End Channel Conflict
Its a story as old as the IT channel itself: a reseller contacts a vendor for product information to prepare a customer bid; next thing you know, a vendor sales representative tries to steal the customer with a lower price.
Such incidents could be the result of an unstated policy within the sales staff that the vendor should take business direct whenever possible; it could also be an isolated action by rogue sales reps desperate to make quota. Either way, its a recipe for acrimony between vendors and channel partners. Its also an indication that something is broken in the vendors sales operation.
Of the two situations, the rogue salesperson is easier to deal with. A reprimand with the promise of dismissal for a subsequent offense should take care of the problem. But implied policies, sanctioned with winks from managers, are tougher to change. Vendors should keep in mind that the channel is a community in which competitors are also frequent partners and that theyre in constant contact with one another.
When word gets out that a particular vendor is stealing customers, the result is bad for the vendor. Unfortunately, some vendors never get it.
So its especially gratifying when a vendor really does get it and decides to move all its sales exclusively through the channel. That is the case with manufacturers such as NEC Solutions America and Panda Software, both of which recently decided to discontinue direct sales and work only through partners.
Panda executives said the security software company more than doubled its sales in the past year, which led to the inescapable conclusion it needs the channel more than ever.
On the surface, it may seem paradoxical to want to move 100 percent of a vendors sales to the channel when the company is growing so fast. After all, if it aint broke ...
But it is precisely because the company is so successful in growing sales that it makes sense to do business exclusively with the channel.
Panda executives concluded rightly that investing in the infrastructure to sustain the companys growth would have proved too costly. Instead, the company is reassigning its sales division to a channel-support role to leverage the channels extensive infrastructure.
NEC is doing the same for its Itanium servers, software and storage solutions. After analyzing a number of channel programs from various vendors and hybrid models that combine indirect and direct sales, the company decided that it would reap bigger benefits from abandoning its direct strategy altogether.
Pedro Pereira is a contributing editor for The Channel Insider. Pereira covered the channel from 1996 to 2001. He took a break, and now hes back. He can be reached at firstname.lastname@example.org.
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