RC did have some wins last quarter: RC "closed six deals with TCV north of $1 million dollars up from five in Q4. One of these wins was at Hyatt Hotels Corporation. Hyatt will be replacing legacy Avaya system at their headquarters with RingCentral Office."
Some factors that are shaking things up: Avaya bankruptcy; 8x8 and Shoretel hiring bankers for strategy; and Toshiba leaving the North American market.
RC states: "For each dollar invested in sales and marketing, we continue to see $9 of revenue and $7 of gross profit over the projected life of an Office customer. " A number of UC providers should take note of that stat.
In the last 15 years, 52% of the S&P 500 have disappeared.
According to the CDC, "more than half of Americans have cut their traditional phone line and now only get wireless phone service." The other half is paying more and more for POTS service.
Verizon sold its data centers. It also sold its cloud services unit to IBM .
CenturyLink sold its data centers to a coalition of PE firms that also bought a collection of cyber-security firms. The new company will go by the name Cyxtera Technologies and it will be run by the former CEO of Terremark.
Gary Testa left Polycom last March to become President of Star2Star. That lasted 11 months, then he quietly exited telecom. Michelle Accardi has his position now. I am guessing the IPO is on hold.
John Oliver took on the new FCC Chair (former VZ lawyer btw) and net neutrality again. Want to comment on the FCC proceeding ironically named Restoring Internet Freedom (Docket 17-108) head over to the domain www.gofccyourself.com
I tried to explain this to several security people. Thankfully now there is a study. "More than 70 percent of SMB IT managers say budget considerations have forced them to compromise on security features when purchasing endpoint security," according to a survey by VIPRE.
All these Rapid Expansion press releases are funny. Yeah, you are following the Long Channel Strategy of signing up everyone you can. No idea how that pans out for most since it is a million dollar cash deal. Each of those master agencies will need co-marketing dollars just like the multitude of vendors that signed up with the likes of Jenne, Tech Data and other VADs. At some point, the cost to get a sale may be too high.
VZW has a co-sale model for One Talk. AT&T has co-selling. But RingCentral is taking this further. There is the partner, a channel manager and a SME from RC involved in each sale - from 1 seat to a million according to the release. All three getting 100% of commission. That will get expensive quick.
I would like to stop seeing ridiculous numbers in the press releases: "over 2,200 sales partners are now offering our services" and "we have more than 4,000 partners" and "300 Master Agents signed up" and the best: "8 Master Agents, providing 200,000 sub-agents". STOP!
]]>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.
]]>If you cannot see the flash mp3 player, you can listen on SoundCloud HERE or download the mp3 HERE.
]]>This and some other moves clearly closes the book on the era of the CLEC.
Southern Light got acquired by UNITI Fiber (formerly CS&L which was the Windstream spin-off REIT) for $700M.
The Intelisys division of Scansource finally revealed that they acquired Kingcom, the exclusive Verizon partner that they run their VZ business through. Just bringing it all in house.
There were more announcements of companies picking a SD-WAN partner: OneStream picked Versa; Star2Star chose Velocloud; Nitel chose Versa, too. This is quickly becoming like Hosted VoIP/UC. It will quickly become a commodity, faster than any technology the channel has sold.
AT&T bought Straight Path for a billion dollars for the spectrum. Any spectrum is property with a water view right now.
]]>They are jumping on the bandwagon for a number of reasons.
One is Consolidation. The new landscape of Ethernet is cable and ILEC. The CLECs are mostly all gone. You have to expand the catalog beyond just network operators and VoIP.
The other reason is price pressure. Pricing across all telecom products - mobile, bandwidth, Ethernet, VoIP - has been declining about 3-10% year over year, creating a problem for the operators and partners. When pricing craters, you have to sell more and more and more to maintain the same commission level. At some point, just selling network isn't going to work because you can't close enough deals or even fill a funnel fast enough.
When 1GB pricing is less than what 10MB pipes were just six years ago, think about how much you have to sell and how fast.
