Channel Partner or Cloud Provider? With This Deal, I Thee Wed

Cloud Providers and Channel PartnersI have always thought the conversation around customer ownership was interesting. I think it’s natural to automatically say that the customer is “mine” and that I “own” the customer. The conversation comes up many times when talking about a recent sale or issue. So where does the ownership lie and who really “owns” the customer today? The conversation gets even more interesting when introducing the channel into the model. The answer should be…everyone owns the customer! A shared experience with total collaboration is paramount in order to effectively support the customer and cultivate that professional, long-term match made in heaven.

With the advent of cloud computing and SaaS models, customer ownership is now shared more than ever between the channel and cloud provider. In the channel space, the historical value of a channel partner is that they provide leverage and reach for manufacturers. The relationship for decades has always been that the manufacturer provides the product (hardware or software) and the channel partner provides the customer. Each channel partner built relationships with customers and earned the ‘right’ to offer new solutions to them. Manufacturers try to woo channel partners to offer their solutions to the customers the partner “owns.” The manufacturer created the hardware or software and pass title to the channel partner in a resale fashion. The channel partner passed title to the end customer. And the channel partner owned the customer experience through the installation, setup, and would serve as the single point of contact back to the manufacturer. In many cases, all communications would run through the channel partner.

However, today everything has now changed with the emergence of cloud computing and SaaS. So, let’s explore the primary considerations of a cloud channel deal.

Buying Decisions

Typically, the channel has established a personal relationship with the customer. Many times channel partners, such as regional VARs, are local and present at the customer site. The buying decision is heavily influenced by the personal trust that has built up over time. The channel partner has the ear of the customer and can make recommendations. However, in most cases, the channel partner isn’t providing everything a customer needs and this results in the customer researching online for alternative solutions. In many cases, cloud solutions are researched and sourced directly online without the channel partner. Both factors influence the purchase—the trust and relationship, as well as the right solution to solve a business need.

Contracting 

Every SaaS or cloud deal has a contractual agreement—as a service, it has to. Agreements cover a wide variety of elements such as:

  • How long is the subscription term? 
  • What happens if the service goes down?
  • Are credits provided? 
  • What happens when the service is terminated?

However, these terms can generally be divided into two key areas: Terms of Sale and Terms of Use. In a true resale scenario, the channel partner should own the Terms of Sale (what is the price offered, the length of the subscription commitment, etc.) and the cloud provider should own the Terms of Use (how can the service be used, what are the uptime service levels provided, etc.) It is unrealistic to ask a channel partner who is primarily selling the service to provide contractual commitments on how the service is being offered by someone else. Both components are needed and the channel partner and cloud provider need to work closely together so the experience is effective for the customer.

Billing and Invoicing 

The reality today is that that the channel has spent decades building operational processes around a one-time product transaction, with no regard for monthly recurring invoicing. Over time this will change, but likely not in the near future. This works extremely well if/when product and channel partners wholly own the customer experience. With cloud subscription billing, the monthly bills are calculated by the cloud provider and sent to the channel partner to pass along to the customer. It’s not uncommon for the cloud provider to actually do everything, including send the invoice directly to the end customer and calculate the partner commission as well. Yet again, both the cloud provider and the channel partner need to work together in order to provide a frictionless experience for the customer.

Care and Feeding

The channel’s track record for supporting cloud providers’ solutions has been less than stellar. Except in rare cases, the support volume just isn’t there to have channel partners’ support teams finely tune their process or master their art. Often times, the best a channel partner can hope for is to be able to log a ticket and route a call. This inevitably introduces delays into problem resolution. Knowing this, the cloud provider needs to have a channel-specific process to support end customers brought in through the channel. Cloud providers need a way of identifying each customer as a channel partner deal and treating it in a pre-agreed fashion for upgrade requests, etc. A well-designed channel support process will go a long way in making or breaking the customer experience.

The punchline is that everyone owns the customer and it’s truly about working together as a team to provide an outstanding customer experience. Tip the ownership scale one way or the other too much and you’ll end up with customer satisfaction roulette at a minimum, or a customer defection in your worst case scenario. By working together and delineating roles, and accepting today’s new market dynamic, we really can evolve and even master the cloud + channel customer experience.

Carlos Román

Carlos Román

Carlos Román has spent his entire career in both channel and services organizations, and is currently the Head of Global Partner Marketing for 8x8. Román had previously held executive leadership positions at Insight and Avnet, and also founded and operated two technology services start-ups in Silicon Valley. He holds Electrical Engineering degrees from NMSU and Stanford University. Read More>

Categories

Follow Us

X