Microsoft partners are smart, innovative, and eager to make an impact on the lives and businesses of their customers. After working with partners for several years, we have seen that impact grow substantially over time.
One thing that we see partners consistently struggle with is mastering and operating the channels, alliances, and partnerships that are so critical in helping businesses achieve growth at scale. At Microsoft Inspire this past July, we presented a session on the Five Reasons Your Channel Strategy is Failing. This fast-paced, interactive discussion explained how partners can work toward building their own channels in a way that makes sense for their business.
Also at Microsoft Inspire, we sat down with Rachel Braunstein, the host of the newly released Hacking the Future podcast series with Microsoft Partner Network. In our episode, we talk about channel marketing, go-to-market strategy, indirect selling, and overall partner success.
Channel Marketing: Have No Fear
For many partners, channel marketing is either unfamiliar territory or yet another thing on their ever-growing to-do list. The good news is that it’s not complicated! Channel marketing, at its most basic, is a set of practices or activities needed to make goods, services, or even concepts available for consumption. For example, Microsoft employs a channel marketing strategy through its partnership with ISV and MSP partners. Microsoft designs and builds the software or devices that partners are then able to improve on and sell directly to customers. By working together, the sales potential of the original product or service is so much greater than it would be if we were working and marketing alone.
Building Your Own Channel
Channel marketing isn’t just for large companies and firms. With the right strategy and focused effort, you can build the relationships and affiliations you need to get your product or service to the right customer quickly and effectively. To get your business on the right track, here are 3 questions to ask before you start building your own channel:
1. Why do you need a channel?
Planning a channel marketing strategy takes effort and commitment to achieve the results that will make your investment of time and money worthwhile. So, before you dive in to building those relationships, start by defining your vision for a channel marketing strategy.
2. Is your solution compelling?
Is your solution compelling enough or profitable enough for another company to want to sell it to their customers? Are you sure that another organization will find your solution interesting and profitable to their business so that a sales rep will be able to drive the customer engagement forward? If not, you should reconsider your channel strategy and do some work in clarifying the value of the solution to the market.
3. Are your asking your channel to do something you can’t?
Sometimes we see partners take what we call “a mulligan”, and think of their channel strategy as a do-over if their own direct sale strategy doesn’t work out. Odds are high if you can’t make the solution make sense for a customer, a channel partner won’t have success either. If you need to take a mulligan, you need to find out why your solution isn’t landing with consumers, and fix the problem rather than wait for a channel partner to save the day.
Now that you know what three questions to ask, learn more about the fundamentals of channel-building and check out Build Your Own Channel Plan from Sharp Perspective.
Want more insights around how you can leverage the power of channel marketing to help grow your business? Check out the latest episode of the new Microsoft Partner Network podcast series, Hacking the Future. Subscribe for weekly downloads of amazing conversations with industry experts and thought leaders on the cutting edge of business and technology. Download past episodes of the Microsoft Partner Network podcast on iTunes, SoundCloud, iHeartRadio, Google Play Music, and YouTube.
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Chat more about channel marketing and other strategies to grow your business in the Microsoft Partner Community.
Rachel Braunstein: Hi, I’m Rachel Braunstein and this is Hacking the Future with Microsoft Partner Network. In this new series, we’re here to help you futureproof your business. It’s really important that you understand why do you need a channel? And is the solution even compelling enough for another organization to want to sell it? If you as the IP innovator can’t sell your own solution, how is somebody else? The customer always has to be the heart of what you’re doing as a business and then there needs to be that alignment with the channel.
Braunstein: From blockchain to social selling, we’re exploring how technology is reshaping business as we know it. Alright. Hey, everybody, we are here at Microsoft Inspire in Washington D.C. I’m super lucky today to have two awesome lady bosses with me. I have Gail Mercer-MacKay and Corinne Sharp. They are here at Microsoft Inspire doing a session together on the Five Reasons your Channel Strategy is Failing, which seems super, super interesting for our partners that are listening. First, I want to just welcome you ladies here and please tell the audience who you are, what you do, what you’re about. Gail, you go for it first.