Even the current price war in VoIP/UC isn't helping. Because there isn't enough Demand for UC - the demand is for POTS replacement and dial-tone - the price per seat has dropped. It hovers just below $20 right now.
I understand that the customer wants the cheapest price - and it is easier to take the order when you find the lowest price - but you have also just lowered your commission.
Providers are starting to cut commission points when they lower the price. Partners and Channel Managers aren't happy. Well, then sell it at rack rate.
So carriers consolidation means fewer vendors and pricing compression means less overall commission. More vendors are needed. Luckily over 600+ vendors have entered the space in the last three years while more than one-quarter of the partner channel have moved on. Retirement, M&A, and business shift/pivot have resulted in a lot less sales partners at a time when there are so many more vendors to choose from.But to be realistic choosing a UC vendor among the 2000+ available is like picking Red Delicious apples at the grocery store. They all look the same. How many do you want to smell and test for firmness before you pick one?
The cloud computing piece, as we found out two weeks ago, is owned by Amazon. AWS and S3 are hosting about one-third of the web!!!! Rackspace, CenturyLink, Azure, Google Compute, IBM/Soft Layer and the others haven't really stepped up their marketing game (even in the wake of Amazon's outage.)
Businesses are moving to SAAS, IAAS and other computing environments. Partners are in a position to offer assistance to businesses in this regard. It is uncharted territory for many, but the business model has shifted to wallet share. If you want to survive (and thrive), it is about getting more wallet share from the customer. That means selling them email, Office365, VoIP, colocation, security and more on top of the network and bandwidth that makes up the typical sale.
We have seen a number of press releases in the last 4 months about SD-WAN - mainly about SD-WAN providers signing up with carriers and with master agencies. SD-WAN the new UCaaS!!! This technology could be the next big thing, but they said the same think about IP Centrex (VoIP) over 15 years ago and about WebRTC.
Our biggest problem: We push Product. That's right. We are a bunch of Product Pushers. We would make ideal drug dealers because we don't create demand, we just push a product on someone who wants it.
We don't sell Solutions. We don't even offer Solutions. The vendors don't offer solutions either. They pimp products. It makes all of this really hard to sell.
]]>After 15 years, 2000+ providers can only take a 28% handhold in the market?
The growth rate of Hosted PBX (HPBX/UC/UCaaS) has always been a hopeful bad guess. And it will continue to do so because too many people, companies and dollars have been invested thus far for any analyst to turn on the sector.
There are 4 major problems with the UC Market.
One, PBX sales have declined about 3% per year. Even Avaya going bankrupt isn't going to speed that up. Not only do people trust boxes; they are cheaper in the long run. Single location businesses, which is most of them, don't have a PBX problem that UC solves. There is a current Product/Market MisMatch that needs to be examined.
Mobile UC may get more traction. Or a simple PBX like Dialpad or Fone.do. Gary Kim writes that the market may be too small. At ARPU of $400, it takes a bunch of sales to move a needle for a company like CenturyLink, Verizon, AT&T, Comcast or Charter.
Two, I wrote this last week. Any 15 year old product needs a re-fresh or re-think. We are overdue for a Re-Think. Slack was a re-think, but that strays to the edges of what UC is. So does Cloud Contact Center. And these companies want to be everything for 1-1000 employees. This isn't Pasta or Rice. This is technology.
UC is Change. People hate change. The Channel doesn't sell Change; we take orders on replacement services. Harsh but mainly true. There are exceptions of course, but the general rule is that agents are transactional. Even Inter-Connects aren't excited to go sell a cloud service. MSPs will if it is white-label and can be bundled into their package, but that falls into POTS Replacement more than a full-blown UC deployment.
Three, HPBX has 2 camps of buyers: POTS replacement sold as cheap as possible and actual UCaaS. Where do you think most of the market is? Right, cheap VoIP.
Now if I am buying cheap VoIP, am I also going to pay for a backup circuit or SD-WAN or any other service enhancement or assurance? Unlikely -- or I wouldn't be buying cheap cable broadband and the cheapest OTT voice!!!
