Monday, 21 September 2020
Over the last few months we have spoken to a number of vendors who are looking to either start off in the UK & Ireland or expand their market here and you wouldn’t believe how many times we have asked the question of:
“What numbers do you think you will do in the next 12 months?”
Only to be met by
“About £1 Million”
Now you may wonder why alarm bells ring when we hear this, and the reason is that this is typically a number that people think you want to hear…. It sounds respectable but all too often this number if plucked out of thin air with no real thought or “Channel Science” applied to this number…
On a recent call Ryan and I were talking to a vendor and when we asked the question around expected revenue in the next year the answer was £800k. This was worked out with genuine best intentions based upon:
- Current Revenue
- Current Pipeline
- Partner interaction and opportunity creation
- Reasonable partner growth without losing focus on existing partners
- Ensuring current partners continue to make money from the solution
- Market Trends
When speaking to this vendor we believe their number is accurate. For some big vendors out there, this number is a day’s revenue but if anyone has worked with a genuine fledgling vendor the first “1 Million” Dollars/Pounds/Euro’s is the hardest you will have ever worked.
In those early days it’s about building credibility, opportunities, pipeline at times without a huge marketing machine or channel strategy behind you. Having worked with some of the big channel vendors and emerging vendors I can tell you which is the most difficult. I would urge everyone at some point to work with a start-up as that experience is invaluable if you can carry that onto more mature vendors/channel roles.
On the flip side of this however only last week Ryan and I were on a call with two people from a vendor and we asked two questions…
1. What is your current UK & Ireland Revenues?
2. Where do you see them being in the next 12 months?
The answers were:
1. Well, they’ve been a bit all over due to what’s happened with Covid etc and the numbers we have done are not a true reflection on the market but I cannot give out exact numbers….
2. Well over a £1 million, possibly over £3 Million
Now, at this stage alarm bells start ringing…. If you don’t want to discuss your current numbers even approximately that may mean you aren’t overly happy with them. We understand you may not want to give exact numbers but if as a vendor and a partner in the UK we cannot discuss some high level numbers something is amiss because in 12 months’ time we will have seen the UK business anyway so will know first-hand the business levels but the second answer is even more concerning…..
£1-£3 million is quite a wide scale…. It’s amazing if a vendor can overachieve by such a large percentage and we know it has happened many times but for every time it has happened there are 30 times it has not…
When we started drilling into the numbers even based on the next years target of “£1 Million” for arguments sake the sirens were well and truly going off as this is the conversation… our comments in red…..
“What’s the average deal size?”
“Ok so that’s between 10 and 20 deals per year closed to hit minimum number?”
“Yeh that’s right, we think we need about 80 opportunities to hit this number”
“Ok great, how many partners were you expecting to work with this year?”
“Errm 15, maybe a few more”
“Ok so you are expecting each partner to close maybe 1 deal each in the next 12 months?”
“Yeh we do, some may do more some will do less but that’s our plan”
“If we do that do you think those partners will really value your relationship based on maybe doing 1 deal per year at approx. £50-£100k Revenue… Looking at that from a partners perspective assuming they retain 25% that’s somewhere between £12.5k and £25k GM per year. If a partner turns over let’s call it £10 Million per year, how important do you believe you are to their business?”
“Errrm well it’s about the partners doing the work now and they will then see the rewards in
years 2 & 3”
“Hmmm, that’s not really how this works, partners need to justify quite early in a relationship that their efforts can create tangible pipeline that will eventually turn into business, if they don’t see that their efforts will go to the next challenger vendor or existing core products. Don’t you think it would be better to focus on a fewer numbers of the correct
partner than many that aren’t correct and will make no money from it?
“No, we need to show we have recruited partners as that’s part of our strategy that we have
promised to our CEO”
“Ok but that strategy is wrong, wouldn’t you rather have a strategy that works with partners who give a shit about you than implementing a strategy that’s wrong but ticks a box at your end?”
“This is what worked for us in the past and we will do it again”
“Was that in the UK?”
“No, but we have experience of building channels in other territories”
“Ok we wish you well, let’s speak in a year when you need to rethink your strategy”
Obviously, some of this isn’t word for word but this was the general gist of how the call went and this was a good example of a bad example of how numbers are thrown together not with any specific thought as to how the channel makes money from their efforts.
