On Rad's Radar: Misunderstanding the Channel

The Channel

On Rad's Radar: Misunderstanding the Channel

By Peter Radizeski, RAD-INFO Inc.  |  May 14, 2014

Both Verizon (News - Alert) and AT&T announced that they were committing millions to the channel. CenturyLink announced that channel had delivered big revenue last year. Telx said that more than 40 percent of new logos came from channel partners. Google (News - Alert) has 10,000 channel partners.

More and more companies are looking to a channel to deliver sales.

That creates a problem because many channel partners are just not sales organizations. However, the service providers think that if they sign up 400 channel partners, sales will flow. It just doesn’t work that way. And you are working against Pareto’s Principle. If you follow the 80/20 rule, why even sign up the 80 percent? Choose the 20 percent carefully.

It goes back to the channel partners’ business models. (No two are alike.) They sell complimentary or adjacent services during a sale, but they aren’t going to door knock just to sell your stuff. Vendors think that their service is easy to sell and pays great, so why wouldn’t the channel partners just pound the pavement getting ink?

If your service is less than $200 and my commission is 15 percent, how excited do you think I will be to just sell your services to make $30 per month? If you think there is a business model around that, please start your own network marketing company and become the next Amway.

Even more baffling are the press releases announcing a service provider has become vendor number 123 at a master agency. That’s akin to having a dozen SKUs in the Tech Data (News - Alert) catalog or being on page 3 on Google.

One vendor, MessageBroadcast, was in and out of the channel in nine months. This isn’t uncommon. Tech companies want a quick return on investment in marketing or channel, which shows you how little they understand both.

The view of the channel as just a tool leads to disappointment. Would you randomly hire people for your sales team without a plan? That’s about what many service providers are doing. It’s become like commercials during live TV, which is why the DVR and Netflix are so popular – no noise.

Peter Radizeski is head of telecom consulting agency RAD-INFO Inc.

Edited by Maurice Nagle


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