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032 - Nurturing Channel Integrity: Key Strategies for Long-term Success · Partnerships Unraveled

• 0:08
  Welcome back to Partnerships Unraveled, the podcast where we unravel the mysteries of partnerships and channel on a weekly basis.
• 0:17
  My name is Rick van der Bosch and I'm the CEO and founder of Channext.
• 0:20
  And I'm here together with Alex Whitford, VP partners at Channext.
• 0:23
  Alex, how are you doing today?
• 0:23
  Yeah, really good.
• 0:25
  Thanks Rick, how are you doing?
• 0:27
  Great actually.
• 0:28
  We're about to go on workation to Italy with the full team.
• 0:32
  Yeah, exciting.
• 0:34
  It's great to work for a company that values sort of that culture so much.
• 0:37
  So yeah, we're taking the whole business is flying out to Italy and we're going to get the whole team together, do some great sort of project work in sprints for a week.
• 0:47
  I'm really looking forward to it.
• 0:49
  Yeah, me too.
• 0:50
  So excited for that one.
• 0:50
  Definitely.
• 0:52
  And then also for our topic of today, we had actually had a meeting this morning with a customer and someone very experienced in the channel as well.
• 1:03
  And at a certain moment we went to the topic for a long time of channel integrity and it really triggered me.
• 1:09
  And I think you as well.
• 1:10
  We were just discussing it, and I thought maybe nice to discuss it on the podcast as well, because I think it's a crucial thing wherever you're working in the channel, whether it's at the vendor level, at the distribution level, at the partner level, how do we make sure within the channel that we maintain this integrity.
• 1:25
  And maybe to start with, what would your definition be of channel integrity?
• 1:30
  Sure.
• 1:30
  So for me, channel integrity is sort of acting in an honest and appropriate way at all times.
• 1:37
  Right.
• 1:37
  I think the channel and the reason we love working in the channel so much is it's a network, right.
• 1:43
  To some degree it's a family.
• 1:45
  We all work together, and we all have our own priorities and our own biases, but we work with trust because we have to work with trust because I'm trusting you with my customer, you're trusting me with your customer.
• 1:57
  We're trusting each other with our networks, and there is a huge amount of value in the networks that we hold.
• 2:02
  So to let someone else sort of control our destiny, the only way that will work for a long period of time is with channel integrity.
• 2:10
  And I have seen players win for a very short period of time by breaking that integrity.
• 2:16
  But inevitably what happens is the channel gets to know what's going on and washes that out and you can never prosper in the long term with that.
• 2:25
  And the only way in my mind to prosper in the long term is to search for those win wins.
• 2:29
  But it always has to be above board, it always has to be with integrity.
• 2:32
  I think the keyword here is trust because trust is hard to win but easy to lose.
• 2:36
  And I think the whole channel is actually built by trust because we are working together on the same end users as well.
• 2:43
  We are providing value together.
• 2:45
  We're building relationships there and everything comes with that trust.
• 2:48
  Right?
• 2:48
  And I think that's why channel integrity is so crucial, because if you lose trust once, it's almost impossible to repair it and really build a flourishing partnership again.
• 2:58
  And I think that's why it's so crucial.
• 3:00
  Like when you're building a partnership, you are building trust and you need to make sure you keep building and building versus letting go of it.
• 3:08
  Yeah, and I think sometimes it's easy to make short term decisions because you're at quarter end or you've got a number to hit, maybe you're close to an accelerator and it can make a real financial difference to your number.
• 3:21
  But what you'll find out very quickly is two things will happen.
• 3:25
  One, you'll burn a bridge with that partner, but two, you'll actually ruin your own individual relationship.
• 3:30
  And I've seen that happen before, where a salesperson has done something a bit dodgy, call to end to get a deal over the line, maybe moved it somewhere else or taken it direct and then that's it, that reputation is gone because your business will say, well, no, that's not how we do business.
• 3:46
  Or you'll burn the brand and your own individual relationship and that really, really can halter your career.
• 3:52
  So my advice is make sure you treat your partners how you would want your partners to treat you.
• 3:57
  Not to get all biblical, but I think that's really the way you want to be conducting yourself within business.
• 4:03
  And I almost like to explore this in sort of two ways.
• 4:06
  There's the moral way, but I hate making moral arguments because either you have that morality and it works, or there's the cynical way, which is the money driven way, which is, yeah, you can win in the short term 100%.
• 4:16
  If you want to win in a sort of three month period, yes, screw over all your partners, it will really work.
• 4:21
  But in three months and one days you won't have any partners left.
• 4:24
  And partnerships are the best way to scale a business long term.
• 4:28
  And so you want to be foundational in that trust building.
• 4:31
  Give often work with the partners that want to collaborate and over a long period of time, with a very clear set of rules, you will have channel integrity and that will help you scale.
