The Partner Channel Podcast Episode #2

5 Key Areas to Understand the Risk of Your Partner Program

Show Synopsis

Meet Michelle Gunter, Executive Vice President at Partner Perspectives, who has an extensive partner channel background. She’s focused on guiding companies in launching channels, helping grow and expand existing ecosystems, and developing new ways to improve channel performance. Daniel and Michelle discuss the sometimes uncomfortable conversations you need to have with partners and how to identify and help partners who may be at risk.

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The Script

Daniel: Welcome to the Partner Channel Podcast, the official voice of the partner channel community. In this episode, I, Daniel Graff Radford, sit down with Michelle Gunter, Executive Vice President at partner perspectives to discuss working in the channel during COVID-19 and how to identify and help partners who may be at risk.

Welcome Michelle. Thank you for being on the show. Could you start off by telling us a little bit about yourself, how you ended up at Partner Perspectives? 

Michelle: Yeah, sure. Thanks for having me. So I’ve been in the channel for over 20 years, helping technology companies, design, implement and manage channel sales, channel demand and technical pre-sales motions. Before stepping into my current role, I worked for Market Star a tech focused sales as a service company, where I had responsibility for the global partner organization. And I joined Partner Perspectives at the beginning of this year, really to continue helping companies create and grow successful channels. 

Daniel: That’s great for those people that don’t know. Can you tell us a little bit about what is Partner Perspectives?

Michelle: Absolutely. So we’re a full service channel consulting and enablement firm. We focus on helping technology vendors build and optimize their indirect channels. So this could include everything from channel strategy and program design, insights and communication to sales enablement, and channel operations. And we have an awesome team of consultants with a rich varied background in leading vendor channels, distributors and partners. And then our company owners, Tim and Jane Lowe have owned and operated a solutions provider and services business for the past 14 years, which really lends a unique perspective in understanding what partners need from vendors.

Daniel: You guys do a lot for a lot of people. That’s great. And you know, you know, for the last couple of months, everyone has been sort of thinking about being in this triage mode and thinking about keeping their business afloat and working with their customers and their partners on that. And some companies are also now looking at this as starting to enter a recovery stage or coming back to work phase. There’s a lot, that’s still kind of felt as unknown of what’s happening in the channel or the future effect on some of their channel partners that are out there. Partner Perspectives recently put a blog out that said, you know, who owns the customer, where you talk about the need to identify and help partners who might be at risk of not surviving because of the impact to the economy. Can you help us sort of think about that threat to these vendors and how they should be thinking about it?

Michelle: Yeah. I mean, you know, it’s certainly evolving, as you mentioned, it’s, it’s all kind of real-time, but based on what we’re seeing at the macro level, there could be a significant risk. So Forrester did a study back in May and one of their more likely scenarios showed about 25% of all channel partners in the US may experience what they’re calling unrecoverable financial distress. So going out of business, and if that were to come to fruition, that would be around 150,000 partners, not making it, in the economic recovery. So as we start to reopen the economy, we’re seeing new spikes in COVID cases. There’s a big looming question of whether there will be a second wave in the Fall. So there are still a lot of unknowns, which is really making it difficult to predict. Uh, and of course, every vendor is going to have their own level of risk due to the solutions they sell, the industries they serve, but it’s such a moving target that I do think every channel chief should be keeping a close eye on their partners right now.

Daniel: Yeah. Some of these macro economic numbers of 150,000 partners being at risk. They can be very scary to think about. Can you help us sort of break it down if we were to go into partner types and think about which types might be more at risk on average than others? 

Michelle: Yeah. So, so far the traditional project based VARs seem to be most at risk, as well, logically those partners who largely focused on SMB. With projects either being put on hold or being canceled altogether, many VARs are seeing real pipeline challenges in second half. There’s also a potential risk for those partners selling in to slower to recover industries, right. That might be oil and gas, travel and hospitality, entertainment. But I’m also seeing some real ingenuity coming from partners and, you know, finding new revenue streams there as well. So on the flip side, when we talk about which partners are thriving, those partners with a recurring revenue practice, your MSPs, your MSSPs, they seem to be the more insulated. And, you know, in a lot of cases, like I mentioned, they’re seeing a surge of growth right now, with the need for cloud solutions, security and the ongoing demand for work from anywhere solutions. So, you know, just a lot of variables, a lot of unknowns, and it is requiring us to look beyond the trends, look beyond the themes and really just talk directly with partners to understand where they are on the continuum.

