Channel intimacy

It is the latest buzz phrase for channel managers at major vendors and it is also an approach that will drive up margins at both a distributor and reseller level (according to the vendors). It is ‘channel intimacy’ and more vendors are integrating the concept into their Middle East partner programmes as they try to go deep with a select number of partners in the region.

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By  Stuart Wilson Published  April 12, 2006

It is the latest buzz phrase for channel managers at major vendors and it is also an approach that will drive up margins at both a distributor and reseller level (according to the vendors). It is ‘channel intimacy’ and more vendors are integrating the concept into their Middle East partner programmes as they try to go deep with a select number of partners in the region.

The one noticeable trend underpinning the drive towards ‘channel intimacy’ is the separation of distribution and reseller management roles at the vendor level. More vendors are now employing account managers to work alongside strategic second-tier partners in the region and ensure that they drive ever-deeper commitment in the business relationship.

Will it work? Possibly, as long as the second tier partners themselves get to grips with the fundamental shift in mindset that this channel evolution requires. Many resellers have in the past made the most of working with multiple vendors and switching between different products and solutions as per the requirements of each individual customer.

In the brave new world of channel intimacy, this way of doing business gives way to one where the partner themselves becomes known as a specialist for working with one specific vendor — and that is a brave step to take. The partner needs to feel supremely confident that the vendor it has aligned with will stay at the very top of its game and supply the products and solutions that customers ask for time and time again.

It is a little bit like a supermarket deciding to stock only one particular brand of a foodstuff, confident in the knowledge that it will not drive away any customers and will enjoy a stronger relationship with that supplier as a result.

Extrapolating this process of commitment a step further, we also start coming back to the perennial debate concerning best of breed or one-stop-shop solutions. And this is where the channel needs to start taking some tough decisions. By focusing the vast majority of their efforts on solutions from one vendor, resellers are immediately limiting customer choice. Pick the wrong vendor and there is a strong possibility that your customer will eventually defect to a solution provider that does work with the vendor that the customer craves.

There are no right or wrong answers for channel partners when it comes to determining whether or not they should pursue a policy of channel intimacy with a select few vendors. It is easier to build up specialist skills within the organisation when you take this path but it is also much harder to position yourself as a true multi-vendor trusted advisor that customers can have complete faith in.

Pursuing ‘channel intimacy’ and total partner commitment is a valid policy — but only for the largest and most powerful vendors in the market, or those that offer an incredibly niche and specialised solution that requires a limited number of partners to provide a route-to-market. Vendors inhabiting the middle ground between these two extremes will find it much harder to drive up the levels of intimacy with both distributors and resellers.

For those distributors and resellers that are tempted to commit to one vendor, there are a few points to remember. It is the business equivalent of putting all your eggs in one basket and it does introduce a new dynamic to the vendor-partner balance of power.

If you build your whole business around one vendor, you become totally reliant on their ability to evolve the product portfolio in line with customer needs and maintain their brand equity in the market. If the preferred vendor loses its way and starts to suffer, the partners that have committed deeply to that vendor will also feel the pain.

Don’t get me wrong; there are financial benefits for partners that commit to specific vendors: increased rebates, greater access to technical skills, allocated leads, MDF — the list goes on and on. Just make sure you understand why these goodies are being handed out and acknowledge the business rationale behind a vendor’s channel engagement model based on commitment and intimacy.

Vendors will admit that it is always best to under promise and over deliver when it comes to dealing with customers. The same applies to partners in their dealings with vendors. Keep your options open and always have an exit strategy ready. Keep the vendors on their toes by playing them off against each other where necessary and always remember that the most important person is the end-user.

Building channel intimacy with a vendor can be a rewarding experience for partners in the Middle East; just make sure that it doesn’t turn into a fatal attraction.

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