Cloud Channel Summit: 5 Lessons on Fostering a Successful Channel-Partner Relationship

Cloud Channel Summit

Last week, the RingCentral partner team and I attended the Cloud Channel Summit at the Computer History Museum in Mountain View, CA. The annual event is designed for cloud businesses looking to build successful reseller alliances and cloud ecosystems.

Cloud Summit Organizers

Cloud Summit Organizers Jeff Kapla and Marc Sternberg

RingCentral’s own channel reseller program is a valuable and successful part of our business. As with all things, however, we are always looking to take the program to the next level — and the Cloud Channel Summit was a great place to learn new insights on optimizing the vendor-channel reseller relationship. Below are our learnings, which we hope you will find helpful for your partner efforts.

We learned at the summit that generally, the three biggest obstacles in vendor-reseller partnerships are conflict, control, and compensation. Conflicts tend to arise when the partnership isn’t clearly defined between both parties. This can then lead to control issues, where either the vendor or the reseller wants to have more control of the sales, terms and conditions, and signed accounts — or the opposite problem can also occur where neither partner wants to take responsibility when problems arise. Finally, compensation disagreements surface when one or both parties focus only on short-term economics, i.e., just closing the deal rather than also fostering the customer relationship for long-term growth.

According to experts at the Cloud Channel Summit, the below five best-practices help you overcome conflict, control, and compensation so you can build a successful vendor-reseller partnership.

1. Provide Product and Customer Education. In  general, vendors need to invest time and money towards educating their resellers on the product, the customer demographics, sales materials for prospects, and anything else necessary for the selling process. The point is your resellers should be fully armed to focus their time on acquiring customers, and the vendor’s job is to make those resellers smarter.

2. Define Vendor/Reseller Responsibilities. Establish the “division of labor” between the vendor and reseller within the selling process to ensure nothing falls through the cracks and there are no misunderstandings. For example, determine whether the vendor or the reseller will provide customer support, project management, integration, etc.

3. Promote Cloud Service Revenue Model. The cloud service revenue model is based on micro-transactions and recurring revenues — as opposed to traditional models where resellers receive one lump sum after the deal is closed. Vendors should explain to resellers that the cloud service revenue model means the opportunity to make more money every time additional users are added to a particular customer account. See this slide for more details:

cloud value analysis

Click to enlarge

4. Establish Local and Regional Resellers. Local and regional VARs are important to the vendor’s mix of channel partner relationships for several reasons. For example, some customers prefer to buy locally because to them, it means nearby (and thus more timely) customer and technical support. Local resellers also have a better feel for an area’s culture and can effectively connect with customers at a more familiar level. Finally, by having resellers across a swath of geographical regions, vendors can establish a bigger footprint and wider reach.

5. Target Resellers With Cloud Clout and Skills. While it’s not necessary for all resellers to be influential in the cloud industry, it is advantageous to partner with a few highly-reputable resellers. The brand recognition of such resellers will help elevate the vendor brand and credibility. Additionally, vendors should aim to partner with resellers who already have a solid understanding of cloud computing. Different cloud services are increasingly integrating within a given ecosystem, and cloud-versed resellers will have the ability to explain the “story” to customers. Check out the following slide for more details:

Changes with the cloud-based ecosystem

Click to enlarge

Do you have additional lessons for building a successful reseller program? Please let me know in the comments.

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