If the buyer spends more on bandwidth, has a backup circuit, they are likely going to buy UC as BC/DR and that isn't cheap VoIP.
The fourth Big Problem: There are far too many providers! Telarus represents at least 37 HPBX vendors. Other masters have at least 25. How does anyone differentiate/ stand out/ position in a marketplace where the cloud broker has a choice of 2000+ providers?
This becomes a problem for the providers who enter into a Price War (seats cratering to below $15 each) and a SPIFF War, where providers are literally buying sales.
One of the most successful HPBX providers, 8x8, is up for sale. This move comes after a recent re-branding as a Global UCaaS provider.
Are the owners (the 8x8 founders still own most of the voting stock) looking to exit? Or is it that the machine to keep bringing in 20% growth quarter after quarter is grinding down? I just don't know who would pay $1.5 Billion for 8x8. VZ payed $1.8 for XO which owned fiber assets. WIND payed $1.1B in an all stock deal for EarthLink, who also had a bunch of fiber. Fiber gets a bigger multiple than VoIP.
The other thought is that what if $300M is about all the B2B annual revenue you can get?
From a recent discussion about Amazon Chime: there are approximately 100 million phone/conferencing lines in North America. If Amazon Chime with Vonage can hit a 5% share of this market, that equates to 5 million subs. At $5/seat/month, that is $300M incremental revenue opportunity for Vonage. That would be a needle mover for most UC Provider, considering 8x8 is at $225M in annual revenue now.
The emphasis has always been on multi-location and mid-market. That's why "41% of larger enterprises are using cloud UC services." Now everyone is focused there (upmarket). However, the bulk of the businesses are single location small business (20 million of them). That means a new product bundle is needed to attract this crowd. Many thing that this sector will be mobile only with an auto-attendant in the cloud.
When you look at the large number of messaging apps, at some point, one of them - Slack, Messenger, WeChat, HipChat - will hit the right bundle of functions to steal mass appeal. Not yet, but maybe soon.
]]>That typically means that more agents are needed each year to bring in those deals. Unfortunately, the channel is aging. Many are nearing retirement. And about one-third of the VAR crowd pivoted to other tech business models (like coding).
Master agencies have a habit of doing 100% pass through of commission between themselves. That worked when the carriers were paying an override for hitting bronze, silver or gold level (as in the BellSouth program). Then the masters were running off of the override.
Today, we have MDF and co-marketing funds, but mostly these are used to finance road shows and events. These events are for recruiting and vendor awareness, but also face time, training and fun. But there are more and more of them. And carriers have a set budget for marketing dollars. That budget runs out fast!
Those MDF monies are NOT used to float the business.
Let's do the math on a pass through. It takes at least an hour to collect commission from one carrier. That person is making, say, $16 per hour, which is $24 per hour after taxes and benefits, etc. It costs about $2 to cut a check to the other agency. So a 100% pass through is actually costing your business $26! And that is despite the size of the deal.
If it is a cable deal (ARPU of $350) or a OTT VoIP deal (ARPU of $400), the commission is $35 and $100, respectively because commission rates for VoIP are higher. Even if you keep 5%, that is $17 and $20 respectively. You still lose on a 95% pass through.
There are a number of pass through deals. So many that it is hard to track who the underlying contract resides with.
That is also a lot of W-9 IRS forms to track!
]]>RingCentral's channel head penned a post about the strategy to hit all the large master agencies. I see press releases every week of providers signing on with distributors, because that is what master agents are now. They even call themselves distributors. They are like a brokerage house of vendor contracts.
Agents used to get a reputation as commission shoppers, but in today's environment it is almost encouraged. The Agent Alliance was set up to help volume buy for master agents. To reduce risk by putting a lot deals through one good contract.
Masters pass through sales back and forth all the time. For example, Verizon deals typically go through one of the handful of platinum partners. Some of it has to do with quota and volume needed. Some of it has to do with the one-stop shop experience that they are portraying. Some of it has to do with programs like VZ, AT&T and Comcast needing experts to navigate the programs.
