(I co-wrote this article with a colleague from my Cisco days, Wayne Greene.)
Your manager tells you to take the new product that your organization is developing and take it to 10M in revenue in 1 year. No sweat you think, we have this great direct sales force of sales specialists who are selling a different product and top notch sales engineering. Perhaps they can be swayed to sell your new risky product. You do simple calculations of average selling price, estimate sales process cycle times and review proof of concept success plans and quickly realize that you need over 100 hot opportunities on the board in 1 week. Time to think out of the box.
In this 3 part series on Channel Partners, I will blog with a colleague from my Cisco days, Bill Petro about our transformation experience in taking our first cloud automation product to market. We had about a year jointly trying to grow our new product business under the VP leadership of the acquired CEO of newScale, Scott Hammond who later went on to be the CEO of Joyent, with a successful exit to Samsung. We were challenged by Scott to drive revenue in new ways and to leverage the power and scale of Cisco.
Wayne: Bill, given we had the resources of our business unit and Cisco at large ostensibly at our disposal, how did we figure out where to start? We had a big question on our hands, should we build a Direct Sales organization with management, motivation, sales ops, and enablement? Or start with Partner Sales organization with relationship management, loyalty, and enablement?
Bill’s answer: One of the advantages of starting with a Partner Sales organization first is that they are motivated. In some cases, they’re already selling other products we manufacture and they know the sales process and logistics of dealing with our price list and operations. Our challenge was to help them build a new practice that would be lucrative for them. Because selling cloud is different from selling hardware we needed to show them how selling software and services which they already appreciated as being profitable was a transformative sale, not a transactional sale.
This was more than just the required “speeds & feeds”. They were now going to be empowering their customer to do things they’d not done before: provisioning virtual servers or virtual data centers and providing a self-service catalog of all kinds of Infrastructure as a Service (IaaS) offerings. This meant building the right sales tools, the right marketing collateral that could be repurposed by the Partner, and the unique value proposition they could use to differentiate them from their competition in the marketplace.
Beyond the sales enablement, we needed to make sure they could deliver the solution to their customer. This meant providing design and deployment training to ensure they would be successful.
There were several things we needed to do to maintain the Partner relationship and develop loyalty. One was building a Partner community online. This ensured timely updates on product news, sales tools, and Q&A. The other was regular product update training. When we had a new release ready to go, we’d connect with Partners ahead of time informing them of enhancements, changes, and need-to-know information. A well-informed Partner is a positively performing Partner.
Bill: So that is how we decided to leverage the channel Partners. But we had many questions: who would those channel partners be? What do they need for success? This needs a program to manage it. How are Channels compensated/motivated differently than Direct?
Wayne’s answer: Interesting, in that time when Private (and Public) Cloud was a new transformative concept, every IT department wanted to get in on this new strategy. CIOs were being asked by their boards what their cloud strategy was. All of the channel partners saw this huge uptick in transformative conversations. In the BU Product Management team, we had so many requests from partners to join in our new product line strategy. The challenge was one of scale. Our team had me, Bill and two other technical folks. How would we completely train the channel Partners in boot camps, which were very popular? We had to train them in both the technical speed and feeds, the concept of customization and configuration, and what of the pre- and post- sales process?
The inside secret was that we hadn’t even figured this out for our direct sales force yet. In the first release or two, we really were “just in time”. After that, we had a formula and we just stamped it out. We had many conversations internally and with Cisco HQ folks on how big to grow the channel. Remember we had lofty revenue acceleration goals. Bill and I had to temper the enthusiasm. Revenue that ended with a customer escalation due to missed expectations or buggy software was certainly not the way to get promoted.
The direct sales guys had learned over many companies, products and release generations that software magically appeared at the release date, was buggy, missed some features, had others that customers never asked for. They also were smart enough to build their own sales materials, come hell or high water for that Monday afternoon sales call. Our direct sales leaders were extremely happy to even get a technical training and the basic pre-sales materials and training before the product released (we ultimately got our maturity up to provide this). A difficult thing when you turn over enterprise software every 6 months. Unlike iPhone software where there was not a manual… our software, like others in the category, needed a 2000 page manual and weeks of practice to get it. If you didn’t continually use the software as an admin, you quickly lost muscle mass.
We realized that we needed to outsource our partner development program to a professional learning practice. We also realized that we needed a formal program (with help from HQ) to set up and manage the partners. We also needed the HQ resources, relationship, and funding. We realized that we needed an internal team to work much more closely with engineering to build the core DNA of the training materials. We also needed Bill and me to work closely with the channel partner management so that they understood that selling a transformative software platform was not the same as selling a router that plugged into the network with little configuration and the network self-assembled “the intelligence is in the network”. That was a hard conversation. One that many Partners did not fully get or internalize quickly enough.
Motivating the channel partners to sell our software product as part of a larger hardware, software and services were indeed a constant task as the core of a channel partner was to figure out where to place their bets on their limited technical and business resources. Our product had competition, both inside and outside the company. But more on that in the next blog in the series. Very few partners “graduated” into a full blown practice around our product. It was mostly due to technical capabilities and the need for customization and configuration to make the private cloud successful. All projects were snowflakes (which means that each project was different enough from each other that there was always a 20%, or more realistically 40% of the project that was different than other customers).
Bill’s Parting Shot: Wayne brings up many of the issues in setting up a Channel Partner program. It was indeed much more complicated than either of us initially thought, and certainly more complicated than setting one up from the point of view of a small versus large company. There are many conflicts that need to be managed that we will discuss in our next articles. What happens when things don’t go as expected?
— Wayne Greene: fromchemistrytoclouds.com
— Bill Petro: billpetro.com