Daniel: That makes a lot of sense, you know, leading a few customer round tables. We definitely have heard the need to connect with those partners and get some adjusted forecasts and be very thoughtful about, you know, being able to listen very carefully to what your partners are saying. As you, you know, have been talking to partners out there. What does a recovery look like when you sort of think about it at the individual partner level? 

Michelle: Yeah. So, you know, I’ve definitely not been having a lot of business as usual conversations. Every partner that I’ve spoken with is in one shape or another adapting, their plans for the remainder of 2020. And in some cases into 2021 you know, either because they’re seeing a growth spurt or a strain on their business. So for example, you know, some of the partners that I talked with are implementing margin protection strategies, you know, no new customer acquisition refocusing all of their resources, a hundred percent on protecting their install base, quite a few partners, who are doing really well. As I mentioned, and they’ve put aggressive growth strategies in place that, uh, you know, and that includes hiring new talent. So if I’m a vendor. I would want to know who are those partners and not only how do I ride that train with them, them, but how do I make sure that we’re part of that growth strategy? You know, I talked to a partner who is in sheer survival mode right now. He’s yeah, cut all nonessential expenses, including most of his employees. And he is just weathering the storm. So that’s one of those high risk partners that vendors really need to quickly identify to one, see if they can help with relief and recovery, but also to make sure that, you know, the customer relationships and the current revenue is not put at risk.

Daniel: Yeah. I love that. As a great example, we have seen the companies that have thrived almost in some cases, despite what they originally thought would happen to them because they’ve pivoted to be a part of the story for recovery. So some common themes we’re seeing, are you talking about doing more with less? How can your product help engage? What might be a smaller workforce, with more efficiency, how can you help people in planning for a more digital return to work, or maybe there’s less people in the office at the same time. So how can your product or service sort of participate in that? That definitely is something we’re seeing a commonality there. And so, Michelle, when you think about vendors wanting to get a more personal view of the health of their channel and better understand which partners are thriving, surviving, or more at risk, what advice would you want to give them? 

Michelle: Because COVID has created almost a wild, wild West type environment. If you’re only looking at the macro or historical data, if you’re only talking to your partner advisory council or your top 10 partners, you might not be getting that full picture. And partner profiles, joint business plans, anything done pre-COVID. And I would even argue during the triage phase, it all  needs to be revisited. So, the only real way to get a true reality check is to combine the tops down view  with an orchestrated bottoms up approach. And that means channel account managers, partner business managers, whatever you want to call them, they need to meet with their partner execs, virtually likely, to gauge their outlook and really work on a joint recovery plan. And this also needs to include a partner health score. So some sort of criteria for reps and vendors to determine those partners, thriving, surviving, or at risk. I know this advice sounds overly simplistic, but you’d be surprised at how few channel account managers are doing meaningful partner business planning on a regular basis, or if they are, they’re treating it as a checkbox exercise. And there are even fewer reps who really know how to have crucial financial conversations with their partners. So not communicating at the partner level right now, not asking the right questions, not being part of the recovery process could literally bump you down in priority on their line card. Simply because of this seismic shift COVID is having on their customer’s business. So a great example of this, I talked with a partner who primarily focuses on selling and managing RPOS hardware and software applications in restaurants. So since COVID his customers immediately had to pivot to meeting curbside delivery applications and the support and implementation that went along with that, and now are yet having another pivot asking for high volume printing to accommodate single use menus. Only in a world of COVID would a customer’s environment be shifting, you know, and their needs, shifting so abruptly. 

