Club 80:20

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“If someone knows that they get X revenue by having 50 partners then the assumption can be that you will get Y revenues if you sign up 150” – John Cassidy, EMEA president, iSherrif

I am indebted to MicroScope for the above quote which highlights all too clearly one of the biggest potential pitfalls vendors can fall into when making changes to their channel strategies. Cassidy made that comment in an article discussing iSherrif’s policy of only having 10 partners in each country.

He was addressing the temptation many vendors face of trying to achieve a big increase in revenues by significantly hiking their partner numbers. As we all know, the infamous 80:20 rule that applies with almost biblical force to the channel means that even increasing partner numbers by 200% (as in Cassidy’s example) is unlikely to translate into a commensurate rise in revenues. Unless, that is, one or two of those extra 100 partners are drawn from the ranks of the 20% of partners responsible for 80% of all sales.

But those 20% aren’t going to just be anybody’s partner because they’re well aware of their status and their influence on channel sales revenues. That can make it harder for newer, smaller vendors to break into the 20% club.

But hope is not lost for those vendors or for the partners outside the top 20 club. The potential remains for vendors to identify the right candidates from the 80% that can become the 20% for them. On the other side of the equation, resellers can seize the chance to differentiate themselves from large numbers of their counterparts in the 80% club.

It may well be if the partners that make this move are successful and, by extension, the vendor they are engaged with becomes more successful and develops a higher profile, it will attract the attention of bigger resellers that can deliver higher sales revenues. But if, in the meantime, the partners have made themselves an important part of the vendor’s sales channel, their prospects of maintaining and developing that relationship will remain healthy. Their commitment is also likely to be more steadfast because they won’t be juggling so many vendors at the one time (or being courted by quite so many prospective vendor partners).

In these types of situations, it could well be that an alliance between vendors and partners in the 80% club could prove the optimum way for them both to progress and grow.

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