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077 - How The Channel Is Changing · Partnerships Unraveled

• 0:07
  Speaker 2: Welcome back to Partnerships Unraveled, the podcast where we unravel the mysteries of partnerships and channels on a weekly basis.
• 0:14
  Speaker 2: My name is Efe.
• 0:15
  Speaker 2: I'll be your host today and I'm excited to announce our special guest today, who you know really well, who is also my mentor, Alex Whitford.
• 0:24
  Speaker 1: A mentor.
• 0:24
  Speaker 1: That's very nice.
• 0:25
  Speaker 1: It's excited to be here.
• 0:26
  Speaker 1: Effa, yeah, a bit weird.
• 0:28
  Speaker 1: You look very different to Rick, but I'm sure we're gonna have a good podcast.
• 0:31
  Speaker 2: So how does it feel to be sitting on the other side of the podcast?
• 0:35
  Speaker 1: Yeah, I've spent the last few months interviewing lots of special and really insightful guests who are experts in the industry, so feeling slightly under pressure now that I've got to somehow be the expert today.
• 0:47
  Speaker 2: So I mean you've interviewed some amazing people like Janet, laura Wayne, the people that we've had on recently.
• 0:54
  Speaker 2: I think it was all amazing and you prepared, you had a lot of great questions for them.
• 0:59
  Speaker 2: So I actually wanted to switch the seats and ask you some of those questions and get your opinions on it, because you've been working on the channel for so long and you have some strong opinions yourself.
• 1:12
  Speaker 1: I definitely have strong opinions.
• 1:13
  Speaker 1: Yeah, I think the channel is a wonderful place and I think we make loads of mistakes organizing channels really well, so I'm excited to get into it.
• 1:21
  Speaker 2: And maybe for our first time listeners, could you introduce yourself?
• 1:25
  Speaker 2: Who are you?
• 1:26
  Speaker 2: Why should we listen to you?
• 1:27
  Speaker 1: Sure, so as sort of effort led me in.
• 1:30
  Speaker 1: I'm the VP of revenue here at Chanix, but I've spent the last eight years building channels across Europe, middle East and Africa.
• 1:36
  Speaker 1: My role previous to this I ran Zoom's distribution strategy across EMEA through COVID and we scaled the channel from something like 30 partners to about 1200 partners in about two years, and previous to that I spent time in distribution, which is where I really spent a lot of my time and that gave me the opportunity to both manage vendors and partners, all the way from SMB up to the largest partners in the UK, and that really gave me a very clear.
• 2:03
  Speaker 1: I think distribution is an amazing place to build your business because it gave me a really clear understanding of how channels can be incredibly successful and how they can be incredibly painful.
• 2:15
  Speaker 2: Yeah, I'm definitely going to get into.
• 2:17
  Speaker 2: I'm playing the cable.
• 2:22
  Speaker 1: Got it.
• 2:22
  Speaker 1: We've got to start the whole thing again.
• 2:27
  Speaker 2: I'm definitely going.
• 2:27
  Speaker 2: No, pause, nice, he's a pro.
• 2:31
  Speaker 2: I am going to get into your experiences in distribution, but the first question that I want to ask you, which you also asked to almost all the guests so we've been seeing all the top vendors right Cisco, microsoft, aws, hpe they're heading down market and they're targeting SMBs through their channel.
• 2:51
  Speaker 2: Now, how do you see this shift happening?
• 2:54
  Speaker 1: Sure, I think buying journeys are changing, I think they're changing the consumer space and I think they're changing in the B2B space Less often.
• 3:03
  Speaker 1: We are finding a requirement to go to big brands and big partners and we want the easiest and best relationships that we can get, and that means we want to work locally right.
• 3:14
  Speaker 1: So I want to work with partners and I want to work with specialists in my area, and the opportunity is there for brands to head down market and satisfy those smaller run rate customers, of which those smaller run rate customers are much more valuable typically than the large enterprise ones.
• 3:32
  Speaker 1: Once you aggregate them all together, so there's a massive revenue opportunity, efficiencies and scale that marketplaces and AI can bring, and that's allowing the biggest brands in the world, who've traditionally played brilliantly in the enterprise space, to head down market and capture that opportunity.
• 3:51
  Speaker 1: Those big brands are investing heavily.
• 3:53
  Speaker 1: Some are building completely shadow channels to satisfy those businesses, and that means that that's how seriously they are taking it.
• 4:03
  Speaker 1: So I think it's a really important thing for the market to understand, because if they capture it before you do, the game will be done right.
