Customer-centricity challenging channel – customer-partners needed

For decades, channel partners have aspired to achieving ‘trusted advisor’ relationships with their customers. The concept is so ingrained that it is nearly impossible to separate the notion of ‘trusted advisor’ from the broader sense of being a partner.

But if the market is moving from value addition by the channel to value creation for the end-customer, isn’t it essential to move beyond ‘trusted partner’ status to becoming, in a meaningful sense, a partner of the customer, invested in the customer’s business success?

Techaisle’s WW channel partners study of 2445 channel partners and corresponding US channel partners study of 814 partners shows that 61% (66% in the US) are transforming their organizations to focus on delivering business outcomes to their end-customers, up from 42% three years ago. However, the figure is still below customer expectations which stands at 78%. There are several points of disconnect between the customer and the channel. One of the most important disconnects stems from the notion of trusted advisor relationship versus meaningful customer partnership. Only 51% of partners are building meaningful partnerships (55% in the US) and the balance 49% still believe in being trusted advisors. There is nothing wrong with it except that customers, especially SMB and midmarket firms are looking for a “super consultant” – a firm that can offer advice that is more complete than what is being obtained from most partners and which can move beyond strategy to deliver operational support that is tied to business outcomes.

These firms exhibit a clear preference for advisors who can move seamlessly from advice to architecture to procurement to deployment and finally to management. Nearly three quarters of SMB buyers would like their channel partners to be able to provide technology advice that is directly connected to business issues, and nearly two-thirds want a partner who is “invested in customer success.”

The nature of the sales relationship will be a critical determinant of channel success. 52% of channel partners globally and 58% in the US are still running their businesses on sales quota requirements rather than a book of business. When all channel partners call themselves “advisors” there is no differentiation left across partners. Channel partners need to focus on being a meaningful customer partner delivering customer success. And this falls into the realm of being a super consultant.

Techaisle’s sense is that most current channel partners wouldn’t argue too strenuously with changing the label from “advisor” to “customer partner” or “super-consultant”. They may, however, push back on its implications. An advisor may have privileged insight into a customer’s business, while a partner has an immediate, financial tie to business results. This has an enormous implication for contract structure: advisors are paid on effort, while partners are paid on outcomes.

In the post-transactional world, contracts will need to specify the anticipated benefits resulting from technology implementations, and supplier rewards, at least above some nominal run-rate level and will need to be tied to achievement (or extended via over-achievement) of these objectives.

For channel partners, this is yet another way that the emerging channel imperatives upset business-as-usual practices. Becoming a ‘meaningful customer partner’ demands that channel partners change their approach to structuring customer contracts, to measuring progress on agreements, and to billing for services – in essence, moving from a tactical approach tied to ‘solving a customer problem’ to a more strategic focus on ‘delivering customer success’.

This is not a simple, easy set of changes for established channel businesses to embrace. However, the changes are central to transitioning to where channel opportunity is growing – and this, more than any adherence to ‘tried and true’ practices, is/should be the goal of management looking to position their channel businesses for long-term viability.

Customer-centricity is indeed a challenge for channel. It is time for customer partners rise.