Critical initiatives in tough times

Critical initiatives in tough times

Local Insight

Current economic circumstances require steady hands from both vendors and channels. This article focuses on initiatives that vendors should consider in terms of their actions and by which channel partners should assess their vendors’ performance and responses to tough times.

Channels will become even more important during tough economic times as users look to their “trusted advisors” to help them navigate IT spending and contain costs. So what sort of initiatives, strategies and tactics should vendors and channel partners expect in these times?

1. Increase the quantity and quality of vendor channel management resources (at the expense of direct sales, if necessary)

Vendors that have the correct channel strategy will find channels provide leverage, address market opportunities and reach new customers. In tough times, existing customer relationships that partners have are the easiest, quickest and most cost-effective means of sustaining and growing business. It is more effective to add a product into that existing relationship, than to build new relationships.

2.Trust is easily destroyed and slowly built

Most channel partners are privately held businesses, not subject to the quarterly public reporting pressure of public companies. The increasing importance of services, and the investment and lead-time required to build service capabilities, means that channel partners have taken relatively large risks in committing to a vendor. Consequently, allowing direct sales teams to for example, “bend” previously agreed rules of engagement and segmentation between direct versus partner business, will have a devastating effect on a vendor’s channel relationships.

3. Cash is king

The capital adequacy of many partners, coupled with the financial position of many of their customers, particularly SMEs, highlights the criticality of cash fl ow. Vendors should consider using their balance sheets and cash positions where possible to provide prudent financing, to both assist customers in purchasing and in alleviating the financial situation of those partners that should be supported. This type of program has already been provided by some vendors and will become more necessary.

Vendors should also consider providing financing and advisory assistance to partners in acquiring other partners. For example, there may be a partner with valuable technical skills that add substantial value to the vendor “ecosystem” but who cannot make their business work. Rather than losing those skills, another partner may be introduced and supported by the vendor in acquiring that partner.

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