There are many reasons why channel partnerships in the area of complex B2B sales fail to deliver expected results. Launching sales through a new channel results in many of the same obstacles you might encounter when launching a new product with your own sales organization. There is often mis-alignment with the channel partner on the buyer being targeted or the size of the deal being pursued. In other cases, the channel relationship may fail to deliver due to reasons completely beyond our control. These partnerships are doomed to failure from the start regardless of who is assigned to support the relationship and how well s/he executes.
In many cases, large companies lack the collaborative sales culture necessary to jointly work deals with partners. In other cases, the channel deal you just signed might be step one in a science experiment being tested out by a new CEO. And in some scenarios, your partnership agreement may just be a box checking exercise being pursued to satisfy the criticisms of an industry analyst or activist investor.
#1) Direct Bias and Sales Culture
Another common reason for channel partner failures is simply culture. Many tech companies have grown up selling their own products with their own sales teams. But as these companies grow larger the resources of product development teams become consumed with supporting the existing install base of customers with maintenance releases and enhancements. Getting new and innovative products to market becomes more challenging. As a result, product management organizations start to look externally for innovation through partnerships. However, establishing buy-in at headquarters between the executives of the two companies is usually the easy part. The real challenge is getting the two field organizations to embrace the partnership.
Getting two sales teams to work together in the field is like trying can be like getting two members of an arranged marriage to fall in love. The two teams need to learn to develop a level of mutual trust. New partners are often nervous that the other partner is going to do something to undermine the deal. Sales leaders with giant egos often need to learn swallow their pride and “play nice with others.” It just may be the case that a $20B company needs the products of a much smaller $50M company to help them win a $10M mega-deal.
#2) Partnerships are the Flavor of the Month
The idea of partners goes in and out of fashion at many large companies. Every few years, CEOs get frustrated with the lack of quantifiable ROI from investments in partnerships. AS a result, they fire the channel team to free up budget to pursue a new product idea or an adjacent market. Then, like clockwork, a few years later a new CEO shows up who asks why the company isn’t more focused on partnerships. Shortly thereafter, a new group of business development leaders will be brought in to resurrect the partnership function.
However, building a partner-friendly culture within a company, especially a large one, is a huge transformational effort. A significant mindshift change is required not only in sales, but in customer support, professional services, and corporate marketing to make partnerships work. Even the CFO needs to adjust his/her expectations with a willingness to offer double compensation to sales reps and make investments in headcount that may take years to pay off.
Programs to build a renewed focus on partnerships have a high failure rate. Those that are successfully typically take years to reach that state. New, outside executives brought in to change the culture and develop a partner friendly mindset often have a short life expectancy. Beware of companies who issue red-flag statements such as:
“We just brought in a new executive to lead up our partners and alliances team.”
“Our sales team historically has been reluctant to embrace partnerships, but our CEO is trying to change that.”
#3) Hidden Sponsor Motivations
What is the real reason why the channel partner wants to remarket your product? Is the product management team trying to put together a story to cover feature gaps in their solution so they can better position themselves in the upcoming Gartner Magic Quadrant? Is the CEO trying to react to board, shareholder or activist pressure to invest in a new market that they have not been able to pursue organically? Is the development team looking for case studies of third parties building on their platform?
Listen carefully for the true motivations of the sponsors at the channel partner. Odds are high that the sales team does not have the same motivations as the product management or the global alliances team. The sales team does not care about analyst positioning in a new market, building platforms, or activist challenges. The sales team is driven to close the largest deals possible with the minimal amount of effort. And they are unlikely to invest any time or effort in learning a complex solution from a partner that is outside of their wheelhouse.
Be sure to uncover the true motivations of the executive sponsors at your channel partner in order to have realistic expectations about the outcomes.