In my stump speeches at partner conferences this year, I identify the No. 1 challenge that faces channel partners (and the tech vendors whose products they represent): partners’ inefficacy in reaching and resonating with line-of-business (LOB) decision-makers. It’s a disconcerting challenge indeed, due to the fact, of course (as Forrester’s Business Technographics® data repeatedly demonstrates), that LOB executives have strong influence over technology solution purchase decisions.
But that tide could be beginning to change. At Salesforce’s Dreamforce conference last week, Salesforce’s COO Keith Block lauded its channel partners, attributing much of Salesforce’s success in the past year to partners’ success in engaging C-level executives. Block specifically called out channel partners for their ability to empathize with CEOs’ goals of growth and shareholder gain. Block also claims that 40% of customers are insisting on channel partners’ strategic involvement in effecting solutions and business outcomes. And Salesforce tends to direct that business to its channel partners with proven business chops/acumen.
While Block’s partner callout may be considered more the exception than the rule today, it is still encouraging. Some channel partners are making the requisite investments and changes to regain relevance in the largely LOB-driven cloud era. And it shows in the data: Customers’ penchant for cloud channel sourcing has more than doubled, from fewer than 25% of cloud service/solution purchases via the channel in 2012 to more than 50% in 2016.
I’ve been invited to present at several partner conferences this year on the topic of how channel partners should transform their businesses, specifically in light of declining discount margins and digital transformation. Yes, you heard me right – declining discount margins. It’s not happening across the board, but the general trend in the tech industry for the past couple of years is that vendors are reducing the discounts they are offering to partners (but some are rolling out programs that can boost partners’ profitability in other ways).
To more than compensate for shrinking discount margins, I posted last year that there is a new wide world of value-added services opportunities for channel partners – particularly “away from the box” value-added services (as opposed to “close to the box” services involving installation and configuration), driven largely by the upsurge of line-of-business buyers: planning, adoption services, change management, risk management, multi-vendor management, and benchmarking, to name a few. For example, we just interviewed a Google partner who is seeing significant growth with its customer success program.
The tech value-added services (VAS) business used to be so easy: Your channel partners would provide installation, configuration, training, and maintenance services for all vendor products that they resold. Their — and your — primary value target (i.e., whom they sold to) was the IT organization. And the required expertise was in the products, not the customer’s business. But technology itself — including cloud computing and the Internet of Things (IoT) — has upended the VAS market. Forever.
· Cloud technology has pretty much wiped out the installation services business. And it’s not just tech products/solutions that are affected. Pretty much everything B2B is now offered to customers “as a service.”
· IoT technology promises to do the same to the maintenance services business. For example, Thermocable, a British manufacturer of heating cables, with the help of IoT developer Concirrus, created a remote monitoring solution that generates automated alerts on a cable breakage or damage, as well as triggering technology to take remediation action remotely — in effect displacing partners’ onsite support services.
We recently completed our evaluation of 14 through-channel marketing automation (TCMA) vendors in “The Forrester Wave™: Through-Channel Marketing Automation Platforms, Q3 2015.” The TCMA Forrester Wave was oversubscribed — besides the 14 evaluated vendors, there are an additional 10 to 15 TCMA vendors that we are researching. Obviously this is a very fractured market, even considering the growing number of companies — across B2B industries such as healthcare, insurance, manufacturing, tech, and telecom — now leveraging their channels to amplify their marketing.
Last week, Zift Solutions, a leading TCMA vendor, announced that it will be, in essence, acquiring “semi-competitor” SharedVue — “semi” because SharedVue didn’t qualify its product for the TCMA Forrester Wave. SharedVue has been owned and controlled by The Channel Company, the corporate entity behind CRN (IT channel journalism), Xchange (IT channel events), and IPED (IT channel training and consulting) since 2010. SharedVue’s product is strong in its content syndication core, but the company has done little to expand the product into a broader, fuller TCMA platform involving marketing campaign packaging, digital asset management, digital marketing tactics support, etc.
For the past 30 years, most B2B channel professionals have thought of their channel as a sales channel. Indeed, in the “good old days,” the standard operating procedure equated to the B2B manufacturer/vendor doing the marketing, the channel partner the selling.
But times have changed. The 5-person “box-pusher” channel partner model of the past has, for the most part, gone the way of the dinosaurs. Today’s successful channel companies are diverse, vibrant business engines, firing on many cylinders, including innovative value-added services, managed services, business consulting, eCommerce, billing aggregation, and marketing. Today’s channel is much more than a sales channel; it’s a marketing, sales, delivery, and support channel.
The majority of channel partners now employ their own professional marketers and marketing programs – which can be a good thing or a bad thing. Left unchecked, channel partners’ marketing efforts can ignore, dilute, confuse, or (worse!) damage a tech vendor’s brand. Leveraged, channel partners’ relatively newfound marketing prowess represents a powerful amplifier for tech vendors to extend their marketing reach. At Cisco’s Marketing Velocity event this spring, many Cisco channel partners evidenced a marketing aptitude for digital customer engagement that rivals that of many tech vendors.
Three years ago, I wrote a report on a then-forthcoming SMB market phenomenon, characterized as the “SMB phoenix.” Gleaned from interviews with new (at the time) small business founders, our research indicated that these new businesses “rising from the ashes” of the 2008-09 recession were poised to mark a significant departure from the SMB market of yore. Headed by a new breed of entrepreneurs, these SMBs were characterized by their optimistic growth projections, their bigger investment in and broader utilization of technology, their marketing prowess, and their relative self-sufficiency. In many ways, they act more like an enterprise business than a classical SMB.
