A guest blog from Jeff Mattan:
Transitioning to the cloud is a necessary step for organizations hoping to stay relevant with customers and prospects. However, while promises of growing cloud revenue and easy Channel assimilation are exciting, these things don’t happen overnight. Assuming your Channel will sell your new cloud solutions, no questions asked, could not only set you up for failure, but isn’t fair to Partners.
In order to successfully transition your Channel to the cloud, you’ve got to understand that moving to the cloud requires a fundamental change in how Partners do business. From selling to implementing to paying their salespeople—everything changes. And if you want your Channel to go to the cloud with you, you as their Vendor have to help them.
But how do you (smoothly) transition your Partners to the cloud, without overwhelming them? Start by asking these five questions.
This question demands an honest review of the strengths and weaknesses of your Partners. It also means determining if your current Partners have access to the customers who will benefit from your cloud offerings. If they don’t, start recruiting.
Assess whether your Partners have the financial strength and skills to transition to the cloud. If your Partners aren’t financially strong enough to make the switch, you could find yourself a year into the transition with Partners focusing more on cash flow than selling and servicing customers. Partners who are transaction-based will struggle to make the transition. Conversely, Partners with a good deal of recurring revenue will have an easier time with the transition.
If you do have financially strong Partners, understand they’ll need to modify their sales compensation systems and skillsets as selling cloud solutions is different than selling premises-based solutions.
For mutual success, Vendors need to help their Partners with their cloud transition. Partners expect updated and relevant support on everything from sales and compensation, to enablement and marketing. To assess where your Partners need assistance, use this framework as a starting point, not as an exhaustive list.
| Item | Description | Notes |
| Training | Sales and technical training, Selling to Line of Business (LoB) Buyers, etc. | · Training on the value of OPEX vs. CAPEX and selling to LoB are key, but Partners will also need training on selling to specific vertical markets, selling to business outcomes, building and implementing cloud solutions, etc. · If you offer a SaaS solution, your Partners will need less (or no) technical training compared to an on prem solution |
| Compensation | Commissions or discounts tied to cloud sales | · SaaS solutions mean ongoing commissions to Partners. Chances are you’re going to pay in perpetuity. Remember, it is easier to raise compensation than lower it so keep that in mind when setting your rates. · If your Partners will build their own cloud solutions from your products, you may need different discount structures in your Partner program. |
| Systems and processes | Partner sales compensation, billing, etc. | · Advice on sales cloud commission plans · Assistance with monthly billing systems. If you have a SaaS solution, you may bill on their behalf. |
| Executive Support | Recommit to partners by making executives more available to partner principals | · Making this transition is stressful and difficult. · Vendors are going through the same transition · Share challenges, successes, etc. |
| Marketing | Campaigns and tools to fill the top of the funnel | · Partners need leads · Give them Partner-ready marketing tools to help them generate them · Focus your channel/ field marketing teams on cloud demand gen |
| Cash Flow | Partner program with lump sum option, promotions to help partners improve short-term cash flow | · Some Partners won’t change sales compensation and will need a lump sum compensation plan · Short-term promos can help by structuring a payment to Partners for meeting certain cloud sales goals. |
| Sales tools | Enablement tools that help salespeople start conversations and close deals | · If you used to have a 30-day free trial and got rid of it, bring it back · If you have good cloud salespeople, interview them and build a playbook: consider making this a sales training tool. |
| Business transformation | Everything above | · Develop a workshop to help Partner principals understand, and prepare for, the challenge of transitioning. · Look everywhere in your company for anyone who could help smooth the transition for partners. · Seek contributions from Finance, Cloud Sales, Operations, Cloud Management and your Executive Staff. Their input is valuable and they'll gain more empathy for your Partners in the process. |
If Partners create their own cloud solutions from your products or software, you can be successful with a separate track. You could even forego the separate track altogether and add a few more training modules to current certifications.
If your Partners will sell, or refer, your SaaS offering, a separate cloud program is best. This means another Partner contract (or an addendum to their existing contract) and an additional revenue commitment, expressed in Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR0. On a good note: SaaS typically doesn’t involve any technical training for Partners and sales training can be completed in hours, not days or weeks.
It depends on your expectations, goals, and business model.
Keep in mind, Vendors also face cash flow challenges as Partners replace on premises revenue with cloud revenue. Don’t get discouraged, though – with the right framework, results will come. Just remember, anything worthwhile has growing pains.
Transitioning your Channel to the cloud is difficult on many levels, and your Partners will need your help to get there. You can make the process easier, and more predictable, for both you and your Partners by asking the five questions above.
For more information on creating successful Partner Programs, read these blogs:
Updating Your Partner Program for Today’s Shifting Channel
How to Use Channel Programs to Better Enable Partners
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