by Ben Bradley

Every month Stan Kania, founder of Software-Link, a Sage Software VAR, gets a call from one or two new ERP or CRM vendors.

“We have a good reputation. Other ERP and CRM vendors want us to sell their products,” said Kania. “But by staying loyal to the Sage family, we receive a high percentage of new leads, lots of help when we need it in the sales process, and healthy margins.”

A trusted and loyal relationship is the holy grail for every channel marketing manager. Yet, vendors/VAR relationships are wrought with distrust. Inevitably, there is conflict between the direct and the indirect sales force. Trust is difficult to establish, especially when the vendor’s executives don’t completely understand the value VARs or distributors bring to the table.

Lee Levitt, now a sales productivity analyst at IDC, (http://www.idc-slb.com) has designed, built and managed channel programs at three different companies and has built and managed strategic partnerships at several more. Levitt suggests everyone in the channel recognize a simple fact: companies enter the channel to pursue business that is too small or too difficult to reach with a direct sale.

“In most cases, what you have are resellers with an existing book of business who generate between 10% and 30% of their total revenue from the sale of third party products while the rest of the revenue comes from services. So most VARs are loathe to risk the relationship because they own the only throat that gets choked. If a vendor’s tech support doesn’t live up to expectations, the VAR has to fix it. That is why the reseller moves a lot more slowly than the vendor. They want to reduce risk for themselves and for their customer. The vendor’s timetable is generally not the reseller or the customer’s timetable,” said Levitt. 

Levitt says the keys to trusted channel relationships are common business interests, a clear identification of the overlap or conflict, a clear definition of roles/responsibilities and investment requirements for both sides, and a well developed action plan to move forward on.

For Norm Dumbroff, CEO of WAV, Inc., (www.wavonline.com) a value-added distributor of wireless, security, RFID, VoIP and portable data-collection products, tapping into common business interests is the number one way his organization builds trust between vendors and VARs.

“Vendors recognize that solution providers are delivering multi-vendor solutions. VARs know they can’t get multi-vendor support from a single vendor. That’s our sweet spot. Certainly we ship boxes but at the end of the day we do the things that both sides can’t do - we sell and support multi-vendor solutions.” said Dumbroff.

Overlap and conflict are a fact of life.

Yet in a trusted relationship, it is important to not buy into the idea that the partner is a competitor, said Dumbroff.

“The true value occurs in the channel when there is quid pro quo between the vendor and the VAR. For example, a good VAR understands that simply providing excellent services implementing the software solution is less important to the vendor than the ability to create demand. After all, the vendor sales person is compensated based on the success of the VAR,” said Dumbroff.  "If you think you are competing with your vendor partner, get out of the relationship because it is already dysfunctional. That’s no way to build trust. In our position as a value-added distributor, helping both the vendor and VAR win builds trust and profitability.”

When discussing trust in the channel, it may be that the root cause of the tension is a chicken or the egg dilemma in so much as each side is waiting for the other side to fully commit to the relationship. Once someone makes the first move, trust is easier to achieve.

“If you value the relationship with the vendor, if the relationship is important to you, you’ve got the make the first move and demonstrate your commitment;” said Rick Toth, EVP for Pepperweed Consulting (www.pepperweed.com).

“There are a lot of great VARs all trying to partner with the leading technology providers. To get noticed, you need to carry the ball in sight of the vendor so they can see how much value you add to the relationship.” Pepperweed is an INC500 provider of ITIL, ITSM, and ISO 20000 consulting and implementation of complex, large-scale, global IT deployments for HP (2007 US BTO Partner of the Year), CA and distributors such as Arrow.

For Toth, building trust means treating vendors as customers. Toth believes clear definition of roles and responsibilities are an essential part of strong relationships. “No matter who they are, and no matter how mature their channel organization, we look at our vendors as customers. We address them with a business plan and we work to understand them, their motivation and their drivers, and which behaviors they are trying to incent,” said Toth. “The sooner we get the vendor involved in the plan and the sooner we work together to make it real, the sooner we both see success.”

Ray Green, Managing Director for Focus Data Services (http://www.focusgroup.uk.com), seconds the idea of making the first move. “The simple answer is that you don’t give your partner any reason to distrust you. If you’re open and honest, give as well as take; are loyal, then, slowly, trust builds. The actions are louder than the words. You start to believe that the people in your partner’s organization are on your side as well as their own. And the sum of the two organizations is greater than the individual parts. More importantly, the sum of your business is greater,” said Green.

At information security VAR Anchor Technologies (http://www.anchortechnologies.com), CTO Peter Dietrich says: “our partnerships with vendors span all size organizations from the massive Cisco and EMC to smaller companies like HighTower and Tripwire. Each vendor seems to implement their channel a little different. The bottom line for us is the relationship. The vendor that has a good product, local presence, makes face-to-face contact regularly and truly recognizes that their channel reps are important are the most successful with us.” Dietrich says his vendor relationships share three common components. First, the vendor has to have a vetted and quality product. Second, the vendor has to be willing to provide some real technical training and demo or NFR product for free or at an insignificant cost. Finally and most importantly, the vendor needs to have a “channel rep that wants to build a relationship with the VAR sales staff. Without this relationship the other pieces do not matter and the relationship will not bear fruit,” said Dietrich.

Jim McManus, VP Channels and Alliances for Dataupia (http://www.dataupia.com) emphasizes open communications as a foundation of a trusted vendor/VAR relationship. “I always ensure that partners are an integral part of the business conversation and process and keep all communication above board, including conversations with potential partner competition. While we believe in open communication as a way to establish trust, we also recognize the value of putting in place programs that compensate partners for representing our company. At the end of the day, partnerships must be financially beneficial for both organizations. Follow through on customer initiatives in a joint manner is critical to the success of partnerships between vendors, VARs and distributors. I have seen a lot of people give lip service, but actions speak volumes.”

Software-Link’s Stan Kania sums it up nicely: “In any relationship, trust is earned by taking chances and communicating openly and honestly. We treat Sage as part of our business and Sage treats us as part of their business. We share sales forecasts, keep them up to date on sales and marketing efforts and vice versa. That’s what makes the phone ring.”