• 4:42
  I think actually that's a great way, a great rule of thumb there in terms of making sure you keep channel integrity on an individual level.
• 4:50
  Like am I treating my partners the way I would like to be treated?
• 4:53
  And if the answer is yes, then you know you're on the right way there.
• 4:57
  And I think another thing that's interesting indeed is that giving mentality like partnerships is all about reciprocity.
• 5:03
  And if you break trust, then reciprocity goes to zero very, very quickly.
• 5:07
  So there it really is.
• 5:08
  Okay, once you build that relationship, you build trust and you are also showing that, hey, I care about you, I want to give you and I want to help you achieve your results and therefore we all become better.
• 5:18
  I think that's really that mindset of, okay, if we keep channel integrity at the right level, then that will really help us towards a long term foundation of partnership as well.
• 5:27
  I think what we should discuss is how do you ensure or build channel integrity?
• 5:33
  Maybe for newer businesses you're actually working to build it, or for existing channels you're working to maintain it.
• 5:39
  I think we can discuss really how do you do that, but also we've obviously come across plenty of examples when channel integrity has been broken and maybe it's just worth highlighting a couple of those examples.
• 5:51
  Don't panic.
• 5:51
  I can imagine there's a few ex colleagues of mine who are starting to sweat.
• 5:55
  We won't name and shame, but I think we can agnostically talk about some of the examples that I've seen and the impact of those examples.
• 6:01
  Yeah, I like that.
• 6:02
  I think let's start with the examples and then afterwards we can dive into how do you prevent those examples that we have seen in the channel.
• 6:09
  Maybe the first one you actually touched upon in the introduction is taking a deal direct.
• 6:13
  I think that's one of the worst things you can do as a vendor.
• 6:17
  But let's start with what kind of examples have we seen where this happened.
• 6:20
  But then also definitely what was the result of that or the impact of that on that specific partnership.
• 6:26
  Yeah, I've seen it happen a lot and it's really painful, and it's really painful for the partner and I've actually seen it and I felt really bad for local cams because typically that decision might not have even been made in the geography.
• 6:41
  Right.
• 6:41
  So for example, I know I was working on a deal and in the US they said, oh, we can take that deal direct.
• 6:49
  And there was a valid sort of reason for it was a billing entity issue and it was operationally more complex to put it through the partners.
• 6:58
  And so a financial person made a decision, oh, we can do that direct, so let's move it direct.
• 7:04
  And I can sort of understand it.
• 7:06
  What they aren't aware of and what they haven't seen is the seven months of work it took to recruit the partner, the three months of work it took to create, find and get to a closing motion of that deal and then the broken relationship that's after.
• 7:20
  Because guess what?
• 7:20
  That partners went no, done.
• 7:23
  Line drawn.
• 7:23
  I will never sell your brand again.
• 7:26
  And the other thing that the CFO didn't or the financial leader didn't take into account was they then switch sold every single deal they'd had closed or were working on.
• 7:36
  So actually the brand actually lost, right?
• 7:38
  They might have won in the short term, but this is inevitably what happens.
• 7:42
  And I think one of the areas in the types of business that I see often taking deals direct is SaaS businesses because we can build direct and we can build via partner and it all gets a little bit complicated.
• 7:52
  What happens in those models is there's reoccurring revenue and the partners will work really, really hard to switch that revenue away from you in the long term.
• 8:02
  So suddenly you're introducing churn into your landed customers and that's what's such a detrimental impact and why having that channel integrity and explaining effectively what we need to do to drive deals forward is so critical.
• 8:17
  So what you're actually saying is that it's not just indeed that you take away an opportunity where you make a little bit extra margin, then when you do it direct.
• 8:24
  But actually, the side effect of it is that you might even lose four times that revenue, because your partner, who's already doing a significant amount of revenue for you, thinks, yeah, you screwed me over.
• 8:34
  So now I'm actually going to do the same back to you.
• 8:37
  And I switch sell every customer where I have you implemented to your competitor, for example.
• 8:43
  And sometimes it's not even retaliatory, right?
• 8:46
  I do think that does happen where I think people think, oh, you screwed me, I'm going to screw you.
• 8:49
  But it's also logical, right?
• 8:51
  If you're a partner and you worked on a deal and that deal was taken away and you've got millions of business running through that account in terms of retention, you're suddenly sat there going, sorry, my revenue is going to be impacted, my margin is going to be impacted.
• 9:07
  I don't know when that brand might think, oh, we can make another 10% by taking this direct.
• 9:13
  That's a great way to deliver 10% improvement in revenue.
• 9:16
  We'll just take business direct.
• 9:17
  Once that thought is in the partner's head, they will work very, very hard to switch sell that business out.
