The Red Velvet Rope

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The Red Velvet Rope

Popular nightclubs have a red velvet rope next to the line outside. Outback Steakhouse did better when there was a line outside. Everyone wants to go to the popular place, the in place. Today, the VIP Room or VIP Experience are hot luxury items. So why is your channel program all about recruiting with a mirror?

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By that, I mean, if you can fog that mirror, you are a partner.

Shouldn't partner programs be more like the NFL or NHL draft than an army recruitment office?

Wouldn't it be better to not sign up everyone?

It would certainly help providers' partners if there was demand for the service offering and if there was just a handful of partners to supply that demand. Instead we have little demand* for the services and everyone can be a partner.

That is the VAD theory, because a value add distributor is similar to a store. They can carry anything. They are in logistics, warehousing and distribution. That is all the value they bring. In stock or not?

On the Master Agent side, I just don't understand the signing up of 20+ UC providers, 10+ data center providers and 10+ Microsoft Partners.

For perspective, USLEC had 26,000 clients when Paetec bought them; Cbeyond had 51K when Birch acquired it; 8x8 has 48K. These aren't large numbers. "In 2012, according to U.S. Census Bureau data, there were 5.73 million employer firms in the US. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses, and businesses with less than 20 workers made up 89.6 percent." [SBE] The sweet spot for businesses, according to CompTIA, is 10-100 employees, which represents a 20% slice of the overall market - or 1.8 million businesses. FYI, 50K of 5M is 1%.

What's my point? No one is crushing it (or ever will). A lack of funds, crappy marketing (if any), no focus and flawed strategy that is poorly executed are all factors that mess with success in telecom. If AT BEST you are going to get 50K businesses, do you really need 450 to 2500 partners signed up to hit it?

Wouldn't providers do better with the zealots?

Verizon and BellSouth/AT&T used to be exclusive. Partners could only sell their services. It worked out well for both parties. It meant there was focus, specialization. Co-selling worked too.

By signing up every master agency, vendors think they get access to more partners. They don't. Most partners use 5 (five) master agents. VARs use at least 2 (more likely 3) different VADs. So by signing up more partners, vendors get their logo in more places, but they don't get more partners. In fact, what they DO get is to fork over more dollars for events.

The model can't last much longer. And if they did the numbers over the last even 4 years, they would find that Pareto knew exactly what he was talking about. Also, that the amount of busy work given to channel managers is just piling up. Hard to hit quota when bogged down with recruiting, quoting, selling, reporting, funnel and a hundred other things.

What vendors confuse is exposure for demand; logo placement for marketing.

I've written about it often and enough. Where's the competitive analysis of the marketplace? Who is your target? Why do they buy? Why YOU and not THEM?

It is very different with network. Lit buildings and fiber routes are the factor. You don't have that with managed services or security or cloud. The limiting factor for voice/VoIP/UC is LNP which has mostly been solved (except for pockets of independent IOC territories).

Put up the red velvet rope. Sign up, train, on-board and work with partners who actually want to work with you. And limit that. It builds up the relationships that you have. It makes your partners stronger.

It isn't going to limit vendor revenues, because vendors are probably quoting and saying YES to stuff that they shouldn't be. Vendors are NOT getting deals that they would like to - or that they built for - because they are too busy chasing every single partner and every single opportunity. In the process, the vendors are diluting their message (brand) and wearing out their channel managers. But hey what do I know. I have not only seen this playbook, everyone has a copy of it, and yet no one is winning using it.

*DEMAND = after 15 years, UC has only penetrated to 29% of the market? CLECs have been around since 1996 and can't get more than 1% of the market - in 20+ years.



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