Mitigating Direct vs. Indirect Sales Channel Conflict
By Abby Sorensen, Editor
Selling more software through indirect sales channels can create headaches for your direct sales team – and your partners – unless you proactively take steps to address the potential conflict.
What happens when your channel partners and your direct sales reps call in to the same account, or when they start undercutting each other on price? Conflict between your channel partners and in-house sales team can be avoided. These four channel experts share advice on how their software companies address, and avoid, this conflict. For more advice on this topic, check out the February 2019 issue of Software Executive magazine.
Pierre-Emmanuel (P.E.) Perruchot de La Bussière, General Manager Channel and Business Development, Vend
You can’t just hope that your channel partners won’t think your direct sales team is cannibalizing their revenue stream. By selling direct, you’re basically telling channel partners, “Hey, we really like you, but at the same time, we think we can do better than you.” That doesn’t work. At Vend, we’re making sure we are leaving money on the table for our channel partners, and that we are building additional revenue streams for them that will help them grow their business.
It’s really about showing channel partners how they, as resellers, can win with our product. We show them how when they bring on a customer, the customer is better off to come through them than through our direct sales team. For example, all of our resellers get access to what we call a specialized onboarding package. The customer would have to pay for the onboarding package if they came to us direct. If they come via a reseller, the customer doesn’t have to pay for it.
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Beth Dabagian, Director of Channel Sales, North America, Monetate
We’re setting up our structure to try to avoid channel conflict in the lower-end market where we don’t engage the sales director in those opportunities. Any referrals that come in from partners that drive net new business, our partner team and our sales directors get comped on that. Then if we do have an overlapping account, the way we’ve handled it for a reseller is that they sell into their customer base. We identify in our reseller agreement a list of the brands that they will sell to. It’s basically their customer list, and then our sales directors don’t sell into those brands, because they’re already existing customers of our partners. We have very few of those, but it’s helped us avoid channel conflict in that space. Also, we don’t assign those leads to a Monetate sales director – instead we pass them directly to the channel. Those leads go to the partners who have invested in our certification process, have had success with customer implementations, and who are totally invested in our business.
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David Saxon, VP Channel Sales & Partnerships, Heap
I’ve always been a big fan of double comp. If it comes in through the partner, you don’t have to pay the direct rep as high a percentage. You have to have that team spirit of sales people and channel partners working together. If you’re not comping everyone across the board, you’re going to set yourself up for failure. Keep in mind your direct sales reps are hanging their head on a direct sales number as well, so when you’re paying the channel rep side of the house, that partner won’t earn as much at the end of the day as a direct rep will. You just have to find a balance and figure out what the financial model looks like when double comping.
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Lina Parness, Director of Programs, Partnerships, Alliances & Business Development, LogiGear
Competing with our partners isn’t an issue. Traditionally, LogiGear registers every opportunity so that the sales staff knows which partner brought in the deal. We’ve hand-picked our resellers based on vertical, geography, and of course, skill set. This also helps us eliminate channel overlap. In a typical company, once the deal is registered the best price belongs to the incumbent partner that registered the deal. Additionally, it gives visibility to management for their forecasting as well as to when the deal is registered.
At LogiGear, we have two buckets of partners: technology and resellers. Our technology partners fit within the DevOps tool chain and allow us to give our clients a fully turnkey service solution for DevOps. As we each sell different pieces of the tool chain, it is not a problem for them or our sales staff. One client and our one of our partners, Zephyr, uses of our TestArchitect tool. TestArchitect easily configured with Zephyr’s tool and our client was ecstatic that our tool easily fit within their environment — it made their testing practice even easier and stronger. Even our reseller partners don’t have an issue with competition, because of the way we structure our deals and look for natural fits that won’t cross the line towards competition. Our reseller partners aren’t experts in automation and don’t have an interest in doing either customization or automation implementations. These partners present TestArchitect as a solution and do the deal registration. Furthermore, we have situations where our sales staff is co-piloting a registered reseller partner deal. In those cases, we have commission structure to compensate our sales staff while our reseller partner gets the full benefits from the sales. We believe that in order for us to win in a partner-reseller arrangement, we need to do everything we can to make our reseller partner win.