Should you cut your losses with an under-performing channel partner?

Posted by Matt Hodkinson
03-Aug-2016 10:30:00

Blog Posts

Channel partners represent an important component in a great many business models. Helping a company extend its reach across a range of sectors. And, crucially, they can play a vital role in the sales and marketing of a company’s products and services. It’s the reason businesses will invest in channel marketing, providing support, sales tools and other resources for partners with whom they work.

But what if your channel partner isn’t delivering the results you desire, or expect? Investing support and resources into any area of your business comes with the caveat that a return is expected. If that’s not happening, then decisions need to be made. And if your channel partner is underperforming then one needs to ask whether you need to be calling time on the collaboration.

The Cost

While effective channel partners can generate significant sales margins to drive profit in the business, those partners who are not hitting required targets can become a costly drain on the budget. Resellers that don’t sell, quite simply, are expensive.

Research suggests, that while resellers will be partners to six or seven suppliers they will only be selling actively for one or two. It stands to reason therefore, if you’re investing in support and resources into the partner, then this will lead a situation costly and decidedly unprofitable.

Instinct would suggest that continuation with an unprofitable partnership is not in the best interests of the business, which of course, it isn’t, and that it might be time to cut your losses and dissolve the relationship.

However, rather than take this ultimate sanction, a more prudent approach may well be in analysing where the issues lie; looking at measures you can take to turn the situation around for mutual benefit.

Is it your channel partner’s fault?

Having a high performing channel partner on board is very much in the interests of the supplier. When a partner is underperforming, an impartial look at how you’re supporting that partner may be in order.

Are you providing the right support to enable the partner to maximise their performance?

Similar to the way you’d address end-user clients, the support provided needs to meet their needs. Not addressing these requirements could easily lead to the partner’s focus shifting to the promotion of other suppliers, and other products.

Sustained Support Versus New Promotions

A traditional method of delivering product support to channel partners has been to deliver a grand launch, getting the partners on board with a range of new tools and incentives. Is this, however, an approach that can offer long term performance from your partner?

Partners need to value and indeed understand the products they are promoting. To increase their own sales, your channel partners will be looking to products and services that meet the needs of their clients.

Having a clear understanding of the features and benefits of the products in their portfolio is therefore key to delivering to their clients. Short-term incentives might grab their interest initially, but could do little to foster the true value proposition. Delivering a more sustained, partnership approach to the support, such as sharing customer insight data to target prospects, can foster greater relationships between business and channel partner. Which could significantly improve performance and profit.

Conclusion

An underperforming channel partner can be a headache for businesses, leading to tough examination of the nature of that partnership. However, it shouldn’t necessarily follow that you cut losses and leave. How you deliver the support and encourage the value of your products with your channel partner, might make all the difference, and turn that poor performer into a market champion.

Channel Sales Manager's Guide