• 4:10
  Speaker 1: Once they lock that in, it's sort of over.
• 4:12
  Speaker 2: Yeah, exactly, I think how I see this shift happening right now is it's a big competition.
• 4:17
  Speaker 2: I think that a lot of vendors out there they're trying to get that first mover advantage, trying to win those SMB partners, trying to build programs to enable and engage them at scale.
• 4:26
  Speaker 2: But I think so you've been in the channel for a long time and I think historically the channel has been a very a top heavy strategy was very common.
• 4:36
  Speaker 2: So maybe could you explain us what is a top heavy channel and what are the problems that come with a top heavy channel.
• 4:42
  Speaker 1: Yeah, great question.
• 4:42
  Speaker 1: So typically I remember getting this lesson sort of day three of my sales career, when they went 80-20 rule 20% of your revenue is going to come from, or sorry, 80% of your revenue is going to come from 20% of your partners.
• 4:56
  Speaker 1: You need to focus all of your time there.
• 4:58
  Speaker 1: Don't worry about new partners or scaling.
• 5:01
  Speaker 1: Worry about how you monetize those partners even more.
• 5:04
  Speaker 1: Sell multiple products, multiple brands, multiple solutions through those partners and make those partners successful, because they're your key to sort of getting promoted Makes complete sense and it's a really, really good strategy.
• 5:16
  Speaker 1: The problem is, once you get an 80-20 channel and then you put your best salespeople, your best marketing, your best strategy, all your efforts and all your power into those top partners, because they're the ones who are really seeing the rewards.
• 5:29
  Speaker 1: You don't have an 80-20 rule, you have a 95-5 rule and that produces a lot of risk.
• 5:36
  Speaker 1: For whatever reason, a partner may choose to pick one of your competitors, and if you've got all of your eggs in one basket, that's a real problem.
• 5:44
  Speaker 1: It is, and if you've got all of your eggs in one basket, that's a real problem.
• 5:47
  Speaker 1: And so we're seeing cfos, channel leaders and financial leaders really start to be concerned that hang on, there's six partners that doing almost all our revenue in the us.
• 5:54
  Speaker 1: That cannot happen.
• 5:56
  Speaker 1: We need to de-risk that, and so what they are seeing is one from a risk perspective, but two from an roi perspective that we need to broaden.
• 6:04
  Speaker 1: So the other bit that's happening is those big partners are selling not just you, but they're selling your direct competitor, and so they are.
• 6:11
  Speaker 1: They are being led by the demand to the end user.
• 6:15
  Speaker 1: If the end user asks for X brand instead of Y, then they are going to sell that brand, and so suddenly you've got all your eggs in one basket in terms of risk, but also you're not, you are not in direct control of that, that partner.
• 6:26
  Speaker 1: And so what?
• 6:27
  Speaker 1: What is really, really important that we do is we spread that risk, and so, instead of having all of, or like five, seven partners, ten partners running the entire region, it's how do they still produce a huge amount of revenue?
• 6:39
  Speaker 1: We're not talking about an either or strategy.
• 6:42
  Speaker 1: We're talking about an and strategy.
• 6:44
  Speaker 1: How do we keep those partners going?
• 6:46
  Speaker 1: But add 50, 100, 200, maybe even a thousand partners underneath there that are really producing a good rate of return, and what you'll find is if you get your run rate strategy done really well.
• 6:57
  Speaker 1: That bucket of partners can actually be more valuable than any one partner yeah, I fully agree.
• 7:07
  Speaker 2: I think, based on the conversations that I have with channel leaders from major vendors or thought leaders in the space, I think the trends are clear.
• 7:14
  Speaker 2: So the competition among the top partners are getting really high and vendors are noticing that, hey, actually, the investments that we make in the long tail are performing better.
• 7:26
  Speaker 2: There's better ROI there, and I actually ran a LinkedIn poll recently and I think it was about 86% of the respondents agreed that vendors should be investing more in their long tail, and there were some very senior people from Microsoft, hp, zebra, those kind of companies as well.
• 7:41
  Speaker 2: So it's interesting to see that, yeah, this shift is happening right now.
• 7:45
  Speaker 2: I think it's exciting, but I think the challenge is it is it is not easy to build a long tail strategy.
• 7:52
  Speaker 2: I want to ask you so what would be your approach to building a successful long tail strategy?
• 8:00
  Speaker 1: Sure.
• 8:00
  Speaker 1: So the difference, broadly speaking, between building a top heavy strategy or a long tail strategy is the difference between sales and marketing.
