A new CompTIA study showed channel conflict is on the rise. What can partners do about it?
CompTIA: Channel conflict is taking business from partners
Channel conflict—that age-old practice of IT vendors undercutting channel partners’ sales—not only is alive and well but also kicking, according to new CompTIA research, fueled by a persistently tepid economy, new sales avenues and market newbies less constrained by traditional best practices.
The study, titled, CompTIA’s Third Annual State of the Channel Study: Channel Conflict and Deal Registration Trends, points to a rise in the number of incidents in which vendors and partners clash over sales opportunities. Data is based on an online survey of some 350 IT executives and in-depth interviews with channel executives and vendors conducted this past February and March.
The top line results show:
- 60 percent of channel organizations attest to an uptick in sales conflicts with vendors
- 80 percent contend it has cost them business
- 21 percent describe as “major” the negative impact of channel conflict
- About 75 percent said they had lost at least one deal in the past year over channel conflict.
While there’s nothing new about channel conflict, it is a nettlesome fact of life for many channel partners, noted Carolyn April, CompTIA Industry Analysis director.
“Conflict between IT vendors and their channel partners is not a new issue, but it’s a dynamic that ebbs and flows,” she said. “Right now, the channel is roiling for many firms.”
According to April, three factors have contributed to the rise of sales conflicts in the channel:
- The lackluster economy has prompted more IT vendors to turn to direct sales rather than building channel relationships.
- Cloud computing has supplied vendors a new way to sell technology services to customers.
- Market newcomers, such as telecoms offering IT services in addition to voice services, are less beholden to accepted industry practices.
Rather than merely complaining to vendors over their tactics, some channel partners have resorted to more forceful responses, with about 33 percent opting to sell a competing vendor’s products and a similar number dropping the supplier as a partner.
Still, channel conflict’s impact hasn’t been all bad, said April. Some channel partners have taken the bait and responded by changing their business model to build stronger relationships with their customers.
“They’re looking inside their own organizations to get their own house in order to become more appealing to the customer,” she said. “They’re improving their own service capabilities, specializing in vertical markets and making the move to a managed services business model, which cements them to a customer.”
Deal registration adds to clashes
Deal registration programs sometimes add to sales friction between IT vendors and channel partners rather than reducing it as intended, CompTIA said. In theory and in practice, registering opportunities preserves the rights to a sale for a channel partner and also supplies vendors with a deeper view of how the channel is performing.
In general, deal registration programs are popular, with 80 percent of channel partners surveyed by CompTIA listing it as an important factor in partnering with a vendor. But poor communications, inadequate software to operate a deal registration system, and confusing policies or rules of engagement can muddy the process. What’s needed is a set of best practices—more than one-third of partners said clearer rules of the road would “make a huge difference” to improve deal registration programs, according to the CompTIA report.