partner seller will feel more comfortable in positioning your technology.

5. Help find net new business

Provide the reseller with some net new business in return for one of their existing/upcoming customer opportunities or at least a chance to meet them - aka 'horse trading'. A great place to be is one for one, that will create a sustainable and high growth business. By giving some new business to the partner you are helping to increase their own book but make sure you get something in return.

6. Seed into the customers with direct marketing

The other thing of course is to take the prospecting into your own hands which all vendors should be doing anyway. It is better to work collaboratively with the incumbent partner but at the end of the day it is your responsibility to seed the market. Therefore start running some marketing campaigns directly into the customer/s. Maybe some mailers, invites to events, cold calling, sharing industry insights that are related to them; there are many ways to do. When you get a catch, just ensure you pull it back into the relevant partner and don't just give it to someone else - consider it as a way to build trust.

By following some of the tips above, you can start to build those key relationships with your channel and gain access to their customer base. Remember, they will not just open the doors, you need to work at it and give them a reason to. At the same time, involve them in any campaigns you decide to run directly with their customers. Keep it in mind that no matter how good your technology is, no one wants to cannibalise their own profit stream - at the end of the day, their book is their blood life.

As always, I value your opinions and if anyone needs some advice/guidance or just fancy a chat then please reach out to me.