The masters look more and more like VADs such as AVNET or Tech Data. Large numbers of vendors are trying to get their SKUs in the catalog with the strategy of hope that this will be enough. That if we can just get in Jenne's catalog we will be sailing!
There is a big problem with that: sell through.
What happens after you ink the deal with the VAD?
These programs work great for a specific business. One type of business is specialty shop that offers a narrow niche of products, like Fireeye or Juniper (for people that don't want Cisco). Another is a vendor with demand created by the vendor in the buyers' realm, like IBM, Cisco, Comcast, Verizon or Microsoft.
In the case of Microsoft and IBM, software licensing for under 10K seats is a pain in the butt. Better to let a VAD handle that. It is what they are designed for. In the case of hardware like Cisco or APC, the VAD is like a warehouse and logistics partner. Microsoft and Cisco helped create demand by making a certification ecosystem that generated demand through experts who were married to that product line. (Very hard to duplicate.)
Now if you are just one of 20+ VoIP providers in a catalog, how does that help you? It is a commodity game at that rate. To a certain extent, you are hoping for name recognition. For example, if it is LSI, Panterra, RingCentral, 8x8, Vonage Business, Star2Star, Broadview, Broadvoice, ShoreTel, West, Evolve IP, Momentum and say an MSP reselling CoreDial underhis own label. How does a partner decide? Seriously. I would be curious how executives at the ITSPs think that decision tree goes.
Factors that may influence that decision include price, SPIFF, integration, feature set, the channel manager and past experience.
Most VARs have accounts with multiple VADs (TD, Ingram, D&H, Synnex), in case the gear is not in stock near the customer site. However, when moving to white-label or hosted solutions like email, backup, and even software licensing, VARs will be picking one vendor. They won't want to log into multiple systems to see the status of that client's email or license is. One portal. So now those huge numbers of VARs who would buy gear from you just shrank because they are picking a single source for hosting.
Agents don't want to become familiar with 20 provider systems and platforms. They want far less. The more familiar you are with a service and the environment around that vendor (quoting, features, ordering, support), the easier it is to sell. Less unknowns means comfort, means trust. Trust is required for sales. Remember that list of VoIP Providers? Name recognition - the brand - can convey trust.
There is an expensive and time consuming process for sell through. DSCI and TelePacific have been going through that since the merger. National road tours, webinars, numerous master agent events, expos like NextGen Cloud and Channel Partners, promotions, SPIFFs - to tell the story, to get your name in front of the partners. It isn't ink and done. It is ink, then go push that rock up the hill every single day! Hustlin' as Gary Vee says.
The other factor is sales friction. Personally, I never even consider selling cable because waiting 15 days for a site survey is total garbage, especially when the direct side gets it done in three days. There are carriers I won't work with because I have in the past and got burned. (I am not alone here.) The easier you are to do business with the better.
It is getting harder and harder to sell through channel because of a number of factors including industry consolidation; musical chairs; too many vendors not enough partners; Noise and Attention; the cost of sales acquisition during both a price war and a SPIFF war; and buyer budget constraints.
The noise of UCaas, SD-WAN, DDoS Mitigation and cyber-security are getting louder every day. To the point that it is just noise, not a resonating message, but more like when that car pulls up to you at the traffic light with the music blaring drowning out the music in your own car. So you roll up the windows to drown it out. Yeah, that's where we are.
]]>Hwver, today Equinix bought 29 data centers in North and South America from Verizon for $3.6B!
Equinix continues its expansion in major cities ignoring the Tier 2 and Tier 3 cities that other data center companies are moving toward. That expansion to the edge "is an industry wide shift in focus to edge computing and having these peripheral data centers in tier 2 markets might very well be a more comprehensive strategy to having a footprint where your clients need to be. In the Future, clients will look to the edge, meaning closer to their end users and subscribers as they expand out from their primary markets," remarked Dany Bouchedid, CEO of the data center master agency COLOTRAQ.