• 9:24
  And I'll be honest, a lot of brands very much think, oh, we've got such a great product and such a great solution, definitely this won't happen, we're too networked into the account.
• 9:35
  It's not true, right?
• 9:37
  Most partnerships led businesses or partner dominant markets, the partner holds the keys to those deals.
• 9:44
  The partners has been working with that end user for a long time is selling multiple products and a partner can find a reason to move, to move a deal, right?
• 9:55
  They can find a use case and a technology and a security reason or whatever to move a deal very, very quickly.
• 10:02
  And if they're a trusted advisor, which typically they should be, those are the partners you want to be working with.
• 10:08
  They will find it fairly easy to move the deal, maybe not in three weeks, maybe not in three months, but once the renewal comes up, once a few renewals come up and you will start to see those churn out and the other flip side to that is they will also stop selling new deals, right?
• 10:21
  And so you've got this double edged sword and why channel integrity is so critical.
• 10:26
  Not only is that partner going to think, oh, I'm not interested in this, the brand's reputation will be ruined, right?
• 10:32
  Channel partners talk to each other all the time and suddenly they'll say, yeah, I got screwed out of that deal or I got screwed out of this deal.
• 10:40
  And once a few of them happen, game's over, right?
• 10:43
  That whole market will say, no, thanks, because it's never worth the risk, right?
• 10:49
  Multiple products solve the same, or multiple brands typically solve the same solution, and it's never worth the risk to start working with a brand that you feel is going to steal that business.
• 10:59
  So if I'm a partner leader, I'm always going to prioritise brands that I feel confident in.
• 11:05
  And there's also a macro effect.
• 11:07
  What I really learned in the last ten years is a lot of partners are very cautious with sharing end user details with the vendors, because what happened was indeed that they have sold it direct without them knowing, or maybe they swapped that lead eventually to a different partner, for example.
• 11:23
  That's also a very important one within channel integrity.
• 11:26
  If you've assigned a lead to a partner, for example, and you don't have very specific terms with them that they need to follow up, for example, in seven days.
• 11:35
  Or you can swap it, but you do swap it.
• 11:38
  Then eventually, without noticing them, then that can really lead to very much like, tension between you and the partner and what you see as an effect of it.
• 11:47
  One of the most important things for you as a vendor is to be very close, actually to the end user and know who they are, but your partners are selling to them.
• 11:56
  So you are very much relying on your partners, the trusted advisor, to actually get to know your market very well.
• 12:02
  And if we do things like this as vendors, then we break trust of partners, not just on a micro level between us and them, but on the macro level as well, between them and all their vendors, so to say.
• 12:13
  So that's why it's so crucial when you're building your partner programme and you are doing things like that, that you have that very high in your standards, that channel integrity, because if you never do that and you also keep communicating to your partners, like, hey, this is how we do it differently.
• 12:29
  We always protect your lead, we always make sure that we work together with you on that deal and we will never screw you over.
• 12:35
  That's what partners love to hear.
• 12:37
  Yes, even in the beginning, they can be a little bit cautious there, but if you prove to them over a couple of months or a longer period of time, like winning that trust, it can massively increase how good you get to know your end user because you cooperate so closely with your partner.
• 12:53
  Yeah.
• 12:54
  And the other bit that I've also seen and when you really talk about the impact of this is the whole value of this channel, right?
• 13:01
  Let's just break it down into its root terms it's that I can employ less people but get more reach, right?
• 13:07
  Because I employ five cams they're all responsible for ten partners each that means I've got 50 partners and they've each got ten sales people each that means five cams are actually responsible for 500 sales people and that means I could touch 1000 end users.
• 13:20
  That's the whole idea right now what happens when you start to break trust that cam has to spend time apologising, has to try and spend time fixing relationships, has to spend time spending defensive rather than offensive.
• 13:33
  What do you think happens to the ROI of that cam?
• 13:35
  Massively falls.
• 13:36
  So there's a cost in the existing customers that you've closed that you're now having to churn out.
• 13:42
  There's a cost in the partners new deals which they will start to switch sell away.
• 13:46
  And there's a cost to your internal resource that the cam is now having to go and fix problems rather than going out and driving pipeline.
• 13:54
  That is the cost of stealing one, two or three deals.
• 13:58
  That is a cost you cannot afford to pay.
• 14:00
  And I think where I really see this going wrong and where you can really fix the problem and you've just touched upon it, is accurate programme design.
• 14:09
  And having channel integrity at the core of your programme design, I think we can come on to exactly how you do that.
• 14:15
  Yeah, I like that one.
• 14:16
  I think what you see there indeed it's really switching then from really focused on expansion to like churn prevention and that's what you don't want.
• 14:24
  Yeah, partner churn prevention, which is even worse because it's really not revenue generating.
• 14:28
  Right.