• 8:08
  Speaker 1: Right In sales, we rely on people and relationships and we learn how to ask great questions and get to know our customers, and and that's how you manage a top-heavy strategy.
• 8:18
  Speaker 1: I can have a very bespoke play.
• 8:21
  Speaker 1: I can have a perfectly customized plan and conversation in a sales conversation.
• 8:25
  Speaker 1: That's not how you do marketing and that's not how you run a long tail strategy.
• 8:30
  Speaker 1: When we run a digital approach, we have a broad brush approach that we know is going to hit 80% of partners effectively and that's good enough.
• 8:38
  Speaker 1: We understand that this is not going to work for everyone and instead we worry about generating demand at scale through our partners.
• 8:44
  Speaker 1: This is how you win in the long tail.
• 8:47
  Speaker 1: Revenue drives engagement and engagement drives revenue.
• 8:50
  Speaker 1: So I'm worrying about the one thing that stops channels growing, which is opportunity creation.
• 8:55
  Speaker 1: How do I enable my partners to create opportunities at scale?
• 8:59
  Speaker 1: Because if I'm helping them create opportunities, some of those opportunities will close and therefore they will be engaged.
• 9:05
  Speaker 1: If there's one number that I want to grow within my long-tail strategy, it's number of self-generated opportunities by partner.
• 9:12
  Speaker 1: Everything else falls down outside of that stat.
• 9:17
  Speaker 1: If we can grow that one stat, as long as the rest of it works properly, they understand how to close it, they understand how to renew it, they understand how to upsell it.
• 9:24
  Speaker 1: As long as your enablement works around, that it will work.
• 9:29
  Speaker 1: At Zoom, we did not have as complete a partner program as we wanted.
• 9:33
  Speaker 1: Right, we were growing so fast through COVID that we didn't have our perfect enablement strategy.
• 9:39
  Speaker 1: Maybe our operations weren't as clean as we needed to be and that was frustrating for partners, and yet they sold Zoom.
• 9:45
  Speaker 1: The reason they sold Zoom is because the demand was there.
• 9:48
  Speaker 1: Fix the demand and you will fix your challenge.
• 9:51
  Speaker 1: There's never, ever been a channel that I've known about or a salesperson I've known about.
• 9:55
  Speaker 1: They've gone.
• 9:55
  Speaker 1: I've got too much pipe.
• 9:57
  Speaker 1: So worry about creating opportunities, worry about the enablements, then close those opportunities and watch your long tail strategy thrive um, you touched upon the, the distribution right, so you also worked in distribution.
• 10:11
  Speaker 2: I think the traditional view of uh managing or engaging a long tail is that vendors think that it is the responsibility of the distributor or I will let my distributor do it.
• 10:20
  Speaker 2: But a lot of the times that doesn't translate so well.
• 10:24
  Speaker 2: So I think what is the problem with, I think, letting your distributor uh engage your long side, because they also have different priorities?
• 10:33
  Speaker 2: Uh, they maybe also lack the tools.
• 10:35
  Speaker 2: They also work with dozens of different vendors.
• 10:38
  Speaker 2: They have worked with so many different partners.
• 10:39
  Speaker 2: How do you see that?
• 10:41
  Speaker 1: it's the same thing as going I'm going to outsource my entire marketing strategy.
• 10:44
  Speaker 1: Distributors play a critical role and there's some really good people and really good plans within distribution.
• 10:50
  Speaker 1: But I don't outsource all of it right.
• 10:53
  Speaker 1: Instead, I go okay, they provide their value, they have their specialism, but I'm going to make damn sure that I work with them to build a cohesive strategy.
• 11:02
  Speaker 1: So, for example, I am not just hoping that distributors have a really good partner acquisition strategy.
• 11:09
  Speaker 1: I'm not just hoping that, uh, distributors have a really good demand generation strategy through partners, because they don't.
• 11:15
  Speaker 1: They have their own priorities and they do a brilliant job at what they do Provisioning, licensing, marketing towards partners and making sure those partners stay engaged.
• 11:24
  Speaker 1: Their facilitation mechanism do it all wonderfully and I'm making sure I wrap around those distributors to provide the support that I'm going to provide to create and enable demand.
• 11:34
  Speaker 1: As long as those two pieces work together, it will work incredibly well.
• 11:39
  Speaker 1: Where it falls down is certain distributors care about profit within their marketing center.
• 11:45
  Speaker 1: So they are.