Gail Mercer-MacKay: Thanks, Rachel. We’re really excited to be here. Thanks so much for inviting us to this podcast. I love podcasts. You know, my company is Mercer MacKay Digital Storytelling and I got my chops selling technology in the channel and running partner channels for about 25 years before I started the digital storytelling agency. So, what we do now is we help partners create amazing assets that help them tell their story both to customers as well as for channels that they’re trying to recruit and to enable their channels to go to market.
Corinne Sharp: So, I run my own consulting company called Sharp Perspective. And I work with ISVs and partners and how they build out their go to market strategies with emphasis on indirect selling through partners, through alliances. And I’ve been doing that for many, many years and prior to that I worked for Microsoft. So, I’m very familiar with the Microsoft world and ecosystem. I ran the channel for Microsoft. So, I’ve always been in the channel. Always been IT. And Mercer MacKay is one my top partners when it comes to marketing and digital storytelling for partners, we partner up when we build those successes for channel partners.
Braunstein: We have awesome partners working together and Canadians, right?
Sharp: We are.
Braunstein: Two Canadians with me, so that’s awesome. We’re global today.
Braunstein: Eh. So, let’s talk a little bit about this creating a channel strategy. What are some questions do you think that first come up when you’re even thinking about that in the partner ecosystem, Corinne?
Sharp: Well, the first thing is they need to understand why they need a channel, right? It’s an important business and strategic decision. You’re looking at growing your revenue. You’re looking at expanding in other geographies, so it’s really important that you understand why do you need a channel? And is the solution you’re looking at building a channel for, whether it’s to resell or whether it’s to implement or both, and is your product or solution even compelling enough for another organization to want to sell it? Is it profitable enough? And have you done that math cam to make sure that it’s interesting, profitable, and that sales rep is willing to pick up the phone and call the customer and move it forward.
Braunstein: What do you think, Gail?
Mercer-MacKay: Oh, absolutely. You’ve got to have that big why. You’ve got to know why you’re doing it because actually partners sometimes think that running a channel is going to be cheaper for them than having a direct salesforce. The reality is it’s reverse; a channel is much more expensive initially to get going. You can scale much bigger and much faster with a channel, but to get them up and running, it’s a much bigger investment than in your own direct salesforce.
Braunstein: So, what are some of the common mistakes that partners are making when they start a channel? I think you have five key ones that you laid out, Corinne.
Sharp: Absolutely. And I’ve seen these over the years in working with many, many partners. And I have five common ones, as you said. So, the first one I see is the mulligan strategy.
Mercer-MacKay: The mulligan strategy.
Sharp: Mulligan, so if you’re not a golfer, a mulligan is where you’ve taken your shot, it hasn’t gone very far, and, of course, this doesn’t work in major tournaments, but you get to do your shot over again. And you typically, get one time do over, right? But a mulligan in partner building is that you were out and you’ve been unsuccessful. Your sales reps haven’t been very good at selling your product or you haven’t been able to get the scale, so you go, uh huh, I’m just going to build a channel and they’ll do it for me. Now, one of the reasons why that is a challenge is if you as the IP innovator can’t sell your own solution, how is somebody else, right? So, the mulligan strategy just doesn’t work.
The other one is you talked about, Gail, no money. You think, well, we don’t have any money. We can’t hire more sales reps. We just can’t move forward, so we’ll build a channel. Well, you need that investment to be able to build out a channel and determine where you’re going to play, where you’re going to focus, you need to do co- marketing and co-engagement together and that takes a little bit of time, resource, and money, right?
Another one is the mirror strategy, right? Your product is so beautiful that why wouldn’t anybody flock to sell it? And so, you just don’t have a dose of reality and you have to be able to step back and put yourself in the partner’s shoes to really determine whether your product is compelling for a partner.
Braunstein: So, how do you know? I mean, how do you look yourself in the mirror?
Sharp: Well, the first thing is you have to look at who you believe your ideal partner would be, right? So, what type of organization? Where are they located, size? And we actually work with organizations on what that ideal partner criteria is and create a rating system. So, instead of going out and trying to find 100 partners, let’s go try and find the five or 10 that are going to be a perfect match and marriage for your organization. Through that, you’re going to be able to explore is your product relevant to those particular partners? Is it profitable for them? And are they going to incorporate that into their existing business practices? So, ideal partner criteria is really, really important.
