The year 2020 carries with it a certain weight – implying a clarity of vision that few of us ever have with any real certainty. The channel trends I see and discuss below, have already begun to emerge and my vision for them is more “hypothesis” than “prediction.” Still, I think they are worthy of some thought and discussion and hope you too will find them interesting!
5G information technology and the Internet of Things will accelerate the transformation of traditional markets. Consumer electronics, utilities, infrastructure and transportation become a few of the new verticals – Smart Home, Smart Grid, Smart City and Smart Cars.
Historically, these markets have been served direct as OEM’s for “mission critical” components and through a set of specialized distributors – primarily electrical and electronics businesses – for the balance of the product or solution. The Internet of Things introduces a third business model – the IT Distributor. All three distribution models have presence to and plans for smart verticals. But how will they play in this new market?
The Key Questions before the industry in 2020 include:
With XaaS (Anything as a Service) the traditional sales model has given way to the Trojan Horse! The first sale by the sales team is just the beginning – and the mantra for success is to “drive usage” in order to realize the full potential of the recurring revenue model.
Many studies have concluded that the team best positioned to drive usage is the Customer Service organization. They usually have deep customer knowledge and good relationships in their accounts. But, right now, there has been little to no focus on upgrading their capabilities as a true (and critical!) channel responsible for delivering the majority of lifetime managed services revenue.
I think we will see major changes here with this channel trend in 2020. Customer Service will become a legitimate channel and will have its own channel program components – training, sales and marketing support, promotions, etc.
We’ve certainly heard the rumblings over the last 10 years, as partner programs have grown increasingly complex – forcing “virtual exclusivity” for one or two vendors in many partner businesses. When we look back to the early 90’s when programs began to move beyond volume and functional discounts, we must acknowledge the sea change that has occurred:
– The offer has changed from a box with a few peripherals to a multi-vendor solution, often delivered as a service
– The customer has changed to include multiple purchasing models. Each of these with a specific set of decision makers and influencers, and each with a specific set of expectations of their chosen channel
– Partner business models have changed with the channel
– The balance of power has shifted from the vendor to the channel, more than at any time in our industry’s history
All this change and yet the basic tiered program format has remained remarkably constant. But it is straining as partners experiment and operate within multiple business models. It’s hard for a vendor to tell if some of its partners are on a path to growth. Or whether they are stuck in a maze of uncertainty.
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More than ever, the answer is something each vendor must decide. Some ideas include:
– Early identification of market leaders, with program benefits tied to Market Power vs. Performance for a specific vendor
– Strategic joint innovation with partners
– “Open Distribution” with a wide menu of free or almost free benefits available to all on a highly efficient platform
– Custom negotiated relationships. Here a vendor’s sales teams work within strict cost parameters to create a basket of benefits tailored to each partner
Keep an eye out for how these Channel Trends evolve in 2020 – it should be interesting. Wishing you all the best for 2020!