In our “Five critical channel success factors” series of blogs we last addressed the first of five questions we believe channel chiefs should ask themselves. To refresh your memory, those five critical channel success factors are:
- Do I have the right partners in my channel ecosystem?
- How does my company rank in my partners’ ecosystem (What is my Share of Wallet)?
- Do I offer them a compelling value proposition (profitability, tools, and enablement programs)?
- Is my company easy to do business with?
- Do we practice data driven channel management?
This blog addresses the important topic of Share of Wallet with your partners, particularly your tier 1 and 2 partners. Share of mind and share of wallet are often hard to measure but they are critical to channel success.
The following data points illustrate the challenges related to Share of Wallet:
- Technology partners, on average do business with approx. 30 vendors. They deal with 6-7 top line vendors every day
- Partners are bombarded with hundreds of emails and social media communication daily including product launches, campaigns, training and certification, company news, etc.
- In addition, they are expected to log into vendor partner portals frequently
For anybody but the largest partners (those partners that have dedicated staff for top tier vendor communication and interaction) vendor interaction takes an inordinate amount of time and resources which is one of the reasons why partners limit the number of top tier vendors. They are resistant to taking on new vendors and product lines unless they see a clear path towards significant incremental revenues and profitability.
So if share of mind and share of wallet are so critical, it stands to reason that:
- Vendors need to have a better measure of “share of wallet” with 1st and 2nd tier partners
- Have a clear understanding on what it takes to increase share of wallet, particularly with tier 1 and 2 partners
Let’s address share of wallet first. Obviously, it’s easy to calculate share of wallet with partners that are public companies but the majority of partners are privately owned. Some vendors ask the question outright in their partner surveys and may even include this statistic in the partner profile data they collect annually. Partners that are private companies may volunteer their total annual revenues if asked and you’ll be able to calculate share of wallet. If all else fails, the last option is to review their top line vendors (this may be information you collect as part of the vendor profile or you may find the top vendors/product lines listed on the partner’s website) and estimate the share of wallet based on general share of market data for your company and your competitors in your space. With this information, you’ll be able to estimate an approximate range.
Why is it so important to have share of wallet data for your tier 1 and 2 partners? Because share of wallet = share of mind. Partners with limited resources (that includes most of them) will not be fully engaged and very difficult to motivate when your share of wallet is 5% or less. Once you are in the 10 percent plus range you can expect more participation, commitment, and loyalty. Therefore, a core channel objective is to achieve the level of share of wallet that engenders commitment, loyalty, and investment from your partners.
So what’s the secret to increasing share of wallet with 1st and 2nd tier partners?
Following are the top three drivers that influence share of wallet:
- Not surprisingly, technology innovation and solutions focused on solving business problems and improving operating efficiencies are top of mind with partners and their customers
- Partner Experience (XP) and Ease of Doing Business (EODB) follow as a close second. Partner portals with relevant, targeted content, intuitive navigation, and inclusive of performance dashboards and benefit statements are critical components of EODB. So are clear directions with regard to “who to contact” and rapid response times
- With the rapid growth in Cloud solutions and services we have seen a shift in partner demand from conventional program benefits such as MDF and Rebates to vendor resources devoted making partners smart and helping them sell. Examples include pre-and post-sales engineering support and marketing and demand generation support. These services are more highly valued, especially by born in the cloud partners
To summarize, share of wallet is an important equation in channel management. Share of Wallet may be underestimated as a success driver by technology vendors. Accurate measurement of share of wallet should be prioritized. Determine what the top three share of wallet drivers are for your channel ecosystem and align your channel program to address those priorities.