A recent visit to a long-standing MSP / IT Services Provider in the US highlighted the background for this post. The reality is, vendors over the years claim they have a "channel program" but most of these have been a "me-too" rather than a true partnership avenue. This is something that in 2018 is still far more common than it should be, we are talking about companies trying to ride the line between channel-only and direct. We wanted to dive into the story that sparked this but also take a look at the steps any MSP new or old can take to ensure the vendors they are working with will support them rather than circumvent them all together.
Back to the original story...
During a visit to a 20-year MSP prospect, we spent quite a bit of time try to listen to the things that are important to the selection of a new vendor from their view. Something that they made very clear is the history of vendors that they attempted to adopt in the past only for those vendors creating conflict between themselves and their customers they tried to bring to the table. Obviously, we were talking about VoIP with them and they didn't hesitate to give us their recollection of the following story:
The company had worked previously with a large nation-wide voip solution (remaining unnamed) that promised them support directly for their customers and a seemingly great (on paper) channel program. They immediately signed up and became one of their fastest growing partners in the top tier of the program! Who wouldn't want to make commissions, cut out the support, and only have to work at it on the sales side?
A simple phone number was given to their clients and would give them direct support whenever needed for the phones. This all seemed great and flowed well up until the dreaded realization that while on those support calls with the MSPs customer, the vendor was trying to cut the MSP out of the deal by offering renewals and other services directly to the customer. As soon as the client would "upgrade" or buy a new service they immediately were moved to a direct customer and the MSPs revenue stopped. Even worse this company tried to work with them and asked for the heavily discounted rate that was given to their own client and the vendor told them no, that rate was an internal offering only not available through the channel program.
The major problem is once this starts occurring now your customers believe you marked up the service just for the sake of marking it up. This creates major trust issues and can do a lot more damage than losing that client for a single service, you could lose them all together. We have heard this story too many times to count over the years across all services or hardware an MSP can offer. We have touched on this lightly over the years in our blog with it being a cornerstone of the bvoip company beliefs. However, we want to take a larger dive into this problem and see if we can help!
This is obviously not the first vendor to have channel conflict vs internal/direct sales...
- How many times have you sold hardware from one of the largest consumer & business computer providers only for a catalog show up in your end customer's mail? And then having an internal sales person call on your customer and try to sell them direct? And then offering them pricing that seemed to be less than what you were quoted?
- How many times have you found that the marketing a vendor starts to step on the toes of your own bundled products and services and then your customer is starting to question who is delivering what service?
- How many times has a vendor called on your customer directly instead of engaging you first about changes at the vendor level and then passing them to another "partner" that isn't you?
- How many times has a vendor emailed or called your customer and had them renew or upgrade services directly without you knowing?
If you have been in business for a while i'm sure the answer is many times to the above questions. And that is where things are concerning when you invest a lot of time, energy, and consulting into a relationship only for a vendor your brought to the table starts to create issues in the relationship.
How do I know if a Vendor has a REAL Channel First / Only Program?
This is a tough item to identify but there are some steps you can take in your selection process to help you identify the true channel-only vendors from the posers! We brought together some of our closest friends from different vendors and partners to discuss this topic and have the below list to help:
- Some items to look for?
- Is pricing publicly available on their website?
- Do they advertise to the general public? (Joint-marketing with an MSP excluded) TV, Direct mail (magazines, flyers, etc)
- Have you reviewed their marketing over the last 24 months? Does that conflict with your business strategy?
- Have you spoken to peers who are currently partnered with this vendor? Have asked them the real questions about the relationship? Did you find these references on your own or are these hand picked references provided by the vendor to you directly?
- Do the terms and conditions of the program talk about who is the customer or who? Are they going to market to a client you bring to the table?
- Have you looked on industry forums to see what others are saying about the vendor and their program and general behavior around their channel efforts?
- Did you ask the vendor if they require you to provide end user details to them? If so why?
- Are their terms that your end customers get locked into and what's involved in moving your book of business elsewhere?
- Does your vendor force promotion of their brand and logo to your customer? Do they allow joint branding, no branding, white labeling?
- If they do offer a direct sales model outside of their channel program will they respect any pricing offered directly via the channel program?
- Will the vendor lock in or grandfather pricing? If not, do they clearly present how the pricing will change and when?
Closing Thoughts...
At the end of the day, it isn't always an easy process to select a new vendor, and the above rules are not written in stone. These are some of the best insights we found from some of the best vendors and partners in the space, as always we try to be here as a resource so if you are every uncertain feel free to reach out. The best suggestion we can give you is consult the community, you are not alone in this business, and the community is one of the best things about the channel. In 2018, there are so many communication methods such as reddit, facebook, product communities that we highly suggest you consult for real feedback. We will expand on this topic more closely in the future.
