Enterprise Resource vice president talks about the vendor's responsibility to its partners.Taylor macdonald spent eight years in the channel as president of his own VAR, Macdonald Consulting Group of Atlanta, before jumping the fence to enterprise resource planning company Sage Software, in Scottsdale, Ariz., where he now serves as executive vice president of sales and channel operations and manages 6,000 resellers. Macdonald spoke with Senior Writer John Hazard about the vendor's responsibility to ensure partners have the resources, including back-office and administrative support, to be successful sales organizations.
Vendors are tripping over each other to add more bells and whistles to partner programs. But what do partners really want from vendors?
When you look at the channel from a program perspective, it starts and stops at understanding that if the business partners are successful, we are successful. We understand that if they're not successful, we are not successful. They're not resellers or VARs; they truly are business partners. At entry level [of products], we sell through retailers and online. The rest are all through business partners. If we can help business partners be more successful and help them not have to re-create the wheel every time they need something done, we can build a successful channel.
They're great at selling and implementing, but they got into it as contractors. They don't necessarily know all the things that go into running a business. Helping them with more than just the back office is necessary.
I started in this business when I went to work for a CPA firm and grew it to be the largest Sage partner. Every time I had to create a marketing program, I had to figure out how to take advantage of value pricing—and any and all those things that go with being a partner—and you ended up working Saturday and Sunday. How do you take advantage of offers with Dell, IBM, etc.? Say you're a small business: All that [navigating through vendor programs] takes away from selling and implementing, distracting you from making money.
The whole idea is simple: Help partners be successful.
What are some of the specific benefits vendors can offer a partner that produce tangible results?
Finding more consultants is the biggest issue they have. I talk to partners every day. One of the things that comes up is that business is great; it's booming. But they all need more consultants. They all think if they just advertise enough in the local publications, someone with six years of experience will move to [their] town. We know historically everyone who is any good is already employed.
We have to help them find good employees. To find them, we've partnered with Yahoo and HotJobs to provide leads. We profiled 30 to 40 successful consultants in the channel to see how candidates fit the success metrics of a consultant. When you make a bad hire, you take two steps back, not one. It might be three, six, nine months later that you get back to where you were. Once hired, [consultants go through the] Consulting Academy [training program, which includes] a 90-day workbook to guide them in their first three months with you.
Help them find salespeople. You realize they are always hiring their brother-in-law. It's a waste of time and money—ours and theirs. Lots of people are brought on and most partners say just "Good luck." They need more than that. They need a process guiding them over their first year. We have a mentoring process.
The old adage goes that 20 percent of your channel produces 80 percent of your revenue. What can vendors do to balance that load? What are you doing to make the relationship more profitable for that 80 percent?
We have to get more out of the middle of our channel. At the top of your channel, the top companies will continue to be successful. Growth has to come from the middle-to-lower part of your channel. It's a natural tendency to get to a certain size and then growth slows. Cisco [Systems] is not growing by double digits every year the way it had. It's 10 to 12 percent. You get to a certain size, and it just happens. Growth is in the middle. If you're a smaller partner, you can go from two to three deals a year to 15 to 20. But they struggle on how to find financing, find leads.
What do they need from vendors that they're not getting?
The whole idea is not for Sage to create programs for a program's sake. [Vendors are] there to help [partners] be successful, make more money. [Partners] have to truly believe we're there for them. We'd rather teach them to fish than fish for them. If you ask what they want, the No. 1 thing is leads. Looks easy. The best partners are generating a higher percentage of their own leads. Those who generate leads close sales at a higher rate than publisher-generated leads.
If we give middle-market leads of people outgrowing Peachtree [Software], they're bothered that they're not ready to take an order. Well, guess what? Those were the 1990s when you would show up, throw up and take orders. Today, you must understand their business, show how they can add value with the product. Quantify the value of problems and quantify the value of solving that problem. Present a compelling case.
What is the biggest obstacle facing partners as they make the transition from reselling boxes to providing solutions?
Since Y2K, the biggest struggle in the business management space is understanding the sales cycle is different. When selling in the '90s, it was people buying an application for the first time. It's like buying a car—at some point, I'll be in market again, but today I'm not buying a car, and your showing up with a new car for me to buy isn't going to do anything for me.
On the accounting side of the house, they have a solution. If I just say, 'I have something good for you to buy,' it does very little. You have to say, 'I understand your business; I can help you cut costs out of your business.' All of a sudden, that proposition wakes them up. I can save time, save money, get new customers. Those are things that will make an owner or CFO [chief financial officer] say, "Now talk to me."
That's been a sea change. It's not just demonstrating the product but [also] a lot of legwork to understand business problems of the customer. People don't have time for someone who hasn't taken the time to understand their business.
Having grown up on the other side of the channel fence, what sort of advantages or disadvantages does this present?
I can't stress the advantage enough. I don't know why more companies don't do it. Not all partners are capable of running a partner program, but the advantage is immeasurable. Having been the largest Sage partner, I know, I understand, I walked a mile in their shoes. It's instant credibility. I did that part. I realized at some point that there were Sage partners who needed help doing the things I did.