Mercer-MacKay: And I would add that before you even do that, when you’re thinking about the mirror strategy, is you’ve got to get real and you’ve got to get honest with yourself and that starts with a SWOT, you know—a strength, weakness, opportunity, threat. Do a really honest SWOT and you might have to do a couple of them. So, if you do that SWOT, you might look at that SWOT as it aligns to a particular channel, but then you might do a second SWOT around how it aligns to co-selling with Microsoft. And it might look slightly different depending on who you want to partner with or who is going to be part of your channel.
Sharp: And another challenge that I think and whether you’re building a channel or you have an existing channel that’s struggling is what I call the leftover issue. Right? So, we’ve got this channel, but we’ve decided that we’re going to keep all of the large accounts and we’re going to go direct with those accounts and we’re going to give all the SMB customers to our channel. Well, that’s not really starting off on the trustworthy foot of sharing. Right? We’re going to keep these; you only get that. You’re segmenting right away. And the other thing is that you might miss out on the opportunity that your channel partners new or existing may actually have better relationships with those customers than you do. And so, you’re missing out on that. So, don’t have a leftover strategy of giving what you don’t want to your partners. Because it just doesn’t feel good.
Braunstein: And when you think about segmenting, you just said, enterprise and SMB, how do you think about segmentation?
Sharp: Well, partners will think about segmentation for what’s relevant to their business. Some sell horizontally across every vertical and some sell only to enterprise. Others, they have a perfect play for SMB and they don’t even go up to the enterprise. So, that’s part of looking at what’s your big why? What is your focus going to be? And finding partners that play in the same space as you.
Braunstein: Right. And even Judson today was going through our industry priorities. I was just thinking about that. Are you retailer? Are you financial?
Mercer-MacKay: Yeah, I was going to add that, the whole vertical specialty. You know, I used to run an ISV. I ran sales and marketing for an ISV and we built a direct sales model and then we built, we started with tele-sales, moved into direct sales and then added channel. And when we added channel, we made some mistakes. And so, it didn’t take off. We had some bumpy starts. And one of those mistakes was we co-sold with a channel, which is great. We brought them in, we trained them on the product, we co-sold with them, but really, we did those initial sales to teach them and we landed some really big brands in some exotic locations. And we took our channel partner to those exotic locations to do the initial workshop, to do the assessment, to determine how we were going to roll out the product. And first of all, the channel partner they’d taken training, but they hadn’t been deep in the technology, so they only had surface knowledge and not real world experience. The other thing was our team back at home was resentful because they wanted to go to that exotic location and meet those customers and do that. So, there was some cultural stuff going on too. So, we kind of had to learn that as you bring your channel partner up to speed, you’ve got build alignment at all levels of your organization— the technology level, the delivery level, as well as the sales level to make it successful.
Braunstein: Yeah, I love that point on culture. I would say most people probably forget that piece, but it’s the most important one.
Braunstein: Yeah. And then I think there was probably one more, my VC told to strategy?
Sharp: Yeah, absolutely. Well, there’s many partners out there and organizations, ISVs, that they’re looking for investment to grow. So, whether that’s an angel investor or whether they’re going to D.C., well in order to get those incremental funds, they have to provide a plan. And oftentimes that plan, well, we’re going to scale our business through channels. And so, it’s the my VC told me too, but they really don’t know how. So, they’ve got the concept they want or need a channel, but they haven’t figured out how to execute it strategically within their business. So, it’s really, really important that just as you have a strong sales plan as you’re bringing channels in, equally important that you have a channel execution plan.
Braunstein: And that’s where marketing, right, becomes really important. Gail, can you talk a little bit more about some of the marketing that you’ve worked with her on?
Mercer-MacKay: Absolutely. So, we have Partner Marketing in a Box, which is a bill of materials that we put together that can completely enable a partner channel to get going. But the thing to remember is the story. So, you need to tell a story that resonates with your read and if you’re creating a bill of materials for Microsoft field sales, it’s a completely different story than the bill of materials you’re creating for a partner channel. And it could be you need different bill of materials for different partners in the channel. They have to see themselves. They have to see their success. They have to see how their goals by reading those assets that you put together for them. You’ve got to arm them to go out and have conversations, not feel stupid, not look foolish, answer questions, know how to take the next step, but really clearly see themselves winning in that overall story. So, that comes back to the beginning, doing your groundwork right up front.