• 14:28
  There is an element of a deal churn prevention, it's like, okay, how can we fix this deal?
• 14:34
  But partners churn prevention means you're not even talking about deals, you're just talking about the partner which is terrible because that's four steps backwards you're back into the onboarding and the recruitment phase.
• 14:46
  We had a podcast previously about Time to Value where you've just started your whole Time to Value chain again because now we're going to have to go all the way back and have preliminary discussions rather than talking about what we all want to talk about, which is how do we close more pipeline?
• 14:59
  Yeah, you start all over if you can even start again yeah, which I think is very rare and especially if there's multiple instances within the same market that's how you get sort of brand reputation destruction.
• 15:10
  It's sort of game over, I think, from there.
• 15:12
  Yeah, I agree there.
• 15:12
  I think I have a question, Alex you've been in distribution for a very long time that's a little bit less my market.
• 15:19
  But what do you know from a distribution level?
• 15:21
  What kind of channel integrity things you've seen going wrong there, and what can you do to prevent that?
• 15:28
  Sure. So the first channel integrity issue that you see in distribution is distributions typically sell more than one brand for the same product, right.
• 15:36
  The same solution.
• 15:36
  So you might sell multiple screen manufacturers or you might sell multiple security vendors, or whatever it is.
• 15:42
  Right.
• 15:42
  What will happen is that you realise that the best way or the easiest way for you to grow is not to generate new business, it's just to steal other distributors business that isn't valuable to the vendor.
• 15:56
  And I've seen distributors get of a reputation really quickly of going, oh, they don't add any value, they're just going to steal market share.
• 16:03
  And what you'll see is, okay, you're not screwing anyone over.
• 16:06
  It's maybe not as bad as taking deals, but you are just interrupting the channel integrity because you're not being integral to what a distributor should do, which is grow business.
• 16:17
  And that's how you get a reputation and deliver no value.
• 16:20
  And then you will just be deprioritized.
• 16:20
  Right.
• 16:22
  And again, the same thing happens.
• 16:23
  You build a reputation for being a market share stealer rather than a value grower.
• 16:29
  That's one way in which distribution can have a lack of channel integrity.
• 16:33
  Yeah.
• 16:33
  If I could add to that, I've actually had a conversation last year with a big vendor as well, and what was really annoying them was that distribution was actually recruiting a lot of their direct or their managed partners to then transfer their customers and buy it via them locally.
• 16:50
  And then it really felt like, hey, we're just transferring revenue, decreasing margin.
• 16:54
  So it didn't feel like a very successful partnership.
• 16:57
  I think that's a crucial one.
• 16:57
  Indeed.
• 16:59
  Of course, it will happen a little bit, but in terms of structuring your partner programme, it should really be about how can we generate new business and how can we activate our unmanaged partners as a distributor to contribute to actual revenue growth for the vendors.
• 17:14
  Yeah, I've had that before and it was so painful because I'm sat there managing a distributor, they took a direct partner on and then they were sat there going, oh, we're not making enough money.
• 17:24
  And I'm like, well, I don't care.
• 17:26
  To me, it doesn't matter if you're making enough money, because you might view them as your customer, because you sell other product to them.
• 17:33
  But they were our partner already, right?
• 17:36
  We know what they were.
• 17:37
  And then, I don't know, the exchange rate changes or they're not making enough margin, then they're complaining.
• 17:42
  And we sat there thinking, but no, we need you to deliver value in other areas.
• 17:46
  Then we can have a conversation.
• 17:46
  Right.
• 17:48
  If you're leveraging a high value and this is how you can have the conversation distributors with your vendors, you can leverage a high value direct partner.
• 17:56
  You can make money on that partner, but then the expectation is that you're investing that money into other areas so that you can grow more of the long tail, right?
• 18:05
  More of the breadth partners, whatever that but there has to be a value trade off.
• 18:08
  There has to be integrity to that deal.
• 18:10
  You can't just be seeing it as, oh, free cash cow, here's how we can milk this.
• 18:14
  It's like, no, we need integrity in the way we're going to grow business.
• 18:18
  And some of that can be share shift, right?
• 18:20
  It's never to say, don't go after share shift.
• 18:23
  I've been a sort of leader within distribution.
• 18:25
  Share shift was great, but there was always a new business division, there was always a new mechanism that we're showing, okay, we did go and steal 10% wallet share from another distributor.
• 18:35
  But look at these accelerator accounts we put together.
• 18:38
  Look at the zero to heroes we found.
• 18:40
  That is how you blend it and that's how you can rapidly become the favourite distributor in the market, which is a brilliant place to be because then you can sort of dominate in all areas.
• 18:49
  And it's all about communication, I think, even though indeed, if you are talking to a managed partner of one of your vendors and they are interested or like in the other examples you're giving, as long as you communicate very openly to it together with your vendor, then you can discuss like, hey, is this desired?
