By Cherryl Pressley
Did you know there around 100,000 independent software vendors (ISVs) in the market today, which is at least ten times the amount there were ten years ago? This statistic—noted by Forrester Research, Inc. in Jay McBain, principal analyst, channel partnerships and alliance in January 2010, What I See Coming For The Channel In 2019—is astounding, especially since the number is only expected to grow and actually reach one million in the next ten years. But while this meteoric rise in saturation is impressive, it’s contributed to a fierce battle for sales as well as eroding margins.
In fact, there’s been more disruption in the channel in the past 18 months than in the past 37 years, according to McBain. And this is fundamentally changing the way in which partners can make money, as well as how much they can make.
I’ve seen these changes firsthand. When I was at Microsoft, I led the worldwide distribution channel. Our strategy was to assist our global channel partners’ transition from transactional to solution-focused organizations, which the cloud has enabled. We accelerated partner-to-partner relationships as well, giving them a way to put the solutions together quickly with a solid go to market strategy. The results were remarkable.
Unfortunately, many other providers aren’t experiencing the same success. And it’s not hard to see why. With rapid industry changes and dwindling margins, many don’t know whether they can make meaningful enough changes to make a difference.
A Better Path to Profit
If you’re a partner and looking to reclaim your path to revenue, let me assure you there’s hope. Here are five ways to roll with the punches of the market, and come out on top including getting out of IT, changing the conversation, focusing on specialties, aligning with partners, and investing in digital marketing. We detail these below.
Get Out of IT Fast
Channel partners have traditionally geared sales conversations toward the CIO and the IT department. But in Tom Kaneshige post on Channel Partners in April 2018, Forrester: ‘Shadow Channel’ Wreaks Havoc on Traditional Partners, he cites that more than 60 percent of these discussions have now shifted out of IT to the line of business owners. This is now the territory in which business needs are explored, and where purchases are made.
If you want to survive, let alone thrive, you must get comfortable branching outside of the IT department and becoming relevant to the line of the business owner. Many owners seek niche products that meet very specialized needs, especially those in the cloud. Evaluate your offerings, and nail down what type of solution you provide as it relates to the business owner. You’ll likely need to revise your messaging to better reflect this new conversation, and that’s okay.
Also take into account emerging technologies like the Internet of Things, Artificial Intelligence (AI), and beyond, and how they help the business user. For instance, AI components are improving to the point that they can predict and prescribe next-best actions for channel account managers and other channel professionals, according to McBain. Think of the value-add this brings to the table, and how such technologies may similarly deepen your impact with a business owner.
Change the Conversation
It’s no longer enough to have a general understanding of the business you want to sell to. As I mentioned above, buyers are looking for solutions that meet a real—and often pressing—business need. They want solutions quickly, and they want them on their terms.
In order to present yourself as the best option, channel partners need to get comfortable speaking non-IT speak. You can’t go head-to-head with a business owner about your software’s features like you would have with a CIO, because the owner doesn’t really care—and may not understand it fully. Instead, dig into the line of business you hope to penetrate to truly understand the current needs. Then present your solution in a way that speaks to the owner’s primary concerns.
For example, consider saying something specific like, “our real-time alerts have saved other companies like yours ten percent in costs incurred from poor employee time tracking.” This statement communicates to an owner that you’ve done your homework, know they’ve struggled with employee behavior and time tracking and have a clear solution that promises benefits they want.
Pick Specialty Areas
As software and hardware is commoditized, every vendor needs a way to stand out from the rest. The onus is on you to keep evolving so you can offer solutions that meet the needs of a particular segment of customers. In this segment, focus on becoming an expert in delivering value and business outcomes.
Your most optimal area of specialty might not be the first area you think of, either. You may want to excel in providing marketing analytics to business to business clients, but eventually come to realize that your solution actually better serves business to consumer customers that need predictive analytics. Be willing to be flexible and adjust in order to find your highest purpose and best-suited niche.
Align with Other Partners
McBain mentions the idea of partner ecosystems in his research, and he is spot-on about the need for this evolution. In order to be relevant and provide the most value, it’s necessary for partners to join with other partners that complement their specialties. This way, all parties can work together to create the most ideal solution for a customer’s needs. This could even mean several ISVs working together, along with an industry expert who understands the nuances of the given client.
Invest in Digital Marketing
The line of business buyers that partners need to be targeting now are actively looking for solutions on their own. If you’re not strategically engaging in digital marketing, you won’t be found by the people who want to find you—and will therefore miss out on sales.
Social media, content marketing, and other digital marketing efforts have changed the way buyers are finding—and consuming—solutions. They don’t want to be sold to, but rather want to find solutions for what they need. So digital marketing is the way to put yourself on the map, get the word out about what you do and be found by your next customers.
Competitive Channel Partners
To be competitive today and make more money in the cloud, you must recognize where the industry is, where it’s headed, and what your continually evolving role is. Once you do, there’s a lot of ground you can cover and a lot of revenue you can make. But it all starts with awareness and the willingness to adapt.
Cherryl Pressley is the CEO of Black Pearl Mail, the company that transforms email into a smart digital marketing tool. Prior to this role, Pressley spent 14 years at Microsoft in a variety of senior leadership roles, most recently leading the worldwide distribution channel to exceed triple digit cloud revenue growth and achieving over $1B in revenue. She is a proven and fearless leader, with more than 25 years of business experience in the technology industry.
Aug2019, Software Magazine