Leveraging and Amplifying Channel Strategies During Rich-Sessions: A Guide for Tech Companies

First, to start this article on the right foot – NO, we did not misspell the title. We mean a rich session. This is a phenomenon where white-collar workers are experiencing recession-like conditions (layoffs, reduced budgets, economic issues) while blue-collar workers are not. As I write this, we are firmly in a Rich-Session.? Need to know more about that? Here is a WSJ article explaining more:? https://www.wsj.com/video/series/wsj-explains/blue-collar-vs-white-collar-pay-why-a-decadeslong-trend-is-flipping/8348F0FB-906A-44D1-8897-3CE3A885B206?mod=e2li

So the big question, of course, is – will this lead to a recession? That's for economists to unpack and opine on, and frankly, something we can't do much about! So, this channel expert wants to talk instead about what we can do to act in a time of economic downturns, which, paradoxically, can serve as a fertile breeding ground for new business strategies.

As belts tighten and nerves fray, companies often reassess their go-to-market game plans. Many fall back on direct sales, considering them the safer, more straightforward, more controllable route. However, for companies already using channel partnerships—or those considering making the leap—recessions offer a prime opportunity to maintain and amplify focus on indirect channels. This article elucidates how channel partnerships during tough times can be your business's extra knight on the chessboard, valuable for both offense and defense.

The Fallacy of the "Direct Sales Only or Direct Sales First" Approach During Recessions

For businesses new to channel strategies, the instinct is often to resort to direct sales during a recession. While this approach may offer the illusion of control, it frequently ignores the greater efficiencies, flexibilities, and insights that channel partnerships can provide. Let's unpack that a little:

A Word on Cost Effectiveness

In times of economic strife, cost-effectiveness becomes more crucial than ever. Direct selling demands significant time and financial investments, from training and HR overhead to lead generation. Typically, your direct team will be hit or miss as well, as for every two sellers you hire in an economic downturn, less than one will make quota effectively in year 1; that's an enormous burden for your organization to manage. When you factor in the cost to hire, train, retrain, and then hire again, you can see why this can become costly. Hence, Channel partners, already equipped with skilled staff and customer networks, offer a less resource-intensive alternative that costs you less. There are no payroll runs, insurance and overhead, and rehiring costs to manage. The channel pays for itself. You will need to provide training and tools, but you have to do that already for your direct team, so that's a primarily zero-sum game. The channel saves you money because they don't get "paid" unless they sell something…wish I could say that for most direct sales teams!

Why Companies Already Using Channels Should Double Down

If you're already leveraging channel partnerships, a recession is no time to backpedal. Rather, it's an opportunity to refocus and even amplify your existing channel strategies. Your partners will likely face the same economic headwinds, making it an ideal time to renegotiate terms, implement co-marketing efforts, and reassess your joint goals. The symbiotic nature of channel partnerships means that when you invest in them, especially during hard times, you create a mutual support system that benefits both parties. One area to start with is co-selling, or as we like to call it here at JSG: co-sellabration! Redefining your co-sell program can make an enormous difference in a rough economic time. Think about what is best for the customer and channel first, evolve your co-selling program to be more about celebrating joint wins, and work hard to help your partners enhance their co-selling plans with your firm. Offer planning templates, ABM (account-based marketing) templates, and sales training to help target and close these joint accounts. Together is, in fact, better!

The Flexibility Factor: Playing Chess, Not Checkers

Channel partners offer more than just an extra set of hands; they provide strategic flexibility. During a recession, the ability to adapt and pivot is crucial, and channel partners, who often have local market insights and logistical capabilities, can help companies execute these pivots more nimbly. Think about services. Building your professional services or even installation services can be costly and time-consuming. The partners often already have these services and can provide them at an affordable cost to you as a business. This allows you, for example, to bundle in installation, support, and management through a partner at an acceptable margin to your business and to pay the partner on the back end of that deal for providing the services. In some cases, you can even reverse engineer a services agreement, where you agree to a cut of the partner services fees to be reverted to you in the deal, and they charge the customer for the services. The options are endless and help you flex during times of need.?

Risk Mitigation: Share the Load

A turbulent economy ratchets up business risks across the board. Channel partnerships help distribute these risks, making both parties more resilient to downturns. The diversified revenue streams from various channel partners can act as a buffer, mitigating the impact of localized market declines. They also can help to secure data; as the economy falters, the criminals become more aggressive, looking to make their money despite the economic issues, enter the partner. They can help mitigate those security risks for their clients and across your solution set, making them the right partner in a time of risk.?

Local Market Insights: The Difference Between Hitting and Missing

Especially during a recession, the intrinsic value of local market insights channel partners provide magnifies. Consumer behavior changes during economic slumps, and understanding these shifts at a regional level can be the line between a successful quarter and a disastrous one. As a result, they can better target a hot market or deprioritize a slow market based on localized and industry market trends. This ability to hyper-target can well serve you as the economy fluctuates. Additionally, they save you travel expenses. Because the partner is in the local market, there is no cost to visit those remote clients – both a time and money saver!

Channel Programs: The Blueprint for Success and Expansion

If you're already in the channel game, use the recession as an impetus to reevaluate and strengthen your channel programs. Define the roles, responsibilities, and revenue-sharing agreements with renewed focus, recognizing that clear guidelines can optimize your channel strategies to withstand economic turbulence. Look carefully at your channel program. Are the benefits of value being used to build the business, or are they ignored and unused? Are your requirements overly complex or burdensome in a time of economic strife? Could you waive some of them to allow partners to grow with you despite the economic pressures? Above all else, remember, in tough economic times, invest in lead generation programs with and for your partners. Your expenses for golf events, travel, show booths, swag, unused benefits, and unused marketing programs can be repurposed to generate leads for the partners. This is not to say you should eliminate all other elements in your program; there are events and benefits, for example, that matter, but you should be hyper-focused on spending most of your budget on stimulating demand. Not sure how to do this? Talk to one of us at JSG about how to make the change.?

Conclusion: A Strategic Shift for New and Existing Partnerships

Whether you're new to channel partnerships or looking to maximize existing ones, navigating through a recession requires more than just quick fixes—it requires a strategic overhaul. The benefits of doubling down on channel partnerships during challenging times are manifold, from cost efficiencies and risk mitigation to enhanced local market penetration.

So, don't just hunker down when the economic weather forecast calls for a recession. Reinvigorate your channel partnerships and dance through the downturn. As the saying goes, amid every crisis lies great opportunity. Make sure you and your channel partners are well-positioned to seize it.