• 19:05
  We're going to do this, but we were not going to do that.
• 19:07
  And then it's again in a partnership, an equal partnership there, and we don't do anything sneaky or whatever.
• 19:13
  And in such a way, I think you keep a very high level of channel integrity.
• 19:17
  And I think that's just in general, whether you're on the vendor, the distributor or the partner side, communication is everything.
• 19:22
  If you're very transparent, then your channel integrity will rise massively.
• 19:26
  Yeah.
• 19:26
  And I think, look, just as a rough rule, we've used this messaging internally here, right?
• 19:32
  We put a rule in place that works to protect you, but also to protect your competitor, right.
• 19:38
  So put yourself on the other side of the aisle.
• 19:40
  You may think, oh, I'm being screwed out of this deal.
• 19:43
  But then you go, oh, hang on.
• 19:44
  But if it was the other way around, oh, I'm actually being protected.
• 19:47
  Okay, well, that's fair enough.
• 19:49
  A distributor that's only doing share shift, let's just put the shoes the other way around.
• 19:53
  Imagine if a vendor was recommending one distributor over the other.
• 19:57
  Oh, that'd be really painful.
• 19:58
  Yeah, you'd absolutely lose your mind.
• 19:58
  You'd be furious.
• 20:01
  You go, well, there you go.
• 20:02
  That's the same level of value, right, is partner comes and says, oh, I need a distributor and you only get recommended one rather than another.
• 20:10
  Yeah, you'd be furious.
• 20:11
  Oh, and if a distributor is only recruiting partners from the other distributor, and not delivering any value, the vendor is going to be furious, right?
• 20:18
  And so, for me, it's always just important to pause when you're in that area of conflict and just analyse, if I was in their position and this happened, what would I do?
• 20:29
  Okay, now I can start to see it.
• 20:30
  And I think that's really important is if you're worried, hang on, is this going to create channel conflict?
• 20:37
  Is this going to create channel integrity?
• 20:40
  Just sit there and imagine, do I have to look the person in the eye and explain what I did?
• 20:44
  And if that feels dirty, then you've probably got a really good indication that you're probably doing something that you shouldn't.
• 20:50
  And I want to be clear, channel integrity doesn't mean no channel conflict.
• 20:55
  That will happen.
• 20:57
  A classic example, end user wants to move from one partner to another at point of renewal.
• 21:02
  Happens a lot.
• 21:02
  Happens a lot.
• 21:04
  Now the partner can feel really aggrieved that they recruited the end user and now it's being switched, sold.
• 21:10
  And there's a really clean way.
• 21:12
  You get the end user to tell the partner why and then the whole thing changes.
• 21:16
  Suddenly, it's nothing to do with the vendor, it's nothing to do with the distributor.
• 21:19
  The end user has made a decision for a reason.
• 21:22
  That's how you drive channel integrity doesn't mean there's no channel conflict.
• 21:25
  Channel conflict will happen.
• 21:27
  But like you said earlier, clarity, that's what you need.
• 21:30
  I need absolute, clear understanding of why the decisions were made and then that's how you can retain channel integrity, even if it's painful for some of the partners.
• 21:39
  Yeah, I think transparency is the name of the game.
• 21:41
  And also, indeed, there what I really do believe is that it's crucial, as in anything like keep communicating over communicating, sometimes even.
• 21:50
  Because if you do that, then it will work out fine.
• 21:52
  No matter what type of channel conflict you have.
• 21:54
  And I like what you said, there will always be channel conflict.
• 21:57
  That's just a fact.
• 21:58
  But as long as you have your open communication towards all stakeholders there, then it will work fine there.
• 22:06
  Yeah, I've got 1 minute, but I've got a really good point, okay?
• 22:12
  The way you want to build channel integrity is the same way you build laws, right?
• 22:18
  You build them agnostically, you build them with no case in mind.
• 22:23
  So you set very clear expectations on when can a deal move between a partner, when can a partner move between a distributor?
• 22:31
  When can things be switch sold?
• 22:33
  When can there be competition?
• 22:35
  And you build the rules and you send the rulebook out, then there's no discrepancy, then there's no discussion, then there's no competition, because the laws are the law.
• 22:45
  They exist and you can read them, right?
• 22:46
  And that's how you solve for channel integrity as part of your partner programme.
• 22:51
  You communicate.
• 22:52
  When can a partner switch to another distributor?
• 22:55
  When can a distributor do this?
• 22:57
  How much share shift is acceptable?
• 22:59
  How much and you set the rules out agnostically then it becomes very, very easy to drive channel integrity.
• 23:06
  I really like that.
• 23:07
  I love that that piece about the law book.
