Why Deal Registration Is a Must for Cloud Vendors
Originally created to help vendors manage channel conflict and partners protect margin, deal or opportunity registration has emerged as an industry best practice adopted by many leading technology vendors as a key component in their partner programs. In many cases this has led to significant shifts in how incremental margins accrue to resellers, often resulting in greater reliance on key strategic relationships by both vendors and resellers.
But when you’re a cloud vendor promoting a disruptive, cloud-enabled business transformation-as-a-service, based on recurring revenue rather than traditional transactional selling and/or product installation, even the notion of a ‘reseller’ might be a bit off-putting much less the idea of registering deals or opportunities. To a cloud vendor, deal registration might seem “old world" — a vestige of the PC/server era. However, you as a cloud vendor need to consider a deal/opportunity registration program and system if you haven’t already, and what’s required to ensure its success.
The Reseller Channel Advantage
Resellers command customer confidence in a way that few vendor brands can surpass, particularly in SMB and commercial markets where a technology simply can’t scale to adequately meet the needs of complex, multistage, multistakeholder routes-to-market. In enterprise and government markets, resellers and integrators have built vertical expertise and long-standing relationships — ones that disruptive technology alone cannot displace.
Like Willie Sutton who, when asked why he robbed banks, exclaimed “Because that’s where the money is," cloud vendors should recognize the need to engage and enable resellers because “that’s where the customers are." Much to Willie’s chagrin, online banking may ultimately replace the need for the local branch, but the banks themselves are proving amazingly resilient. Likewise, distributors and reseller channels are rapidly transforming their businesses incorporating both referral and resale models, and you can take advantage of their strategic imperatives to change.
In brief, any cloud vendor’s go-to-market strategy that doesn’t include the existing ITC reseller channel will likely be forced to reconsider if it is to continue its growth trajectory. For an example from the server-based computing era, look no further than Dell’s reinvention from direct seller to champions of the channel. If growth is the goal then building and nurturing indirect channels for the majority of your business is a must. Given that resellers and integrators own the customer’s confidence, perhaps a great place to start is to build their trust and confidence with your brand and solution.
Unfortunately, that “trust" is presently under siege. CompTIA reported in its “2013 Third Annual State of the Channel Study: Channel Conflict and Deal Registration Trends" study that more than eight in 10 channel firms surveyed say the existence of a deal registration program is a critical or important factor into their decision to partner with a vendor. Yet, at the same time, more than six in 10 reported significant challenges or problems including poor communications and technical challenges.
Business model transformation is one of the most disruptive changes a business can face. Is it any wonder that trust is hard to muster when what’s clear is that the old model isn’t going to continue to work as well as it used to, but what’s less clear is the new model is still taking shape? It’s important to recognize that while recurring revenue creates a more consistent and self-sustaining revenue model over time, the transition for a reseller is challenging. Anything that might engender channel conflict of any sort should be studiously avoided.
Consider the use of deal/opportunity registration as a first step to ensure your sales team is not overlapping with resellers on opportunities. Then programmatically engage your resellers earlier in their selling cycle to support them with whatever additional support your partner program can offer — technical support, sales tools, access to MDF, rewards, etc. — and track partner generated opportunities as closely as you would your own pipeline to make sure bottlenecks are identified and removed quickly. Finally, measure the results and communicate them with your partners and your internal teams.
Leveraging Investment & Insight
Think about the difference between referral partners and reseller partners. To “re-sell" a product or service carries an organizational commitment far beyond simple referrals. For the reseller it requires an investment of time and money, commitment of resources and a well-planned approach to add a new service offering to customers. It may involve beefing up services offerings and/or adding new services to the mix. These services may be related to managing on-premises or private cloud assets as businesses move to outsource more of their IT capability.
The best predictor of sales growth in the future is partner investment in enabling their teams today. But don’t stop at just provisioning the content or the tools, be sure to measure the impact. Incorporate reseller progress in quarterly reviews and leverage deal/opportunity registration data to make sure everyone can see the tangible progress being made. In time, success will build, and the business case for collaboration will only grow stronger. Recall that mutual commitment is how the channel was built by the last generation of technology leaders.
What Should Cloud Vendors Do Differently?
Finally, what lessons should be learned from the old-guard deal registration systems to ensure success today? The short list should include:
- Start with your reseller’s perspective and work within their workflows for best adoption.
- Ensure visibility to all the stakeholders — yours and your partners’ by integrating seamlessly with CRM system or tools.
- Lean on what you’re built on, namely multitenant architectures that accelerate the network-effect and scalability — don’t get locked into technologies or business models that restrict growth.
Persistent registration of every referral and resale opportunity is the most effective way to maximize your visibility to partner pipeline activity and minimize the potential for channel conflict. What will likely prove most important in achieving your goals is ensuring that the process of how your channel partners operationalize registration gets as much attention as the economic incentives.
Michael Reilly is CEO of Vartopia, a leading provider of deal registration solutions to the information technology channel. Prior to co-founding Vartopia, he held a senior channel position at VMware after selling the reseller firm he helped create, Foedus, to VMware in 2008.