Braunstein: It seems like the biggest mistake in all of this is really not understanding who you are, what are your core competencies, where you can excel and then figuring out from there, what does the channel look like? What does your marketing strategy look like? How does that affect your culture?
Sharp: And what’s your value proposition for the customer?
Sharp: Right? So, the customer always has to be the heart of what you’re doing as a business and then there needs to be that alignment with the channel, right? And then when you’re going out and recruiting channel partners, Inspire is a major opportunity for partners looking to expand and come here and really you know come armed with what your ideal partner criteria is, use the tools and the connect tools to do that. You know, there’s a company here called Shiny Dogs that’s doing a great job. They’ve done a booth takeover at the IMCP Booth, the International Association of Microsoft Certified Partners, and they did a 20-minute presentation yesterday and came away with five interested partners on their data management and cognitive analysis. Five partner opportunities after just a 20-minute presentation, so this has to be incorporated into their marketing strategies and how they in a one-time deal, they can set themselves up for success for the rest of the year.
Mercer-MacKay: That is a great point. Inspire is amazing. I think it’s my biggest marketing investment all year. And it’s the one I would never take off my plate. It’s how I grew my business, all because we meet partners here. And we’re all able to help each other grow and become more successful.
The thing that’s really interesting about Inspire is that it is a real business conference and I think still, there’s the misconception that it’s a technology conference because Microsoft is a technology company. It is not. It is a business conference and it’s where business leaders from around the world come together to invest in new ideas, to make new connections, and to learn how to grow their business successfully. I know one partner from Canada told me, he said, Gail, my investment in Inspire in Toronto allowed me to grow my business 30%, well beyond what I was ever expecting to do on my own because of the partnership that we made.
Braunstein: Wow. So, let’s talk a little bit about that partner journey. Microsoft Inspire’s probably one piece of a potential partner journey.
Sharp: Absolutely. So, everyone talks about the customer journey, right, so what is that experience your customer has with you and your first conversation? They go to your website, all those things. The same thing happens with a partner journey. And there’s kind of number of steps that you need to go on and we’ve talked about it, right? So, the first one is what’s your channel vision and strategy? What’s the why behind your channel? Who’s going to be your channel chief? That senior leader that’s accountable for the strategy, accountable for the execution. That has to be part of your journey.
Then you need to look at what are those foundations? So, we talked about the ideal partner criteria. What is it going to look like? What’s your focus going to be from the geographic perspective, from a vertical industry perspective, and size and segmentation. Then you move into profitability, right? You need to understand if the customer solution that you have is going to be profitable both for you and for that partner. And as more and more moves to SaaS and recurring revenue streams, you have to look at the compensation models in your organization. And so often they say the two leaders of the organization shake hands, they start an agreement, but they forget that it’s actually the sales rep and the guy or the gal that picks up the phone to call the customer, if they’re only going to make $100 selling your solution, chances are they’re not going to pick up the phone.
And then they continue on that journey. If you’ve got a physical product versus a software product, you need to look at all the operations and logistics and working with distributors and how that works globally. What are the margins going to be? I call it incentives, margins, and deal registration, oh my. Right? How all the complexity of that when you’re looking at profitability.
And then there’s the co-engagement, right? So, Microsoft has done a brilliant job over the years of how do you market together? How do you sell together? And partners need to look at what that’s going to look like and to avoid channel conflict between your direct sellers and your channel partners that are out there.
And then how are you going to manage all of this at the speed of change? So, the speed of change in the industry, the speed of change of IT but equally important, the speed of change that your business can follow or absorb. And so, you need to make that as a key part of your strategy. So, this journey you need to go on is really, really critical and it is a process.
Sharp: And so, it’s really important that as you’re looking, you understand that process and set expectations accordingly.
Braunstein: And that seems like something you need to evaluate all the time as new things come up, new technologies, new areas of focus or some things start to go away. You think about we just launched Microsoft 365. Right? There’s just new developments. How are you going to adapt to that? When you think about LinkedIn and Dynamics 365 and Sales Navigator when you talked about selling. I mean, how do you sit and evaluate every single moment and adapt your channel or your value proposition to potentially meet your customer needs?
Sharp: Absolutely. And there’s so many organizations partners out there today that are having to reinvent themselves.