• 23:07
  Indeed.
• 23:10
  I think transparency is the name of the game.
• 23:13
  Right.
• 23:13
  And how better to be transparent than to write it down and communicate that with your partners.
• 23:18
  Yeah.
• 23:18
  And it's got to be a compelling reason.
• 23:22
  Right.
• 23:22
  And why I like that you write it down before is that nothing sets the example and the structure out like, no, I'm not screwing you out of this deal.
• 23:31
  Here is the rules.
• 23:32
  Here are the rules I sent to you nine months ago.
• 23:35
  I'm following this rule even if it's painful.
• 23:38
  It is then at least understandable where people start to break down of trust is when they think you are bending or breaking the rule specifically for a deal.
• 23:48
  Right.
• 23:49
  And then that's when it can get complicated.
• 23:51
  So if you just set the rules out early, then people go, okay, I understand the rules.
• 23:56
  People don't mind playing a game as long as the game has a clear set of rules.
• 24:00
  Right.
• 24:00
  If you start making things up as you go along, that's when it just all falls apart.
• 24:04
  And then you come in that like true or false discussions that you really don't want with your partners.
• 24:08
  And I agree.
• 24:08
  It's also like the set of rules for your internal team and for your distributors and for your partners.
• 24:14
  So you really have like a total market approach with channel integrity.
• 24:17
  Yeah, you make a great point with internal team.
• 24:20
  Right.
• 24:20
  And I'm a really big advocate of the fact that your salespeople are brand representatives.
• 24:26
  Right.
• 24:26
  And if they are doing things that diminish the brand's reputation, they shouldn't work there anymore.
• 24:32
  Right.
• 24:32
  That's a really critical thing.
• 24:34
  If you've got someone who's screwing over the channel to hit their own target, that is the exact type of person you don't want within your business.
• 24:41
  Right.
• 24:41
  You know, I'm a big believer in do you want to try your best or do you want to win?
• 24:45
  I love when salespeople say I want to win.
• 24:47
  That's a really good ethos to always strive to win.
• 24:51
  However, that can never come, not once at the breakdown of channel integrity or of their own integrity.
• 24:58
  Right.
• 24:59
  I think I would rather lose than cheat and win.
• 25:01
  And I think that's a really important philosophy to drive into your culture and into your team.
• 25:07
  I like that.
• 25:07
  Maybe as the final example, maybe from the partner perspective, but then to defend the order distributor.
• 25:14
  What examples have we seen there in terms of things going not in the right way when it comes to terms of channel integrity?
• 25:21
  Yeah, there's been a few that I've come across.
• 25:24
  Some have been funny, some have been shouting matches.
• 25:28
  There's been a few over the years.
• 25:29
  I think the common one that filters into the ecosystem pretty quickly is partners getting leads either from distributors or for vendors and then switch selling those leads into a brand that they prefer or a brand that makes them more money.
• 25:44
  You can immediately see what happens, right.
• 25:46
  Which is the leads stop immediately and you're never going to get any level of support.
• 25:51
  And what just happens is the vendor and the distributor will accept the business that you bring to them.
• 25:56
  Why wouldn't they?
• 25:56
  But they're never going to be proactive and that will just cause the breakdown of the relationship.
• 26:02
  Yeah, you don't get in that like that reciprocity mode because they don't feel like when they give you something that you give back the same attention and time that they have given you in terms of giving you that opportunity.
• 26:12
  No, and I've seen cams be moved off accounts because of it and not even they're hitting the revenue goal to be a managed partner.
• 26:20
  But if you're seen to be moving business away to a competitor, even if that's sort of a renewal business, and you're switch selling cams will just be moved straight off the account and you're sort of just burning that bridge unnecessarily.
• 26:33
  We are all aware that partners sell multiple brands and competitive brands.
• 26:36
  But you've got to be seen again, it's got to be integrity in terms of how you handle and if there's valid reasons, right?
• 26:43
  There might be a tech reason, there might be a product fit reason why a deal has to be moved, but having that feedback and that understanding filter into the business so they can really go, oh, okay.
• 26:54
  It needed this technical thing.
• 26:56
  Maybe the end user even told the vendor why having the end user involved in that conversation is a brilliant way just to draw a very clear line in the sand and go, this is why it had to happen.
• 27:05
  And partners positioning multiple brands, that's fine, as long as we're all clear that that's what happening.
• 27:12
  And the only reason that can't happen is leads.
• 27:15
  Right?
• 27:15
  That's a very different game.
• 27:18
  If MDF is being spent to funnel leads into a partner and then multiple brands are being positioned, that's a surefire way to ensure you're never going to get MDF generated leads ever again.
• 27:29
  Yeah, I agree.
• 27:29
  But eventually it's a free market, right?