Bouchedid continued, "As an industry we need to collectively adapt and do away with old ways of thinking even if we are still taking about traditional data centers. This reminds me of the wireless cell site deployment era. The initial deployments were always tier 1 markets yet once that reached a saturation point, the carriers had to move to where more subscribers resided. So they began to expand into tier 2 and 3 markets. What we are seeing in the data center industry so far is purely demand driven."
It is also profit driven. Data center companies are real estate companies. It is why a few of them are structured as real estate investment trusts (REITs). It is why investment dollars flow into a third, fourth and even a sixth data center in an NFL city like Atlanta, Chicago or even Phoenix.
CenturyLink just sold their data center business for $2.1B to a coalition of PE firms headed by the former CEO of Terremark. C-Link was getting enough out of their data center business AND they needed cash for their Level3 bid.
Meanwhile agents are left wondering about commissions. Will the new company continue to pay the commissions? Or will that fall to CenturyLink? Who is billing the client now? Which company will the customer renew with?
Tierpoint rolled up Windstream and other data centers. They are held by a PE firm. This is a risk for channel partners because of the potential for sale. In other words, will your well written agent agreement be enough to continue to see commissions after a sale like CenturyLink's or even Windstream's?
One executive at a master agency noted, "The battle between Digital Realty Trust and Equinix continues! IO, Cologix, and Interxion are next."
]]>Jeff Ponts of Datatel; Emmett Tydings of AB&T Telecom; and Chris Palermo of GCN joined the podcast this week to talk about the M&A in the industry and what partners can do to mitigate risk in 2017.
It has been a turbulent year with a lot of mergers and acquisitions. It makes people anxious.
Jon Arnold is a fellow blogger who recently saw Guy Kawasaki keynote Nextiva's event. The one thing lacking in telecom is Innovation. As partners, WE need to innovate to the tune of adding new skills, being creative, thinking through problems and cross-vendor solutions.
Give this podcast a listen - and leave your comments.
If you can't see the flash mp3 player, you can listen on SoundCloud HERE. Or you can download the mp3 HERE.
]]>But then the article goes sideways, because, for the most part, channel partners don't do demand generation. Service providers complain to me because they have to do lead gen FOR the partners.
The author works for a marketing automation company. Everyone thinks automation means magic. It still requires the same ingredients: permission, great content, relevance and attention. Hammering more irrelevant content at your partners isn't going to help.
In fact, the biggest issue from providers is getting any Attention from the actual partners. As it turns out, signing up VADs (like Jenne or Tech Data) and large Master Agencies isn't the end all be all. It takes a lot of effort, time and money to get to the partners on the other side of that contract to actually get the sales coming in.
It is extremely hard for the smaller or new providers because they have no brand and no demand. In addition, in many cases no idea what impact marketing would have on their business. Automating noise without a clear, concise, relevant message to the proper audience is throwing money away (and annoying people).
]]>If you can't see that flash mp3 player, you can download the mp3 or listen on Soundcloud.
]]>CenturyLink just sold off its data center business that was a combo of Qwest Cyber Centers and SAVVIS to a group of PE firms for $2.15B in cash and C-Link keeps a minority stake worth $150M in the new company. CL bought Savvis for $2.5B in 2011. Buy High; Sell Low. Bell-Head Mentality.
The PE coalition that bought the data centers also grabbed 4 cyber-security firms in order to announce this global security co, to be run by Manny Medina, former CEO of Terremark Worldwide.
Wired's headline says it best: The World's Telecoms Are Under Threat From All Sides.
Broadband, cellular and voice are all flat or declining markets.
IAAS and PAAS are ruled by Amazon, IBM and Google. Microsoft only got into the game recently and is doing better than all the telco's combined.
PE firms are buying up data centers as the world adjust to cloud computing, an app market and streaming TV and radio.
DDoS attacks are happening too often. So are Hacks. There are not enough fingers to fill all the holes in this dyke.