Sharp: So, SIs that have been doing all their work on-premise, right, and they have the three-year cycle with their customers that now as things are moving into Azure, they need to look at what their business is going to look like. So, you see a lot of SIs that are now becoming IP innovators. They’re becoming ISVs. Right? And Gail has seen so much of that in the industry where they’ve had to transform their business from the traditional legacy SI implementer to now that person that’s created their own IP that they want to sell through channels. And you probably have a couple examples of that, Gail.
Mercer-MacKay: Well, we work with a lot of SIs all the time that are trying to do that and I’ll tell you the biggest challenge for SIs to make that shift is that they have to change their mindset and around how they go to market. Because the difference between going to market as an SI, an SI, each customer is different. Each customer has a unique set of needs, and each project reflects that. When you’re going to market as a product company, you have to deliver a set of standards that don’t get modified. You’re just delivering and you’re rolling out change over time, but you’re not going and doing specific instances for each customer, otherwise, you’ll never make it work. And culturally, that’s a really tough shift for an SI to make. They have to think about that and think about how they’re going to move from being an SI to an ISV. But it’s doable. I mean lot of SIs are doing it. And where I’m seeing it be more successful is where they’re carving it out as its own profit margin completely separate and bringing in different people and not using the same people that are running the SI side of the business. Because they’ve got to keep that going; that’s where all the revenue’s coming in while they ramp up their IP product.
Braunstein: I love that point. Really, that’s awesome. And we did a podcast with Kevin Conroy and he was really interesting talking about the pricing and he totally changed his business. He was an SI and so, listen to that one if you want some more information on that.
Mercer-MacKay: Thank you. I want to add one thing because, as Corinne was talking about the partner journey, what I really want to let partners know, I’m just going to put a little plug in for Corinne right now is that she has a program called Build Your Own Channels. So, for most partners, there is not a university they can go to to learn how to build a partnership. You can go to sales school, you can go to other marketing school. There isn’t a partner channel school. And Corinne’s got a program called Build Your Own Channels and it’s a self-paced program. I think it’s six or eight weeks long and a bunch of partners get on together and each week they learn something new. And at the end of the eight weeks, they’ve got their complete channel strategy built. And it’s such a painless way to get your partner channel built and really feel competent and comfortable because you’ve got a mentor and a guide along the way walking you all the way through to the very end. So, that’s my little plug for Corinne. She didn’t now I was going to say that. I thought I’d throw that in for her.
Braunstein: Are there any other walk away from this podcast, a few tips, two, three tips you’d say to partners so that they don’t fail in their channel strategy?
Sharp: Well, I think we’ve talked about so many is really step back and understand why it’s going to be important for your business. So, who you are, what you do, what’s the value proposition for the customer, and what’s the value proposition for your partners. And that it is a journey, and it’s not something that you’re going to go find a partner and you’re going to move forward and they’re going to start selling for you in month one. It may happen and that’s a good thing, but you’re building a partnership and I say it’s almost like building a relationship. It’s kind of like dating. Right?
Braunstein: Yeah, absolutely.
Sharp: You’re going to have a number of dinners and dates and feel it out and I use this analogy quite regularly. You just have to make sure you take the time. And, as I said, you need to have your channel chief, the person that’s going to be designated. And there’s so many smaller partners out there. And thank you, Gail, so much for mentioning Build Your Own Channels, is that my goal is to reach over 100 ISVs to help them grow their revenue and the only way we can do that is to help them in a more self-paced learning environment and create a community. Because then they can help each other. Oftentimes, they’re not competitive, but the process of building channels is just that and they can help each other as well as receive the support from the build your own channels team.
Braunstein: Awesome. Patience. Patience, a little bit of collaboration, little bit of fun.
Mercer-MacKay: It’s a journey. It’s a journey not a destination.
Braunstein: Life’s a journey.
Mercer-MacKay: It builds over time.
Braunstein: Alright. Well, thank you, ladies, for being here. We’re super excited to have you in the podcast.
Sharp: Thanks very much.
Mercer-MacKay: Thanks, Rachel. Thanks so much.
Sharp: Really appreciate it.
Mercer-MacKay: Bye now.
Thanks for listening to Hacking the Future with me, your host, Rachel Braunstein. You can follow me on Twitter at @rkbraunstein and follow us at MS Partner. Check out our show notes for more information from today’s episode. And don’t forget to subscribe and leave us a review.