Digital transformation is impacting every sector, across every industry, on a global scale. Delivering a strong value proposition during the ongoing digital transformation is a complex, multifaceted endeavor that warrants a new vision, which incorporates new approaches to partner engagement and incentives. The enterprise has never experienced this level of upheaval before and established brands are scrambling to update or replace IT systems before they are overtaken by disruptive brands leveraging digital strategies. Technology changes have resulted in vendors offering new, advanced solutions and services across a wide range of categories. Revenues have shifted from hardware and software to applications, and from transactional to recurring revenue business models.
Technology partners have changed their offerings and business models to accommodate the demand for business-focused solutions from their customers while adapting their businesses to these new technologies. Digital transformation of partner businesses requires new skill sets, and partner companies willing to adapt and evolve. Moreover, the digital transformation is disrupting existing channel financial and incentive models, which keep impacting every level of the channel ecosystem.
In addition, end user B2B customers’ buying habits have changed dramatically. Such trends have contributed to the continued growth of services available to solution providers interested in expanding their portfolios, including converged telecom and IT services, managed print services, software, platforms, infrastructure-as-a-service, and managed services.
The impact on partners and their businesses has been significant:
- Barriers to entry have been lowered (cloud, virtualization, modular architecture), making it possible for partners and vendors to create applications quickly and at a lower cost.
- Margins are under siege on all sides; partners must zero in on their specific value add and hone their focus on key, defendable points of differentiation.
- Integration is not optional; partners are expected to make customers’ applications work together seamlessly.
- Subscription models pay off more slowly; partners must find a way to sustain themselves through a lengthy “ramp-up” period to get to positive cash flow.
So, when your channel partners say, “show me the money,” it means that they expect their vendors to present a value proposition that is aligned with their challenges and the ways they measure their business performances and gauge their profitability. You (vendors) must be able to demonstrate how their channel strategy and partner programs have a positive impact on partners’ business metrics. The following are practical guidelines for a successful “show me the money” strategy:
- Identify which partners can benefit most from your solution offering and help you grow revenues and market share. Spend time with a representative partner of each partner type. Listen and learn. Understand their business drivers and challenges. Once you understand the partners’ core business metrics, develop the value proposition and program elements that directly relate to their core business metrics. The level of and investment in the value proposition and related partner program elements vary by partner tier. Remember, value propositions will vary by partner type.
- The most important aspect of an effective value proposition is for a vendor to “translate” the value proposition into measurable KPIs and to share those KPIs with (managed) partners for the partners to have a clear understanding of how the vendor-partner relationship will affect his/her business. Your value proposition, partner program, and business plans with top-tier partners should contain the following elements:
- Set up checkpoints and use your partner advisory board to validate changes that you are considering to both your value proposition and partner programs, along the way. Incorporate their feedback in the “final version” for a more effective value proposition.
- “Rinse and repeat.” Technologies and market dynamics are constantly changing. So are your partners’ business models. Review your value proposition and partner programs at least annually with your partners and benchmark the competition to ensure your position as a market leader.
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