The major technology producers have thousands of channel partners worldwide. Sure, they are broken into various designations such as “Gold”, “Certified”, “Advanced”, Premier and so on but that still leaves channel teams with hundreds of partners to squeeze the best from.
How can a channel team decide which partners are worth investing in to help the team achieve their own growth targets? Which partners should get which type of lead? Who should get more discretionary funding and who less?
The Channel Institute delivers channel sales training courses that use both the BCG Matrix and McKinsey’s 9-Box Matrix to train channel professionals to make effective partner portfolio investment decisions. These training tools quickly enable both clarity and decisions on complex situations in a way that lists or spreadsheets simply cannot.
As the chart below shows, we have created four archetypes to help our decisions: The Puppy, The Workhorse, The Caterpillar and The Butterfly. We have also used two axes: “Segment Priority” i.e. how important the market sector being measured is to the Vendor team, and “Ability to Win/Transform” i.e. the skillset the partner has to win deals in that segment, or at least be able to quickly transform their company to become winners there.
As with the McKinsey and BCG matrices, the idea is to score each partner according to both criteria and the plot them on the axes. Their relative positioning to each other and the criteria will then roughly categorise them according to one of the archetypes. Each archetype has its own recommended generic strategy which the Vendor channel management training team can use to inform their final decisions.
To delve deeper into the tool, let’s look at the four archetypes, their characteristics, and suggested generic strategies for each.
The Puppy is a Company whose management lack strategic focus and discipline. To them, everything is an opportunity and they chase it like a ball of string. They consider the fact that they have multiple skillsets and great flexibility to be wonderful strengths, whereas in fact this lack of focus is their greatest weakness. They are the ultimate “Jack of All Trades, Master of None”. It is difficult for new buyers to take them seriously.
During our strategy development workshops with both channel partners and Vendor teams, this characterisation gets instantaneous recognition (and laughter!). Many companies that have matured into one of the later archetypes recognise that at one point they were probably a Puppy, but thankfully survived.
The generic strategy recommendation for the Vendor team is to leave these partners to themselves. They will either figure out their own strategy or will eventually be hit by a bus. This is business, and it is not the responsibility of Vendor teams to take in every stray.
These companies are typically Channel sales partners with great technical skills, led by brilliant and enthusiastic technical executives. However, they lack the business acumen to see the bigger picture. They typically define themselves according to a Vendors product set or technical application.
Workhorse companies lack the vision and strategic “nous” to become a strategically important partner for the Vendor. However, they can be a great technical asset and in their own specific “Wheelhouse” they will be a very safe pair of hands. They may consider themselves visionary, but in reality their vision comes back to standard “continuous innovation” rather than anything discontinuous or disruptive. They will find a better way of doing the same thing, but this is not visionary. The Workhorse is often an ideal acquisition target for the Caterpillar as part of its strategy to become a Butterfly.
The recommended strategy for the Vendor channel teams is to engage tactically, at a technical level. Do not provide leads or other supports that are outside of their tightly defined areas of core competence.
When it comes to channel sales training, the Caterpillar is the most interesting of all of the characters in this model and has the most potential for the Vendor channel sales team. These channel partners have both technical ability and visionary business acumen. They are a safe pair of hands but also understand that what makes them successful today is absolutely not enough to get them where they want to go. They don’t just think in terms of product or even technology.
These channel partners are worth studying in channel sales courses because they understand the bigger picture of strategy – where they will play, and how they will win sales in that segment, and that segment only. They are already investing in building resources to enable them to dominate their chosen market segment. They have a clear picture of what their company will look like when it finally becomes “The Butterfly”.
These channel sales partners are quite rare and Vendor channel teams need to take them seriously and invest in them strategically. This means providing leads that help their transition, but also going far beyond simply providing leads. It means helping them both technically and at a business level. These are the “High Potential Partners” that will deliver a disproportionate share of revenue and market in the future.
The butterfly has already made their transition. They are already a winner. The Vendor teams not only need to keep them close and aligned to the Vendor, but also make sure that both teams together are looking over the horizon. What is the next “S-Curve” in which this partner can become a leader, aligned with the Vendor “Point-of-View”?
It should be noted that the entire tool (archetypes and generic strategies) should be used purely to assist decision-making about different partners. The final decision on any individual partner should not simply be dictated by the tool as other information may influence the final decision.
About the Channel Institute:
The aim of the Channel Institute is to bring a more formal, standardized structure to training for channel business professionals. In particular, the Institute aims to focus on the vastly under-served segment of training and certification for those that are relatively new to the channel management profession.