Generally speaking, solution providers understand that conflict with their vendor’s direct sales teams will happen occasionally. But, poor channel conflict management that makes the problem chronic will cause them to take actions that ultimately cost their vendors money, according to the 2nd Annual Channel Conflict Report by The 2112 Group.
One-third of solution providers say they will drop a vendor that poorly manages channel conflict. They would rather lose the relationship rather than continue to clash over sales opportunities and accounts.
But that’s not the worse consequence of poor channel conflict management. Six out of 10 solution providers say they will de-emphasize a vendor with poor channel conflict management or habitually puts their own interests ahead of partners.
Why de-emphasize rather than dropping a vendor for an alternative? And why is this such a bad thing for a vendor?
First, de-emphasizing essentially means dropping a vendor in favor of an alternative supplier. Solution providers will push a competitive brand over their conflict-challenged vendor to avoid clashes. They will continue to sell and support the prior vendor to maintain their legacy customers and provide their accounts with choices.
Over time, though, solution providers will try to convert their accounts to the vendor with less channel conflict problems and challenges. This is where ease of doing business, good field engagements and support, and solid channel management pay off for well-performing vendors. For the poor channel conflict managers, the consequences are slow in building but ultimately problematic because of the lower rate of sales and long-term account losses.
The problem is worse from a channel investment perspective. If solution providers de-emphasize their vendors but remain on the channel roles, they cost more than they bring in. Consider the amount of money vendors spend on channel market, communications, training and enablement, technical support and sales; these activities and functions cost vendors millions of dollars annually. If a partner is on the books but unproductive, it means they will continue to consume and demand resources for which the vendor gets no return.
Solution providers are not shy about their channel conflict problems. Overall, solution providers participating in the 2112 Channel Conflict study say the problem is moderate and declining. Vendors are showing signs of trying to improve channel conflict management. When conflict does happen, 35 percent of solution providers say they will complain to their vendors and demand satisfaction, whereas only 15 percent say they will say nothing and accept channel conflict. More times than not, intervention by a channel chief – a vendor’s top channel manager – is required.
The message in the 2112’s 2nd Annual Channel Conflict Report is clear: Solution providers will make vendors pay for poor channel conflict management and practices. It may take time for vendors to feel the effect, but solution providers will ensure vendors feel the bite back.