How To Establish Profitable Partnering — 4 Expert Perspectives

By Christine Kern, contributing writer

Experts weigh in on best practices and mistakes for channel partnerships.

At the inaugural ISV IQ Live! Conference held February 24 in Santa Ana, CA, nearly 150 channel executives gathered to address the topics of raising capital, partnering, and marketing. One panel, Profitable Partnering, featured three vendors and one distributor executive discussing best practices and common mistakes in establishing channel partnerships.

Participants included Gregg Brunnick, Director of Product Management and Technical Services at Epson America; Walker Thompson, Director of Alliance Management at Vantiv Integrated Payments; Mark Fraker, Vice President of Marketing at BlueStar; and Marc Solomon, Vice President of Strategic Partnerships at Worldpay. The session was moderated by Business Solutions Magazine President Jim Roddy.

The panel began with participants addressing how ISVs can establish successful partnerships with VARs, as well as some of the common costly errors. Brunnick said ISVs who have a streamlined offering, either products or a combination of products and services that VARs can easily digest and help resell, are the most successful. “Where you tend to run into problems is if you have offerings that are overly complicated, overly confusing, and even if you try to go with too many VARs at once,” said Brunnick. “Those are all potential speedbumps that can trip you up as you move forward.”

Fraker added no to skimp on the training process, saying, “From an ISV standpoint, when you go out and decide you’re going to bring in resellers, bring one person in and get to learn from that experience. You can have all the training that you want. Remember, they’re going to be an extension of you. Your reputation is now on the line with someone else, other than the people that you hired and brought into your company.”

Those VARs are “in essence, your face out in the market. If you train them, make sure you test them, so that they comprehend exactly what you’re teaching them, because teaching and comprehension are two entirely different animals.”

Fraker also recommends pricing higher rather than lower at the onset, since it’s more difficult to raise prices later than reduce them. He also suggested going to a two margin stack pricing system, noting, “You need to have a margin stack in there for your reseller, and if you plan on using a distributor, you need a margin stack in for your distributor as well, because we’re all in business to make money.”

When it comes to ISV mistakes, Solomon said, “It’s very common they don’t know what they want to be. When they say, ‘Oh, I’m going to go out and I’m going to be the end all to end all,’ that’s not what they are.” The first thing Solomon suggests is asking yourself what your value proposition is because ISVs need to be able to identify what value they bring to the end user. “You’ve got to know the value of what you’re going to bring, how you are going to help solve a problem, and how it’s going to be used and useful.”

Ultimately, for Solomon, “The biggest mistake is the ISV doesn’t really think about their value proposition and what they can do for the end user.” Once they do that, it’s a matter of partnering with the right VARs to make the partnership valuable to the end users.

Thompson added, “A lot of ISVs come in schizophrenic on what’s the right decision to make. I think if you do adopt a channel program, you’ve got to jump in feet first and whole body in. That deep commitment to a channel program must be apparent to the VAR. They’ve got to feel that when they’re out there selling and marketing your product.”

Thompson explained many ISVs are faced with the dilemma of selling direct or selling through the channel. “Many times that conflict can come into play, and we’ve seen the market disrupt a bit, where ISVs are trying to figure that out and they are crossing streams at this point.” It makes for a confusing experience for VARs.

As Roddy pointed out, a common complaint among VARs is that an ISV or vendor is not channel friendly.