• 27:31
  So I think indeed if the end user then is more like in the lead there as well, where they say, I want this specific brand even though they came in via different one, but also there, I think it's all about transparency.
• 27:42
  So if you get MDF either from your market development fund, either from your vendor or from your distributor, and you start generating opportunities with that together with them, but eventually maybe the end user chooses to do a different thing or your margin is so much better with another vendor communicate it.
• 27:58
  I know it's a hard message, but usually when you take a little bit of that sneaky approach.
• 28:04
  Let's just not tell.
• 28:05
  They will find out because they will see that end user eventually in a customer case on the website of their competitor, or they will hear it in the market when they cheque in with that end user, like, what did you end up with that they chose for the other solution there?
• 28:19
  So I think there, again, communicate whatever the message is, even if it's not the nicest to hear for your vendor or your distributor, do it because that's what built that trusted relationship.
• 28:28
  But I also fully agree with you, like, when you get leads with True, MDF, et cetera, it's definitely a very nice thing to position the brand that actually helping you with generating that opportunity.
• 28:38
  And look, I always think there's a moral way that we can have this conversation, but there's just a cynical way to have the conversation, which is leads are a really valuable asset, so protect it, right?
• 28:49
  Don't bite the hand that feeds you.
• 28:51
  If they're giving you leads, sell the deals into those leads that you can because it's going to guarantee more leads.
• 28:56
  And I'd much rather have a cynical conversation around here's how you're going to maximise revenue, which is if you sell three competitive brands and they all give you ten k a month worth of leads, well, you should just sell the deals into the leads that they give you because then you'll still get the leads.
• 29:13
  Right?
• 29:13
  You'll continue to get the leads.
• 29:14
  To me, that's just a mathematical problem at that point.
• 29:17
  Whereas, yes, if there is a very, very tangible reason and by the way, I don't think margin is one of them, not for leads.
• 29:26
  If there's a tangible product fit reason, then, yeah, feed that back, right?
• 29:30
  And by the way, get the end users to feedback.
• 29:31
  That's a great way that you can ensure it.
• 29:34
  The Cam can take that back to tech and they can work on product market fit and they can have those conversations, fine.
• 29:39
  But margin is a terrible one because all that will happen is go well, yeah, that competitor brand does give you more margin.
• 29:45
  So we'll never give you another lead again because we can never guarantee that you're not going to continue to do the same thing over and over again.
• 29:52
  So for me, just keep it above board.
• 29:55
  Make sure you can look someone in the eye and give them clarity around why you've made a certain decision.
• 29:59
  But if they are giving you leads, you really want to prioritise that vendor.
• 30:03
  Yeah, I agree.
• 30:03
  And I think it's a great one.
• 30:05
  Like, involve the end user as much as possible from whoever stakeholder you're working at.
• 30:10
  Whether you're working at the vendor, at the distributor, or at the partner, the end user should always be leading and then there is no wrong answer.
• 30:17
  No.
• 30:17
  And again, put yourself in the other position, right?
• 30:19
  If a vendor gave you a lead and you switch sold that lead.
• 30:22
  That's painful for the vendor.
• 30:23
  If the vendor gave you a lead and then introduced another partner into that opportunity, you'd be absolutely fuming.
• 30:28
  Right, and so it's the same thing, right.
• 30:31
  You've just got to be able to put yourself in the other person's position and go, Do I like this deal?
• 30:35
  Because the great thing about working in Channel is everyone should like the deal because we're searching for the win wins, right.
• 30:40
  That's the whole point.
• 30:40
  And so if suddenly the other person's got a bit of taste in their mouth, you've probably done something wrong.
• 30:46
  Yeah, I really like this topic because indeed, we here at Channext are trying to build the largest channel platform in the world and the biggest network there.
• 30:56
  And this is also a very hot topic in a lot of the conversations we're having, because everyone has a little bit of that anxiety.
• 31:02
  Right.
• 31:03
  But what's going to happen from the vendors, like my partners, if they participate, are they going to another vendor and the distributors?
• 31:10
  Like, if I use my MDF to run campaigns, how do I know for sure that the partner is then going to buy with me and not with another distributor?
• 31:17
  And for the partner, the other way around, like, if I generate leads or contacts, how do I know that it's actually not being pushed to a different partner?
• 31:25
  And I think those are the things we are always talking about and always thinking about, because that's the thing with channel integrity.
• 31:32
  If you screw it up, once your trust is gone and you can't do anything anymore, and it doesn't matter whether you are Channext, whether you are a vendor, a distributor, or a partner, channel integrity should always be on top of your list.
• 31:46
  Yeah, I think it's fairly easy for me to understand.
• 31:49
  Right.
• 31:49
  I think me and you have had a few discussions around this, and my first job in sales was at a distributor, right.
