Most software and tech companies begin their business in a direct sales model. They build a solution for the end user, hire and mobilize a sales team, and begin selling directly to the customer.
At some point along the way, they recognize the need to trigger a new level of growth for their company, and decide that a channel strategy makes sense. At that point in time, the company employs a dual route to market, one that continues with their direct sales team, and one that utilizes the channel to expand their reach and scale.
Unfortunately, many of these companies fail to create clear rules of engagement between these 2 models, resulting in the collision of direct sellers and MSPs/resellers fighting over singular sales opportunities. It creates frustration for both groups, and a breach of trust for the channel resellers. When the MSP or IT reseller feels that their vendor does not “have their back” and favors the direct sales team, it can lead to bad blood that ultimately severs the relationship.
I’ve experienced it myself as an MSP business owner, and I’ve also witnessed very large household name tech vendors not defend their channel partners. Once word gets out on the street that a specific tech vendor can’t be trusted in the channel, the damage may irreparable.
By the way, for other great advice on how to build a channel reseller program that will set you up for success, CLICK HERE.
From my 30 years in the IT industry, here are 4 best tips to eliminate channel conflict in your program.
Eliminate Channel Conflict in Your Reseller Program
It’s super-important to ensure the engagement model between your direct sellers and your MSPs/resellers is smooth. 4 Topics to consider are:
- Set expectations on which deals should go direct and which should go through the channel.
- Define and communicate clear rules of engagement when a competitive situation arises.
- Have clear compensation rules for your direct rep if “their” deal ends up with the channel reseller.
- Have a clear lead distribution strategy between the 2 groups.
4 Best Tips to Eliminate Channel Conflict With Your Direct Sellers
The 4 best tips to Eliminate Channel Conflict With Your Direct Sellers are:
1. Set Expectations on Which Deals Should Go Direct, and Which Should Go Through the Channel
Ideally you launched a channel reseller program to get beyond your own direct sales team’s reach. To reduce the frequency of both groups pursuing the same customers, decide in advance which prospect should be the focus of the direct sales team, and leave the rest to the channel.
Having clear expectations is the best proactive stance you can take to eliminate the conflict altogether. Even better, if there are specific named prospects where you DON’T want your resellers involved, publish that list, and communicate this to both groups to eliminate any surprises.
2. Define and Communicate Clear Rules of Engagement When a Competitive Situation Arises
Surprise! Both groups found the same prospect and both want to win the deal. They will look to your company’s leadership for guidance on how to proceed.
I’ve actually seen an example where the direct sales rep from a large tech vendor told the customer “whatever you do, don’t buy from our reseller, it’s way better and cheaper to buy from us directly!” Whether it’s true or not, this is a fast way to kill your channel program on the spot, and word always gets out on the street.
Be proactive and have clear rules established in advance. For example, if a channel reseller finds an opportunity where a direct seller is engaged:
- The direct seller must immediately back down (and preferably support the reseller).
- If you decide both will continue to compete, the reseller should at least be neutral, and even better, the channel should get a pricing advantage.
- If you decide to support the direct seller for a specific reason, offer the reseller some type of compensation to keep the peace.
3. Have Clear Compensation Rules for Your Direct Rep if “Their” Deal Goes Through the Channel
In my opinion, the best model to ensure there is harmony between your direct sales team and your MSPs/resellers is to pay your direct sales reps on deals that go through the channel.
You want to encourage collaboration, not competition, between these groups. By agreeing to pay the direct sales reps on channel deals, it will instill a team spirit and a mindset of “when our channel wins, we win.” It may end up being a more expensive model overall, but the positive collaboration and good will is worth it.
To make this work, have a clear commission structure on how the direct reps gets paid on channel deals. Ideally, there is no difference to their commission if it goes through the channel. Even better, I’ve seen organizations give their direct reps an INCREASE in commission if their deal ends up with a channel reseller.
4. Have a Clear Lead Distribution Strategy Between The 2 Groups
The assumption is that you have an effective lead generation strategy for your business. One of the best value-adds you can deliver to your MSPs/resellers are qualified leads!
It’s very important that you define which leads will go to your direct sales team, and which will go the channel. Again, I’ve seen broken programs in the past where ALL the leads go to the direct sellers, or all the GOOD LEADS go to the direct team and the CRAPPY leads go to the channel. Neither is a great way to support nor scale your channel business.
Distribute leads to both groups. Maybe it’s as simple as taking turns. But maybe it’s a more sophisticated decision process.
Find a system and implement it.
Conclusion
Thinking proactively about your dual-sales strategy will pay dividends in the long run. It will foster collaboration, eliminate confusion and conflict, and drive positive results. Good luck.
