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Put more horsepower (and profitability) into your vendor relationships

December 14, 2017

Put more horsepower (and profitability) into your vendor relationships

Are you getting the maximum value from partner programs? The connections IT services providers have with vendors should be secondary only to the relationships they have with the clients. There are certainly cases where they may be more important than a single customer, and their value continues to increase as the complexity of the technology grows.

But everyone in the channel knows tech is just part of the equation. Vendor-partner relationships are built on many variables that tend to change over time depending on the needs of the providers and the suppliers. IT service providers often make their way up the chain from simple spiffs and rebates for products and services sold to getting MDF and other incentives for delivering more complex (and higher profit) solutions. As business models shift, the speed and magnitude of those variations often increase, which is why channel partners should be evaluating the value of their program participation on a fairly regular basis.  

As in any business activity, strategy is key. “Most providers follow the 80/20 rule when it comes to partner program participation, focusing most of their efforts on the vendors who drive most of their solution business,” suggests CompTIA Faculty Member Rebecca Rosen. In fact, the association’s research shows the average IT services firm maintains between 20 and 30 supplier relationships, meaning companies they work with on at least an annual basis. Of that group, just 6-8 vendors receive the bulk of their business, time and energy.

The hard part is determining which relationships are worth that level of commitment and investment. “In other words, who do we need to be strategic with?” The factors that go into those decisions are numerous, including the provider and client value of each particular vendor's offering, the partner program benefits and the supplier’s business model. The latter is crucial if the company has its own direct sales team.

That’s why IT services firms have to build solid relationships with their vendors, to get to know they key people responsible for the channel and any related programs. That may include members of the board, the executive team, marketing and communications professionals and the legal staff. And don’t forget the standard channel support crew; sales, channel account managers and the product management team. Changes in those groups can be devastating for providers who have few connections, which is why the breadth and depth of manufacturer relationships is crucial.

Rosen offers a number of channel-related best practices for good partnering, as well as several examples of how not to do it, during the presentation. Each of these key strategies is drawn from the CompTIA Quick Start Guide to Profitable Partnering, a peer-developed channel resource that providers can use as a template for build more valuable manufacturer relationships. That engagement plan includes:

  1. Understand the Organization—What do providers need to know about their partners?
  2. Think Like a Vendor—What are their objectives?
  3. Work the Partner Program(s)—How do partners earn the top benefits?
  4. Manage ConflictWhat are the rules of engagement?
  5. Align Roles—How deep and broad should the relationships be?
  6. Evaluate the PartnershipsHow does a provider measure relationship success?

The answers to all of these questions, as well as detailed recommendations, are included in the free CompTIA Quick Start Guide to Profitable Partnering. Download and check it out today.