The death knell has sounded for partner tiers. Whether it’s bronze, silver and gold, or registered advanced and platinum, the days of segmenting partners hierarchically based on volume or revenue are over.
This is according to the latest research from the University of Huddersfield, in conjunction with channel marketing experts Coterie. The qualitative report, based on interviews from across the channel spectrum and end-users, found that although there has been some restructuring to the way partners are segmented, these changes don’t go far enough.
It’s time to face facts; the current structure isn’t working.
Across the partner ecosystem, everyone from the channel heavyweights to newer start-ups have based their segmentation on sales at one time or another – either volume or revenue. And yet just because one organisation has three times as many salespeople, doesn’t qualify them as an expert (aka Gold) in what they’re selling, implementing and servicing; it just means they’ve got more salespeople, or are better at selling.
The competitive nature of the channel means partners are always looking for a differentiator and being segmented by vendors according to volume delivers advantages only to the larger players. So the bigger players continue to get bigger, while the smaller, often more nimble and entrepreneurial partners, are left languishing with bronze or registered status.
A tiered structure offers little advantage to vendors that are missing prime opportunities for innovation with smaller players. For the larger channel players, volume or revenue segmentation means they have to strive to sell more to maintain status, placing focus on sales, rather than customer service or the right solution to solve particular customer problems.
And let’s not forget about the customer in all of this. The channel must become more customer-centric, and to do that, segmentation should reflect what customers are looking for. No one chooses a partner because they’ve sold the most. Customers select partners based on their expertise, their proof of experience and their ability to demonstrate how they can help that customer achieve their business goal. None of which is reflected by labelling partners after precious metals.
Instead, the research discovered that partners want segmentation based on skills and expertise mapping. Vendors should focus on partners specialisms, both vertical on specific sectors or horizontal on technologies, and reward the expertise, knowledge and experience that partners have achieved within their chosen area.
By properly mapping their channel and segmenting accordingly, vendors not only ensure that every sector of their market and implementation process are covered (and equally other areas are not saturated), but also deliver much-needed differentiation to partners.
The ecosystem mapping process also helps vendors to overcome the challenge of scale. By segmenting partners according to skills and expertise, vendors achieve a much clearer understanding of what their partners need – whether that’s help with marketing, technical skills or sales. Without this process at the outset, vendors are simply operating a ‘spray and pray’ approach when it comes to partner support – a costly and unfulfilling exercise.
And, the research respondents said, the most important thing is that this mapping and monitoring process is constant. The channel is by its very nature an organic network – changing and morphing depending upon market, societal, economic and customer influences. Therefore, the way the channel is segmented should also be open to evolution.
This requires agility, especially when it comes to marketing throughout the partner ecosystem. Helping partners to adapt, ensuring they have the right skills and reach to hit their segment, and the right support to secure the customer is essential.
However, according to the research, this support won’t always need to come directly from vendors. As the ecosystem develops, new relationships will form and partners will share skills across the ecosystem, depending upon the strength of each partner, the requirement to shore up the customer and deliver the best service/implementation.
There is no perfect channel structure and certainly no one-size-fits-all approach that will benefit every vendor and partner. But with solid research that proves a hierarchical channel based on volume isn’t working, one thing is certain; it’s time for change.
By closely mapping and monitoring the ecosystem and basing segmentation on expertise, the channel stands the best chance of creating opportunity, with the right skills and support in place to ensure deals are won and customers are happy.