UCaaS is ruled by 8x8, Vonage Business, RingCentral, Fuze and a bunch of other providers that are not a telco. The PBX market may be shrinking but not fast enough for the other Hosted VoIP players. Cisco and Microsoft have chunks of the enterprise UCaaS business that the telcos don't.
Comcast Business is at $6B in annual revenue, which makes it a bigger CLEC than almost all that are left. WIND does $5B. EarthLink less than $1B. Birch and TelePacific are private. Level3 does $8B. CenturyLink does $17B (much of it ILEC revenue). Zayo is $2B.
Apps like Messenger, WhatsApp, Skype and Slack are replacing voice and SMS and even email. It is a topsy-turvy world. What's a telco to do? Well, merge! Get bigger because bigger solves nothing, but it makes money for top execs in the C-Suite and the Board room and on Wall Street.
Our economy spins on e-commerce and the Internet. When the companies that provide that Internet are too clunky to do it properly, what happens to our economy?
We went from a five nines voice network of reliability to cell phones and VoIP that quite frankly can't be more than three nines. Have you noticed the number of outages lately by telcos and cablecos?
There is a lot going on. There are many areas of opportunity, but the fall back from these guys is "more of the same", "do what I know" and "one more quarter!". None of these transactions is good for the industry, the economy or the consumers. They are stop gap, short term money movers. We are going to wake up shortly and realize that it is 1970 all over again. It makes the NSA job easier when there are few players, but what about the customers?
In the data center space, one master agency contacted me after the C-Link announcement to tell me that the folks at CenturyLink have no details about the sale. How can that be when Monroe has been trying to sell the DC division all year? Great planning, guys!
Whose customer is it? Will the agent still get paid? Will the customer see a price increase? Who is the billing entity? Who will the customer be paying? These are good questions that bothered some TELX customers when Digital Realty took over.
I keep seeing executives at master agencies say these deals are good. Do they say that in print because they have to?
Don't forget that you can leave a public comment with the FCC on any of these mergers. You can voice your opinion here. You will need a docket number but you can google it after the filings are in the system.
]]>For the most part channel programs just sign up everyone. Or at least every master agent and VAD that they can get to ink an agreement. A common strategy, but for the most part an ineffective and expensive one.
It used to be the Duopoly sales strategy to hire hundreds of sales people. And that worked for a little while - until the expense over took the outcome.
Also, when you have that many sales people, the competition is high - and the tricks and dirty play happen. Especially in telecom, where people fondly remember the hey days when they waited by the phone and took orders. Today, they have to hunt and educate and create solutions. That is a LOT of work for a lot less compensation.
Everyone treats the products like a commodity because they are. It is how they are built and marketed. All ME-TOO. No vertical. No niche. We serve 1-10,000!!
SIDE NOTE AS AN EXAMPLE:
Who has an app? I got an app. What does it do? "the Hub app includes collaboration features that allow end-users to make and receive calls from any device as if they were in the office," CP writes. This isn't me picking on Birch, but you could have better explained the benefits. Like just saying app is going to make everyone jump. Psst... UC-One is an app that Birch's vendor, BSFT, offers.
So when you have 1200 partners and sales are flat, what do you do?
Your team commits to "over 75 different events to draw in new partners and expand education and support for its existing partner base." [CRN] Think about the expense of that. (I'll wait.)
Seeing an opportunity, the software vendors are clamoring about their PRM (partner relationship management) solutions.
"Impartner has enhanced the ability of channel chiefs to optimize their channel operations and accelerate revenue with the announcement of a new interface for the Impartner PRM solution," announced by Channel Vision mag.
"Convey Services today launched Align™, a new cloud-based Partner Relationship Management (PRM) and channel marketing solution." [PR]
And one master agent, AVANT, has re-branded as "a channel enablement company. We are passionate about helping partners learn how to sell leading next-generation technologies with our intelligent distribution methodology." And they have an app. "AVANT's BattleApp is our proprietary partner portal that is a central place where our channel partners can go to learn, research, qualify, register and close opportunities."