• 11:45
  Speaker 1: You know, the most profitable part of most distributors is their marketing team, because they use that marketing team to charge vendors mdf and probably they care very much about maximizing the profitability of that mdf not necessarily about the revenue generated as a result, and so that can be a real problem for vendors sorting between which which disties are doing a great job generating demand and which disties are actually just using them as a bit of a cash cow to make sure that they they of monetize their marketing team the best.
• 12:16
  Speaker 1: That's one of the challenges.
• 12:18
  Speaker 1: But another challenge is hey, my distributor's in charge of it.
• 12:21
  Speaker 1: Do you know how complicated that is?
• 12:23
  Speaker 1: How complicated when you aren't the brand, to just be the brand?
• 12:28
  Speaker 1: It's really hard.
• 12:29
  Speaker 1: And so you've got to be there in the streets, in the trenches, with your distributors, allowing them and supporting them to generate the demand.
• 12:38
  Speaker 1: Because, like I say, if you generate enough demand, the facilitation will happen.
• 12:42
  Speaker 1: And distribution is your facilitation mechanism, they're your provisioning mechanism, they're your enablement mechanism, but they cannot generate demand for a brand like a brand can, I think, think also the biggest challenges, especially within that long tail, the partners that they're managing.
• 12:57
  Speaker 2: I think they are really these partners are very small.
• 13:01
  Speaker 2: I think you work with hundreds of partners.
• 13:03
  Speaker 2: You said, I think, a dozen hundred, 1200 partners when you were working at Zoom and you worked really closely with these partners.
• 13:09
  Speaker 2: When you talk to them, what are biggest challenge?
• 13:13
  Speaker 2: What are?
• 13:14
  Speaker 2: What are they struggling with?
• 13:16
  Speaker 1: yeah, I think sometimes people don't understand the pressure that small businesses are under right.
• 13:21
  Speaker 1: For me, one of the reasons and janet spoke about this brilliantly, I thought it was a really insightful point if you give a top global partner a hundred leads, that's a hundred leads.
• 13:32
  Speaker 1: That's a hundred leads.
• 13:33
  Speaker 1: To them, it's nothing.
• 13:34
  Speaker 1: They get hundreds of leads a week from loads of brands all over the place.
• 13:39
  Speaker 1: So some leads are cool, it's nice to have.
• 13:42
  Speaker 1: However, if you give a small business three leads, that might be the only three leads they get all year.
• 13:48
  Speaker 1: They are running those into the ground to ensure that they get that lead converted right.
• 13:55
  Speaker 1: They've got bills to pay.
• 13:56
  Speaker 1: They've got people to feed.
• 13:57
  Speaker 1: It's a really tough job running a small business, and so what I love about that is it's really easy to gain loyalty.
• 14:04
  Speaker 1: Because if you're helping a small business through a tough time in a downturn, turning an economy, where people are worried about how they're going to pay their team for the next year, hey, three leads might make all the difference between someone losing their job, and I know, because I've spoken to them, the power of helping those small businesses thrive.
• 14:22
  Speaker 1: They will sell your product for the next 10 years, right, and that's not the reason to do it.
• 14:26
  Speaker 1: The reason to do it is the cynical reason the ROI is better.
• 14:30
  Speaker 1: But the real reason that makes me proud and the real reason that I've seen is when a partner turns around and says thank you, you helped me.
• 14:36
  Speaker 1: That means a lot more coming from a mom and pop shop in the UK that have been struggling for the last few months than helping one of the Goliaths hit a number, because, hey, they're hitting a number right, and that's the bit that really warms my heart.
• 14:50
  Speaker 1: But the cynical part of me, the the revenue leader part of me, says the roi is better, the conversion is better.
• 14:56
  Speaker 2: so that's why I'm betting on small partnerships, because mathematically it makes more sense, but morally it makes more sense as well from my experience when speaking to those smaller partners, also hearing from other channel leaders, I think the biggest challenge is customer acquisition because I heard this uh research.
• 15:13
  Speaker 2: I think the biggest challenge is customer acquisition because I heard this research.
• 15:14
  Speaker 2: I think the average partner, average North American partner, has about nine employees.
• 15:19
  Speaker 2: I think it's the same in Europe.
• 15:20
  Speaker 2: It's about eight to 12 employees and typically none of them do marketing.
• 15:24
  Speaker 2: So imagine how much more pipeline, how much more revenue they would close if they had that marketing support.
• 15:32
  Speaker 1: Yeah, we've seen it as time and time again and you're absolutely right.
• 15:35
  Speaker 1: The stats are clear.
• 15:36
  Speaker 1: In Europe, average channel partner is 8 to 10 FTE or 8 to 12 FTE.
