At a recent meeting of the minds of channel professionals, one of the biggest questions on their lips was “how far should they go in helping their channel partners through these tough times?” My POV-You can go far without too much effort.
Interesting times, these. In economic downturns manufactures react by scaling back their own workforce to try to offset any forseen loss in revenue. A natural (but not necessarily universal) fallout to that is an even greater reliance on their channel partners. Problem is, there are less resources available to capitalize on this need, including less direct support through the vendor’s channel reps (less reps, means more partners per rep, which in turn means less 1:1 time with partners) and program budgets get scaled back…often waaaay back. In spite of the manufacturers own cutbacks, many are questioning how far they can, or rather “should”, extend themselves to help assure partner viability through these tough times-up to, an including, bankrolling partners through the downturn. I say, you may not have to go that far. In fact, a little can go a long way.
Cash Flow is the number #1 concern of most resellers, and indeed most businesses. You can assist your partners in their cash flow needs with very simple changes. This includes little things like prompt payment of Co-op reimbursements or other rewards. For many reasons which may seem valid, many vendors take from 30-90 days to reimburse partners for certain activities-many of which may have been already pre-funded by the partner themselves. Without going as far as extending credit terms, you can improve their cashflow tremendously through this small change.
Another idea is to focus on key partners only. During tough times, there is no time like the present to determine which partners are the “keepers” and which ones are the “losers”. Somewhere in the middle are the “Maintenance” partners-those that won’t grow without a disproportionate investment, but are otherwise significant enough not to lose. We say focus your attention on the keepers.
As part of that process, now would be a good time to review the business plans of the “keepers” and make sure that those plans are still sound for the pending economic realities of ’09. I hear “the worst is yet to come” all the time. Despite being a basic business discipline, most partner companies are not good a business planning. Working with key partners to help them evolve their plan to address the new realities may not cost you much if you approach it right.
Finally, there has been a lot of discussion about how distributors should change their business models to address downturn to help protect, and even support, their vendors revenue during the downturn. I hear strong opinions on both sides of that fence, from “Distributors are closer to the needs of the reseller and local markets” to, “Distributors are only good a providing logistics, not adding value”. I’d be interested in which side of this fence you are on and why.