Are Manufacturers Providing the Channel With the Right Tools to Capture Service Revenue?
By Claire Millsap
The IT channel is in a state of flux. New competitors and shifting customer behavior are redefining the game for manufacturers and each of their downstream partners.
Amazon, for instance, recently entered the managed services arena, signalling a paradigm shift on-par with what the technology behemoth did to traditional bookstores. As enterprise software vendors trend toward as-a-service delivery models, resellers are shifting their focus from products to services (as well as proprietary IP). And in the last six months alone, vendors from Dell EMC to Kaspersky Labs and Google have unveiled new or improved partner programs to maximize their revenue potential.
Confronted with this widespread change, technology manufacturers are quickly realizing they can’t phone in channel partner relationships. As hardware and software become more commoditized, maintenance and support are one of the few remaining areas that drive healthy margins. For manufacturers to maintain this critical annuity revenue, they need to put the right tools in the hands of their channel partners.
Forging True Channel Collaboration
Manufacturers don’t have the luxury of equipping their channel partners with a simple out-of-the-box service revenue solution. There is no shortcut to developing a tool that addresses the complexity and nuances of how manufacturers, distributors and resellers operate.
From a manufacturer perspective, an ideal service revenue platform should provide an overarching view of their products, accounts and contracts in one centralized place. At the same time, the tool must be configurable enough to prevent a manufacturer’s multiple distribution partners from viewing each other’s sales data.
Resellers and managed service providers follow different rules of engagement as well, requiring a consolidated view of product information from the various distributors they collaborate with. Last but not least are end users, who demand more from resellers – i.e., data they can access to drive their own IT destinies.
It’s a manufacturer’s responsibility to understand and support each link in this chain, not just the distributors they work with directly, or risk having competitors that will. For many vendors, this means embracing a major paradigm shift and learning how to communicate effectively with all downstream channel partners.
Finding a Tool That Plays to Everyone’s Strengths
As the recent slew of partner program makeovers indicates, there are concrete benefits to investing in your channel ecosystem.
Offering a one-stop contract and product information platform that caters to distributor, reseller and end user needs pays dividends in long-term customer loyalty. The easier it is for partners to work with a manufacturer (and sell its products), the more likely they are to stick around for years to come. By developing resources that make partner businesses more successful, manufacturers ultimately extend their own revenue streams.
Building a homegrown revenue management tool that caters to channel partners’ intricate requirements commands time, resources and budget that most manufacturers, frankly, don’t have to waste. Fortunately, there are third-party solutions available that let manufacturers quickly start forging stronger partner relationships and capturing new sales opportunities.
Keep in mind, all revenue management solutions aren’t created equal. Here are three critical elements to look for when selecting and deploying the right tool for your channel:
- Exhaustive, organized data: For manufacturers, the first – and arguably most challenging – step to providing a comprehensive revenue management tool is getting your data in order. This isn’t simply a matter of aggregating information that already lives in various teams and tools inside your organization. It also means incentivizing distributors and resellers to communicate and register sales out data, something channel firms have been known to avoid given the cumbersome nature of most registration processes. Look for a revenue management solution provider with the expertise to help bridge the data gaps between you and your channel partners, and take the pain out of communication and product registration.
- End-to-end channel accessibility: A revenue management tool should be flexible enough to accommodate manufacturers’, distributors’ and resellers’ sales objectives, along with end users’ IT needs. To that end, the platform should provide different levels of accessibility depending on who’s using the platform. Manufacturers, for instance, should be able to see a global view of their sales and service activity, while distributors should only have visibility into their downstream resellers’ and end users’ accounts.
- Features that remove the friction from renewals: Traditionally, closing even one renewal contract has been a tedious, messy process for any organization in the channel. To truly bring value to channel partners and support your own bottom line, find a revenue management solution with functionality that eliminates the friction. A platform that proactively (and automatically) notifies downstream partners about upcoming renewals, offers instant access to service contract data, and helps identify opportunities for cross-selling and upselling, will reduce the time and cost of locking in annuity.
Tectonic shifts in the IT industry won’t diminish the vital impact channel partners have on manufacturers. But the partner programs that served the industry well over the last few years are no match for today’s unique selling environment.
By investing in the right tools, manufacturers and their partners can become more united in their shared mission to keep customers happy and profits up.