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Vendor-Partner Conflicts Rising as Channel Firms Lose Sales

By Craig Galbraith
June 05, 2013 - News

A new study from CompTIA cites challenging economic times, new technologies and new methods for selling information-technology (IT) solutions as reasons for an increase in conflicts between vendors and channel partners.

Six in 10 IT channel companies, the study revealed, say conflict has risen in the past two years. Eight in 10 say it has affected their business negatively; 21 percent of those say the impact has been "major."

“Conflict between IT vendors and their channel partners is not a new issue, but it’s a dynamic that ebbs and flows," said Carolyn April, director, industry analysis, CompTIA. “Right now, the channel is roiling for many firms."

So what, specifically, is behind the rising tension? Poor economic conditions, for sure. A number of technology vendors have focused more on direct sales to customers as a result, and at the expense of their channel partners. Second, new methods for reaching customers with technology services, such as cloud computing. And third, new entrants into the market, such as telecom companies that now offer IT services in addition to traditional voice services.

It's all resulted in a loss of business for many channel firms. More than three-quarters said they lost one or more deals in the past year due to channel conflict. The most common response from channel firms to lost business is to complain to the vendor, CompTIA says. But some firms have taken more punitive actions. About a third attempted to sell a competing vendor’s product to the same customer. Three in 10 dropped the vendor in question as a partner.

One area with the most tension is deal-registration programs. When executed properly, these programs help to avoid or reduce channel conflict by preserving opportunity rights to a particular deal for the channel partner registering it first into the systems. Vendors benefit from greater visibility and tracking into their indirect sales pipeline. More than eight in 10 channel firms surveyed by CompTIA say the existence of a deal-registration program is a critical or important factor into their decision to partner with a vendor.

At the same time, these programs can prove challenging for both parties and cause headaches and hard feelings for channel partners, CompTIA noted. Problems most often occur in three areas — poor communication, cited by 61 percent of channel partners: examples include insufficient reporting on approvals and payout status, and lack of information on incentives; technical challenges (cited by 49 percent of partners) when deal-registration systems and tools are hard to use; and inconsistency (cited by 27 percent of partners) when rules of engagement and adherence to rules are constantly changing.

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