• 15:41
  Speaker 1: Average FTE until you get a full-time dedicated marketing head is 49.
• 15:46
  Speaker 1: That's not even the same ballpark.
• 15:49
  Speaker 1: That's so far away.
• 15:51
  Speaker 1: You need a partner to triple or quadruple their FTE to hire one full-time marketing user, and yet they're selling lots of stuff.
• 15:59
  Speaker 1: How?
• 16:00
  Speaker 1: Through relationships?
• 16:01
  Speaker 1: But what I love about this is this thought that marketing can be the catalyst.
• 16:05
  Speaker 1: Marketing can be the game changer to a small partner strategy.
• 16:09
  Speaker 1: The problem is they can't hire 30 more people to get to a full-time dedicated marketing user, Yet they're still producing good business.
• 16:18
  Speaker 1: Now you can help change their future and you can change your own revenue because you can enable them, via automation, to drive new demand through marketing.
• 16:30
  Speaker 1: And that's the bit that makes.
• 16:31
  Speaker 1: That's the bit that I get really excited about and the really innovative brands that we've spoken about Microsoft, Cisco they are looking at three channel marketing automation because they understand that those SMB partners do not have the headcount, time or capability to create bespoke marketing plans and so they are automating those marketing plans.
• 16:52
  Speaker 1: And we are seeing the same thing time and time again, when you provide that marketing catalyst when no marketing has gone before, you see outrageous returns as a result.
• 17:04
  Speaker 2: I think this is also one of the things that I'm really proud and excited about working at Chenex because, for those who may not know so, Chenex simply we help vendors automate their marketing through their channel partners directly to their end users, and we have a feature on the platform where the partners can provide feedback back to their vendors.
• 17:22
  Speaker 2: And I sometimes take feature on the platform where the partners can provide feedback back to their vendors and I sometimes take a moment and scroll through that feedback and there are so many partners out there that are so grateful and thankful for their vendors, thankful for the marketing support.
• 17:34
  Speaker 2: They say we've been getting so many inquiries because of these social posts, because of these landing pages.
• 17:40
  Speaker 2: We even had new customers because of this.
• 17:44
  Speaker 2: So I think reading that makes me feel like I'm doing something impactful here and it makes me excited.
• 17:53
  Speaker 1: Yeah, I love the sentiment, I see the passion in your eyes, right, it's something that we really try and foster here at Chanix those S&P partners.
• 18:00
  Speaker 1: They're the backbone of the channel economy, right, and we've seen it happen with presidential candidates and kings in the 16th century.
• 18:07
  Speaker 1: If you just focus at the top of the tree, the whole thing falls down right.
• 18:11
  Speaker 1: And so what we are doing here at Chanix is we're giving those partners a chance to thrive and it works.
• 18:17
  Speaker 1: And that makes me proud, because I just see and I've spoken to them, I've seen partners who are really struggling, the economy is in a really tough place, and suddenly they get two or three new opportunities because they connected some organic social.
• 18:32
  Speaker 1: And you think, how the hell does this work in their eyes when they say, oh, my God, like we close new opportunities because of social media.
• 18:43
  Speaker 1: And so there's two pieces of advice I have for the market If you're not social selling, you're losing right, and if you're not automating your marketing strategy to the SMB, you are not getting the return that you should be getting right Too long.
• 18:56
  Speaker 1: And really, why I think Chanix is doing something innovative is the marketplace.
• 19:01
  Speaker 1: Technology didn't exist, there wasn't a way to facilitate automated marketing at scale.
• 19:06
  Speaker 1: And so, yeah, of course, what do you do?
• 19:08
  Speaker 1: Well, I throw people at the problem.
• 19:09
  Speaker 1: If I'm going to throw people at the problem, I'm going to focus on the top end.
• 19:12
  Speaker 1: I can't have one channel account manager, have a thousand partners, but that's what the difference between a sales strategy and a marketing strategy.
• 19:19
  Speaker 1: You can target a thousand end users with a marketing strategy, and with an automated marketing strategy through partners, you can target a million.
• 19:27
  Speaker 1: And so that's what really makes me proud of what we're doing here, because we're targeting a segment in the market that desperately needs it and, as a result, is going to grow like crazy.
• 19:40
  Speaker 2: Well, thank you, alex, for joining us as a guest today and sharing your own expertise.
• 19:44
  Speaker 2: Today we covered the importance of true channel marketing automation engaging the long tail, if you're for all of our listeners.
• 19:53
  Speaker 2: If you have any feedback, please reach out to us and thank you.