The next step is to (A) get the app downloaded by all XXXX number of partners; and (B) get the using it daily, which is where the struggle begins.
The problem isn't Content. The problem is the on-boarding is minimal. It isn't structured. And that goes back to the fact that you just wanted to sign up as many folks as can fog a mirror. Most don't know your company. They don't what you do. They don't know who would buy your stuff -- or why anyone would buy your stuff over the other 400 or 2000 providers that sell really similar stuff. And you do a poor job of explaining THAT!!!
You don't look for Alignment or Complimentary or anything in partners. You look for numbers. Yet if you take into account Pareto's Principle, then your 1200 partners is really 120 getting a check (if that many). So why did you sign up the other 1080??? Because you don't want to have tiny hands?
End of the day Enablement comes from Recruiting, On-boarding and Aligning. It takes all 3.
I wrote a 5-part series on Sales Enablement in 2013. I have helped a number of programs with it. In addition, I write a column about this for every issue of Channel Vision magazine that you can read online or download.
]]>Some are wondering what vendors to look at. Who is real and who is not. Who will be around to pay commissions in three years?
Hint to one data center company: Don't tell partners that you are owned by a private equity firm famous for cashing out. That isn't a way to win our minds or orders. Also, do NOT tell partners at a master agency event that they can go direct with you. WTF?!
In the past month I have been asked numerous times if Microcorp is for sale. The answer: "As a member of the Microcorp Advisory Council, I can assure Microcorp is not for sale but actively looking to buy!
Since the ScanSource deal, a couple of master agencies have announced that they were investing in the business and want your business. (see HERE and HERE.) One sub-agent seemed upset by this and called in fear-mongering. Is it?
The VAD space is in turmoil. All of them are seeing revenue drop. All are trying to figure out how to take advantage of cloud and MRR to shore up revenue erosion. ScanSource gambled on an easy fix - buying Inteisys - except that their stock tumbled afterwards.
If you haven't worked with a VAD, it isn't exactly the same as what Agents know as a Master Agency. VADs are more automated and focus on logistics and distribution of licenses and hardware. Sales isn't about co-selling, but product information. There isn't a whole lot of need to order track a software license or a server. VADs run on co-marketing dollars and razor thin margins. Masters are labor intensive. The hand holding that the agents and VARs will need to navigate selling telecom, cloud and managed services will be a shocker for the likes of ScanSource.
The upset sub-agent must not understand what every Agent I have ever talked to does: Diversify your income streams because everyone gets screwed in this business. . If ScanSource held you to a firm partner contract with quota and activity requirements - or at some point stops paying your commission - what do you do? It will cost you almost a million dollars and years of your life.
It's about mitigating risk. No one has a crystal ball, but you can take steps to give yourselves a safety net. You don't have to, but it is sound business practice.
The other dilemma, which kind of caused all this, is the lack of new partners. The VAR segment has shrunk in the last 4 years. Too long to go into now, but with moves that Microsoft and Cisco made, some partners opted to pivot out of the VAR space. Others made the move to MRR as an MSP with a lot less emphasis on hardware sales.
At the same time, price erosion resulted in commission decline. Meanwhile, not many new faces are entering the channel. At every channel event - I have been to 4 in the last few months - the number of folks under 45 is a fraction of those partners over 45. This business is getting old.
At the same time, more vendors are entering the marketplace for cloud, managed services, IOT, analytics, blah, blah, blah. More vendors but not more salespeople. We are at a point where the channel is the cheaper option for sales for most vendors and carriers. In the UCaaS space half of new mid-market logos come from channel partners. The cost of sales via channel is lower than the cost of a direct sale. But without new blood in the channel, what happens in even 5 years?
More vendors coming into the space with even the same number of partners just doesn't work out mathematically. Verizon is aware of the problem and is working on it with partners. But they seem to be the only one, because it seems many are looking globally for sales right now:
AVANT hires a UK channel manager. Intelysis goes to Europe. Tech Data is buying Avnet's technology solutions group for $2.6 billion to expand into Asia.
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