• 31:56
  So day one it was, you never screw over a partner.
• 31:59
  You never talk badly about a partner.
• 32:01
  You always if there's a problem, you call the most senior person you can.
• 32:05
  You have a discussion about it, and you're just very, very honest at all times.
• 32:10
  And I think that's how I try and run my career, because I would rather be honest that I've made a mistake and it's led to a bad decision, but I've come and proactively told you than try and get away with it, and then it somehow looks like I've deliberately done something.
• 32:23
  Right?
• 32:23
  And so for me, that's the way we run Channext, which is to our distributors, to our vendors, to our partners.
• 32:30
  We say, here's how we do it.
• 32:32
  It's your decision.
• 32:33
  We will not get involved.
• 32:35
  We're never going to proactively recruit a competitor.
• 32:38
  We just stay in the middle.
• 32:39
  We are the marketplace.
• 32:41
  The example we've used a lot when we talk about this internally, HubSpot has DocuSign and HelloSign integrations.
• 32:48
  Guess what HubSpot doesn't do.
• 32:49
  Recommend one of them.
• 32:49
  Why?
• 32:51
  Because it would screw their entire marketplace.
• 32:52
  And so that's my ethos around how we run everything.
• 32:55
  If a partner wants to choose to sign up, that's absolutely their decision.
• 32:58
  We're not going to get involved in that because we don't proactively drive any of them.
• 33:03
  We just create the marketplace that allows the full market to be successful.
• 33:08
  I really like that expression, the tide rising, rises, all ships.
• 33:14
  Right?
• 33:14
  That's the whole point.
• 33:15
  We're building a marketplace that's going to benefit the channel, all of the parties that get involved, but it's not up to us to try and raise one boat higher than the other.
• 33:24
  We're just creating the marketplace.
• 33:24
  Yeah, I fully agree.
• 33:26
  I think it's really facilitating the partnerships there.
• 33:29
  I think maybe to end with your metaphor of the law book and also give some ideas for our listeners, like how could you implement if we take those three examples, then from Channext.
• 33:39
  So we're also building our own channel in such a way, of course, if you think about it like that, to protect a law for us to make sure that we never break channel integrity towards vendors is that we will never recruit net new partners for them within our marketplace.
• 33:56
  So to say, outbound because another vendor might have brought them in.
• 33:59
  So we only let that happen inbound.
• 34:02
  So that's a very strict rule.
• 34:03
  You are running the partner team here and every person in that team knows that we are never doing that because in such a way we protect the channel integrity for distribution.
• 34:13
  If we run a campaign, if they are running a campaign with their MDF, then the partner can see that lead, but only that specific distributor and never a different distributor, even though that we know from that partners that they are buying from three distributors, so it's actually protected there.
• 34:30
  And the same is really on the partner level.
• 34:33
  If a lead is generated on their website, no matter if it's with your MDF and they haven't followed up or whatever in time, then it's their lead because it was in their environment, it's their end user, probably their customer, and a vendor or a distributor literally can't switch it.
• 34:48
  And I think that's to just give that away to our listeners, think how you can implement rules like that within your partner programme and then you can really create your own law book, so to say, with very clear rules and everyone will become happier and more successful as a result of that.
• 35:02
  Yeah, we had a great example, right?
• 35:04
  We're speaking to a prospective new customer and they were like, oh, it'd be great if you could show us the list of X vendor.
• 35:10
  And the answer was very simple, very direct, which is, we will never do that because you wouldn't want us to do it to you.
• 35:16
  And the second you say that answer, everyone sits back and goes, yeah, fair enough.
• 35:20
  Because, actually, yes, if you're trying to disrupt a market, it'd be great to get the other vendors list, but we're never going to do that, because guess what?
• 35:26
  You do that once the whole business dies, right?
• 35:28
  And the whole channel dies.
• 35:30
  And that's why it's such a hard lined rule for me.
• 35:34
  We want to be fully integral to the way we do business.
• 35:38
  Why?
• 35:38
  Because we're building a long term business.
• 35:40
  We're not looking for short term wins.
• 35:41
  We want to facilitate a channel marketplace that makes the channel the most dominant form of sales across the world.
• 35:49
  And the only way we can do that, that's a long term vision.
• 35:52
  The only way we can do that is being able to defend any and all of our decisions.
• 35:57
  And that's why we have a programme and an infrastructure to drive channel integrity.
• 36:03
  Love that.
• 36:03
  I think to conclude, you can never completely prevent channel conflict, but you can be 100% in control of having the higher standards in channel integrity.
• 36:12
  I think that's the big takeaway for today with, I hope, also some actionable tips for our listeners to actually implement it.
• 36:19
  Thank you for all your thoughts today.
• 36:21
  Thank you to our listeners and see you next week.
• 36:30
  Our channel.