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When it comes to vendor training and certifications, channel partners just have to suck it up.
Or do they?
Apparently not. At least not at Atrion Networking Corporation, a $120 million firm with 257 employees located in Warwick, R.I. For past two years, the 28-year old partner firm has engaged with its many vendor partners in what it calls a reciprocal loyalty program.
"We say to our technology partners, 'You need to be certified with us as well,'" said Paul Cronin, senior vice president and partner at Atrion.
An IT solution provider, Atrion offers consulting, professional and managed services in areas such as the data center, security, network infrastructure, and storage. The company also has an application development practice as well as a focus on unified communications, and counts Cisco, Microsoft and VMware among its top technology partners.
So what's this reciprocal loyalty program all about?
According to Cronin, it means that his company has goals just like vendor partners have goals. "It means that you [the vendor partner] are going to be more deeply involved in our business and understanding what we do, you're going to go through our onboarding process, and, you're going to go through our leadership workshops that we do every month for our clients, employees, and vendor partners," Cronin explained. "We've been running these workshops for five years now and we have 1,250 alumni," he said.
This approach is important to help foster understanding about the amount of time and investment that goes into maintaining the vendor-partner relationship, Cronin explained.
Because, after certification, vendors want more.
Paul Croninsenior vice president and partner, Atrion
"They want to get in front of your sales and technical people ... so we created a fancy worksheet that says, we're going to document the amount of time that it takes our people to get their certification, the amount of time it takes to put people in a room so you can come in and educate us on your newest, latest and greatest, and to go to your conferences, so we're going to document the expense and time to go there," Cronin said. "Then we're going to come up with a number and we have a conversation at the beginning of the year about what our MDF [market development funds] will be," he said.
If there's no meeting of the minds at the beginning of the year -- if a vendor partner isn't willing to invest as much in Atrion as the partner is expected to invest in the vendor, i.e. get its people to become experts in a vendor's technology and help that vendor sell its products -- that vendor partner may be on Atrion's line card but not a mainstay in the partner's portfolio.
"We'll do the minimal work that we need to fulfill on this vendor's products," Cronin said.
On the other hand, vendors that commit to Atrion get the full force of the partner's selling power -- pipeline mapping, access to its team of professionals, and building its managed services around the vendor's offerings, for example.
Atrion's strategy aligns with the trend that Diane Krakora, CEO at PartnerPath, is seeing in the vendor-partner relationship. "We see that the power in the relationship is moving to the partners," she said.
Krakora added that the days when companies like Siebel Systems charged solution providers a million dollars to enter their "strategic partner" program level are gone. Siebel Systems was purchased by Oracle in 2005.
"In the channel ecosystem of the future, the solution providers have all the power," Krakora noted. "They meet with the prospect, introduce a solution that includes multiple products, design how the solution integrates with the customer's current environment, implement the solution, develop the change management policies, roll the solution out customer-wide, drive adoption and manage the front-line support questions for their customers. The solution provider now truly owns the customer relationship and thus has the power to decide which products are part of the offering."
Crafting a reciprocal agreement
What prompted Atrion to design its reciprocal loyalty program was the need to put in place some controls.
Several years ago, the company was reaching a critical mass or about $75 million in revenue and moving towards $100 million in revenue. "That's when we thought about designing our own reciprocal agreement [with vendors] for doing business together," Cronin explained.
At the time, Cronin was also on the board at CompTIA and was the chair of the partner advisory council. The partner advisory council worked with the vendor advisory council. While in some strategy meetings between the two councils, both sides were tasked to come up with the number one problem they had with each other.
Partners complained that the vendors weren't doing enough for them and vendors complained the partners were investing enough in them. The outcome of the meeting and venting was a two-day program where vendors learned more about a partner business and partners learned more about why investing in a vendor was a good idea.
That's when the light bulb went off for Cronin.
"I thought, why should I wait to go to a vendor for a program?" Cronin recalled. "I should turn around and offer my own program so when a vendor comes to me I tell them that they need to be certified if they want me to be certified," he said.
Now Cronin will admit that this strategy doesn't work to the level he'd like it to with all vendors, but it helps shift the balance by getting money upfront rather than waiting for rebates based on selling products.
The way this partner sees it, it's the partner that owns all of the risk. What if the vendor just doesn't shine or worse, goes down the tubes?
Over the past two years, Atrion has engaged five vendor partners with its reciprocal loyalty program. The agreement resonated with four of the five companies. The arrangement wasn't successful with the fifth organization, which Cronin explained was small and offered a niche product to his company.
This year, the channel partner will renew four of the reciprocal agreements and expand the program to one or two vendors.
"We're not looking for this type of relationship with all of our partners. In some cases, we're just looking for a fulfillment relationship," Cronin said.
Kevin Rhone, senior strategic consultant with the channel acceleration practice at Enterprise Strategy Group, has heard of things similar to what Atrion is doing. But he noted only the most desirable partners -- the best and largest partners or those that a vendor specifically wants to take away from a competitor -- can usually pull it off.
"However, the idea of committing to mutual goals upfront supported by the vendor providing funding upfront or quarterly, which comes from the partner marketing budget, to execute to these goals is not that unusual," Rhone noted.
These funds can be called either MDF or business development funds and are normally not recoverable by the vendor if the partner misses the targets. Rather, if this happens, the terms are renegotiated.
When advising vendors, Rhone contends that this type of arrangement is mutually beneficial but should not be used as the only incentive. Rather, it should be combined with some form of rebate based on performance, growth, etc.
NetApp is one vendor that engages with Atrion in a reciprocal partnership. According to Cronin, NetApp invested money to grow Atrion's business and in the first year Atrion doubled its revenue with NetApp.
Cronin described the NetApp relationship as a landmark case for its strategy.
"Fortinet came in and funded $40,000 last year and upped its funding to $60,000 this year," Cronin said. "Our relationship has matured and I doubled down on my investment with them knowing that I was getting that money upfront," he added.
Big players aim to ease vendor training burden
What about Cisco and Microsoft, two big vendors for Atrion? Do they play?
Not exactly in the same way.
According the Cronin, Atrion does engage with Cisco in that the partners build business plans and have sessions together.
"Let's say if I'm going to market with Cisco security -- which I do -- I'm talking to this business unit about a reciprocal loyalty approach so I might ask for funding to grow that," he said.
What Cronin did say was that big vendors such as Cisco and Microsoft are doing some great things to ease the vendor training and certification burden on partners and that they're listening to partners.
Channel partners are asked to make big investments in vendors, time that's taken away from the partners to build their own business, not to mention transform their businesses to cloud and other technologies. Cronin suggests it's time to balance out the equation with vendors.
Read about best practices for managing vendor relationships.
Find out how vendor relationship management techniques can improve a channel business.
Learn how to get your share of vendor market development funds.