In addition to our extensive Forrsights data on customers’ technology adoption trends, issues, and opportunities, we are engaged on a regular basis by tech companies to research various aspects of the SMB market. One of these recent projects, commissioned by Symantec, involved a deep dive on the SMB phoenix market to determine if it had evolved according to our projections (N.B. Symantec refers to the SMB phoenix as “accidental entrepreneur”).
I expected the original SMB phoenix premises to be borne out, but not to the extent that the research concluded. The differences between SMB phoenixes and their predecessors are astounding! Faster growth? Almost four times as many phoenixes project that their employee headcount will double in the next two years. Technology? Phoenixes have a broader (by about 25%) software deployment footprint, which is characterized by much greater propensity to go cloud. Self-sufficiency? Phoenixes’ technology decision-informing skews heavily toward their founders’ prior enterprise experience, their employees’ input, and online resources; their predecessors’ toward VARs and traditional media like print and radio.
This year (next month) Forrester’s Technology Sales Enablement Forum will sport a new channels track. With a theme of “Bridging the Strategy-to-Execution Gap,” we will drill into the issues vexing channel professionals on why “perfect” strategies, involving partner recruitment, partner enablement, and partner loyalty, often fall flat with channel partners.
I’m particularly excited by being joined on stage, not just by my colleagues Dane Anderson and Michael Speyer, but by [yes, real live] channel execs Jon Roskill of Microsoft and Wendy Bahr of Cisco. Jon and Wendy are going to share their insights and their most effective techniques around channel enablement – i.e., how their companies’ channel teams empower their channel partners to effect maximum productivity. Attendees will have plenty of opportunity to grill Jon and Wendy with their particular issues.
Moreover, Dane, Michael, and I are going to bring “the voice of the channel partner” directly into our explorations of partner management execution. I’m sure you’re going to take away some valuable, actionable ideas for boosting your own channel strategy-to-execution map. Check it out:
Forrester’s Technology Sales Enablement Forum 2012
Lurking in the tech channel shadows are the various manifestations of the newly emerging e-channel: online application stores, online communities, group buying sites, and e-purchasing services. For example, the number of small to medium-size businesses (SMBs) that sourced software products from online application stores increased almost 40% from 2009 to 2010. (I’ll publish the 2011 channel numbers next quarter.)
Joining the application store ranks of Intuit Marktplace, NetSuite SuiteApp.com, and salesforce.com AppExchange this year have been Adobe Marketplace, Cisco AppHQ, Constant Contact Marketplace, Microsoft Dynamics Marketplace, and Microsoft Office 365 Marketplace. Online communities OfficeArrow, OpenForum, and Spiceworks now offer software products. You could imagine e-purchasing services, like Rearden Commerce and Concur, expanding their travel services domain to other B2B products and services (like software). And this is just the tip of the iceberg – believe me, there are a lot more tech vendors and communities that will launch e-channels in the next six months.
All this e-channel activity, from both the provider and customer sides, has got to toll a warning bell for traditional channel companies – and their vendor partners, who have to keep them appeased. Perhaps most vulnerable are the DMRs (direct market resellers) (although the DMR gorilla, CDW, is taking strategic steps to expand its services portfolio in becoming more of a solutions provider).
I’ll be researching the impact of this emerging e-channel further, so if you have ideas or perspective to help guide my research, please share.
Tech marketers often fret over their marketing mix, but it’s usually couched in terms of “how” – e.g., “How do customers get information about us?” or, “Do we have the right mix of web content, events, blogs and [now, of course] social media conversations?”
We know that all those “how” things are not equal. Customers utilize web content more than events, and events more than blogs. But every bit as important (if not more), and sometimes not taken into consideration, is the “who” of the “how.” In general, customers highly value tech vendors’ websites and events, industry analysts’ research reports and blogs, channel partners’ online videos, and social media conversations with peers. But customers’ go-to information source preferences vary by industry, company size, and geography. [For more information, see the Forrester report on “The Who And How of Influencing Customers’ BT Decisions.”]
With social media stacked on top of websites stacked on top of events stacked on top of collateral … well, I don’t have to tell you how complex marketing-mix allocation budgeting has come to be. But designing your mix model on a “who-what” framework simplifies the model, and goes a long way to ensuring that you’re investing in the information sources that customers are tapping.
. . . but bad reactive marketing can make the problem much worse.
[co-authored by Zachary Reiss-Davis]
As has been widely reported, in sources broad and narrow, Amazon.com’s cloud service EC2 went down for an extended period of time yesterday, bringing many of the hottest high-tech startups with it, ranging from the well known (Foursquare, Quora) to the esoteric (About.me, EveryTrail). For a partial list of smaller startups affected, see http://ec2disabled.com/.
While this is clearly a blow to both Amazon.com and to the cloud hosting market in general, it also serves as an example of how technology companies must quickly respond publicly and engage with their customers when problems arise. Amazon.com let their customers control the narrative by not participating in any social media response to the problem; their only communication was through their online dashboard with vague platitudes. Instead, they allowed angry heads of product management and CEOs who are used to communicating with their customers on blogs and Twitter to unequivocally blame Amazon.com for the problem.