Daniel: I think that makes a lot of sense and, you know, just sort of to keep at this that, we’re hearing a lot of people that are frustrated that maybe they’re not having the most truthful conversation on either side of the table, but if you feel like you’re getting maybe too optimistic, a forecast from your partner, it, might not be quite what you want to bring forward if you’re a cam to your leadership and then have kind of a wrong target there. What are some things that you think that they can bring up to get these partners to open up a little more candidly? 

Michelle:  A lot of times partners will over-inflate or be a little bit overly optimistic about their forecast and, but right now you’re asking your partners to have an honest, candid, and potentially vulnerable business and financial discussion. And I think vendors need to, and I understand the frustration, but I also think vendors need to ask themselves, is there a compelling value proposition that incents them to want to be more engaged in open what’s in it for them? Partners will tend to open up that they see the value that they’ll get in return for sharing that information. So, CAMs are going to need to look for ways to put themselves on the partner’s side of the table and create a talk track that not only disarms, but shows the value, you said the partner wants to engage and I would also ask channel execs, you know, have you, or are you creating a culture of open feedback and honesty internally? So reps are accustomed to this and we’re comfortable doing that with partners. 

Daniel: I think that makes a lot of sense, you know, on top of that, we’ve also heard, some SPIFFs for some channel engagement. So as you’re starting to pivot on message, as you’re looking to train people on some of these adjusted products that you’re putting out there, like what you described that maybe there’s some SPIFFs for getting people up to speed and registering deals and kind of on the front end that, have been helpful as well. You know, one of the things that I loved about our last conversation was some of the coaching that you were providing to channel account managers. On the, on being able to be astute in how they asked financial questions to better understand  the risks of their channel. And I think you have really good coaching there. Can you kind of share some of those things with the audience? 

Michelle: Yeah, absolutely. So one of the things we teach CAMs in our channels, MBA training, I mean, is that by asking the right set of business questions, they can gain a lot of insight into the financial health and priorities of that partner. So that’s important, especially if you haven’t built that rapport with a partner to be able to go in with those hard hitting financial conversations. There’s a lot you can learn. By asking more business oriented questions. And if you’re astute to listening, you’ll hear the clues and the stories from a financial standpoint. So there are really 5 key areas that I’m recommending reps explore with their partners right now to assess, not only how they’re doing financially. But what their focus is for second half and into 21, and the role your company needs to play in that recovery process. So those are number one, financial there’s definitely some just financial questions you need to ask. Two is customer and by extension industry, number three business model, which also includes solutions. four is talent and, last fifth is, is their plan for recovery. A couple of examples of questions. You might ask partners to understand not only their business priorities, but also give those clues into their financial health and focus.

For example, so a solutions-focused question, it’s one that partners are very accustomed to hearing. Has there been a change to your product or services mix and or change to our products? not only is this going to tell you if there’s been a shift in solution, uh, but also tell you a story about revenue, a little bit about gross margin.

Another customer focused question might be, what are the challenges? What are the biggest challenges you’re seeing with your customers in their recovery? You know, if they respond with, let’s say. Oh, we’re struggling with customers not paying on time. Well, that’s telling you a story about net profits and even cash flow, right?

If they’re having to, um, sustain and float that, or if they say, you know, we’ve had to reduce the cost of, of some of our services to retain big customers, you know, that’s telling a story about gross margin. So, and gross margin dollars are key to a partner’s overall health and cashflow is a really key indicator right now in a partner’s recovery. So asking questions that help you better understand that will really give a lot of insight. 

Daniel: These are great things to dig into with your partners and, you know, putting yourself on their side of the table where you can share. Maybe some changes that have happened with your organization and get them to therefore open up with theirs can be a great way to sort of get past some of the ways addressing these questions. You know, right. So you’re a CAM, you’ve had a great meeting. You’ve gotten all this great data from your partner. What do you do with it? 