As our team speaks to vendors and advises them on their strategy to grow a channel, we stress that even though the CEO (based somewhere not in the UK) probably doesn’t care about partners making money from their solution. ABCD do… we know what works, how to
get partners buy in and ultimately let them see rewards for their efforts, if a vendor doesn’t take this into account, the partners will not be partners for very long.
In the channel it’s about being honest and maintaining credibility, this takes a long time to build but can be lost very quickly.
If we knock on your door with an approach from a fledgling vendor what I can tell you is that the channel strategy has been thought out, the numbers today and for tomorrow will be accurate and part of our role is to know your business so we only approach you with vendors
that suit your profile.
This process won’t work for every vendor, but for us it will work with every vendor that wants to build a successful channel.
Thursday, 02 April 2020
Well other than the start of the Alphabet, kids’ nursery rhymes and the title to a Jackson 5 song it’s my new company 🙂 It also stands for:
I officially left my last post at the end of January and had always intended to spend some time at home, with no pressures hanging over me and enjoying doing some work in a gym I co-own. Other guys generally run the gym for me, so it was great to put some effort into that which is so different from the IT industry. Its quite hard work dealing with the consumer but really good fun and was exactly what was needed. Incidentally it’s not quite so much fun now since we had to lock it down but it’s forced us to take the gym/training online and to be honest I think the guys in the gym daily would have struggled doing that if I was in full time employment so I was able to offer some genuine value to the team and use my experience, maybe that’s a little bit of fate?
ABCD came around as I have acted as a consultant for around 10 years now on and off. Advising investors around how technologies are adopted and speaking to “starts up” organisations on the options available for them around channel strategies, as we know there are many ways to skin a cat and sometimes the American view of a channel is a little different to the UK.
Having spent most of my adult life working in and around distribution you know most of the players in our space. I guess like any company everyone has their strengths and weaknesses and now being outside of Alpha and speaking to some organisations that were previously competition I had no bias towards them.
So much so one of the companies I was working with was looking for a distributor and I made an introduction to a former competitor and they will be launching that product together late May/early June.
Another vendor I was “advising” was looking to work their opportunities via 4 or 5 partners, they are not what you would call a full channel play but know as their business grows, they will need to build a scalable model.
I made a handful of introductions to partners I felt could add this solution to their portfolio, not everyone felt it was for them but 2 did with a 3rd sat on the fence, low and behold it was the embryonic start of their channel.
This said vendor then asked if I would be interested in staying on board through their journey acting on their behalf. I was seriously considering this when another organization approached me to do something very similar over a short period of time. The dilemma!!!
Both vendors have already won business locally, they have local feet on the street and I figured I could help them both, what they actually needed what local experience of the partner community and a guiding hand when you are transitioning from a single tier or direct model to a two tier model.
“Hang on a minute, I can do that” I thought!!
Whilst this was taking place, I had a French vendor approach me for some guidance and they wanted a Distributor and Resellers, in truth, they are 12-18 months away from needing a channel, they needed some end user traction before they went down this route. What I didn’t realise is they thought this too!!! However, two of the distributors they were talking to were asking them to spend big on channel marketing and incentives etc and it was all wrong!! Inadvertently I gave them their strategy for the next year or so even though there is nothing in it for ABCD at this stage. At least they didn’t make a costly mistake going down the distribution route at this stage.
Those that have worked with me know I believe in being honest with people, even if you don’t like what I say today I won’t fall out with you. My first Sales Director in this Industry Jonny Ellis said
“Walshy Lad, always live to fight another day”
and those words have stayed with me ever since.
Look at the good people in our industry, I’ve worked with some of the best, they have stood the test of time. On the flip side look at some of those with a bad reputation. It proceeds them and 9 times from 10 I believe it’s because they have put their own needs before those of their partnerships whether that’s a vendor or a reseller. People don’t forget.
So, this is a long way of saying ABCD was never planned to grow like this, I was going to do nothing more than consultancy (which will still carry on) and offer honest advice and introductions where appropriate, but I will be picking up with these two vendors from the start of May.
To say I am excited is an understatement, but I know starting any new venture in the current climate is going to be hard, but I will make it. work, I have done it before, just not entirely on my own!!
There are a few people involved in this behind the scenes, people I trust, and respect and they will be working alongside me going forward. What the team all bring with them however is
So, when you sit down and question what your channel strategy should be for 2021, come and speak to myself and the team. ABCD may not be the right vessel for you to work with but if we are not, we will certainly give you our opinion on who is.
Thanks for reading this far…. I’ll be a little more vocal on LinkedIn now I am back in the fold and look forward speaking soon