Michelle: Sure. I mean, you know, coming out of there, you should have a clear picture of how you’re going to help and move forward together, as well as a reality check to, bubble up to senior leaders. So you gotta feed up the information right now. That partner health score is really important, updating your profile and giving a really accurate second half forecast. Accuracy is key right now. And this entire exercise is really futile. If it doesn’t paint a clear picture for senior leaders on not only the reality of the health of their channel, but how to act, where to invest dollars, and ast but not least, follow up and follow through on the joint recovery plan. You know, show your partners that you are there for them throughout this process, stay engaged, communicate regularly. Partners are definitely going to remember which vendors supported them during this time.

Daniel: That’s right. Especially, you’ve asked them all these questions and you’ve promised some changes. And if you don’t follow up, that will give them a very poor taste. But those people that do follow up those people that do hold up their end of the plan. They’re going to remember that versus the ones that don’t. Alright, Michelle, are you ready for the final four questions? 

Michelle: Okay. I am ready for the final four questions. Bring them on. 

Daniel: If you had a superpower, what would it be and why? 

Michelle: It is funny. I must say that I actually put more thought into this question than the others. I don’t know what that says about me as a person, but I picked the power of luck. I mean, come on. Imagine waking up every single day with the power of luck on your side. I mean, you’d be a pretty cool life. So I would probably play the lottery quite a bit if I had that. 

Daniel: I like that one. The power of luck. 

Michelle: Yeah. 

Daniel: All right. Can you give everyone, an example of a mistake and a success you’ve had in the channel?

Michelle: Yeah. This is fun. So a pretty big mistake that I made was the first time I was expanding into Asia. I really underestimated the nuance of Chinese business, customs and culture. That was a hard, hard lesson for me. I was younger in my career and I was in over my head, but you live and you learn and you keep expanding. As far as the success, you know, it’s something that I’m really proud of was that, I took a team of nine reps in the US with a little bit of hope and prayer focused on selling hardware, software, and services with SMB focused partners and eventually grew that into a highly effective team of 350 reps across the globe, delivering over $2 billion in revenue annually. So just, just a really great example of what happens when an organization comes together and heads towards a common goal. 

Daniel: Not everyone gets to experience that level of hyper-growth what a wonderful, wonderful experience. Maybe you had the power of luck on your hands as well. 

Michelle: I must have had the power of luck. 

Daniel: All right. What is one business book you recommend to someone who inspires, to be a leader in the channel? You know, not everyone has had, obviously this hyper growth. Not everyone has achieved your level of success. It’d be great if you could give an example of something that they could retold to better themselves. 

Michelle: Yeah. I mean, you know, this isn’t an inspirational leadership book, but a book that I find myself recommending often is Building Successful Partners Channels by Hans Peter Beck. Hans, you know, if you’re out there, you’re welcome. And the reason why is we work with a lot of new clients that are maybe high growth SAAS or SAAS companies that are really exploring and building their channels for the first time. And many of these leaders have never had a channel background. They really grew up in the as a service world in a direct only motion. So it just gives a great foundation and walks you through the fundamentals of what to consider and how to build a successful recurring revenue or cloud channel. 

Daniel: Great. Great example. All right. We’re in a changing world five years from now, what will be the major changes in the channel that people should think about right now?

Michelle: So there’s an ongoing buzz in the industry that one day in the future, everything B2B will be purchased through a marketplace and that customers will procure all technology, all business applications, all services online.

Originally I was a lot more conservative about that prediction in my line of thinking, I did think the trend would grow, but that it would be more modest and, and wouldn’t be by any means the most popular method Um, but with COVID, it’s really been forcing our hand to a digital only engagement.

So it’ll be interesting to see if that, you know, how much of that sticks, but I do think it will accelerate customer demand for B2B and technology marketplaces, potentially shifting how partners interact and engage with customers in a new way. 

Daniel: Those are great things to think about for the future. And I want to thank you to our guests, Michelle Gunter for Partner Perspectives. And thank you to you, the listeners, for joining us here at the partner channel podcast. If you like what you heard, subscribe to our podcast episodes, wherever you like to listen to podcasts. If you want to learn more about Allbound, please visit our website in the description.