Tech Bytes & Insights


Ashish Vazirani
ZS Associates
John DeSarbo
ZS Associates
  Jason Bell
  Associate Principal,
  ZS Associates
Kyle Heller
Associate Principal,
ZS Associates
  Alex Southworth
  Associate Principal,
  ZS Associates
Brandon Mills
ZS Associates
Leon Wei
ZS Associates

Channel Loyalty: A Tale With Five Simple Lessons

Posted by Kris Bose on Wed, Feb 27, 2013

kris bose channel loyalty2I grew up listening to parables that simply illustrated complex concepts about life, ethics and morality—so I used this technique to illustrate key points about channel loyalty…

Once upon time in Technology Land, there lived a mighty lord who ruled ironfisted over his traders. They followed his orders, sold the royal goods and paid their (high) taxes. The lord rewarded his traders with gold, silver and bronze coins based on their performance. He demanded his traders invest much of their wealth to buy royal certifications to prove they were worthy of his affections. Traders who did not care about receiving his precious metals lived outside the "registered" area.

For a while, all was well and the royal coffers overflowed. But the lord became complacent while the markets changed. When his ministers informed him that a few upstart neighboring lords threatened to enlist his traders and capture some of his business, he laughed them off. The traders would never consider abandoning him, given how rich and comfortable he had made them! They owed him their loyalty.

But the royal coffers started to deplete over time. When the lord finally noticed, he was enraged. He called forth his traders and demanded that they pick up business. When they tried to tell him their problems, the lord silenced them with dire consequences (though a new age of human rights was emerging, so he couldn’t behead them or feed them to the crocodiles, only “unregister” them). But business remained stubbornly flat. Befuddled, he promised them even bigger rewards. While this helped revive business to previous levels, the lord was now bleeding from excessive reward payments and headed toward bankruptcy. With neither threats nor rewards working, the lord was truly stumped.

On the verge of ruin, he finally called upon his most intelligent trade minister, who had long begged the lord’s attention on this matter but had been ignored. The wise minister stroked his goatee, went on an investigation trip and came back with five crisp points for the lord’s consideration (a breakthrough report in an age of verbosity):

  1. You assumed that your partners would be loyal to you forever based on your dominant position. Nothing is forever other than change. You didn’t anticipate change—or better yet, shape it.
  2. You did not treat your trading partners as equals, but as lower-class beings who had to serve you. The competing upstarts really listened to them, understood their business and built a real partnership.
  3. You only rewarded traders in a way that you thought was right, but never bothered to ask them what they would consider as most valuable for their business.
  4. You made it difficult to do business with too many rules and, most important, you never helped your partners improve their business by giving them timely market information (that only you possessed).
  5. You never looked ahead. In spite of numerous warnings, you did not collect real-time intelligence that would have helped you assess shifting loyalties ahead of time.

The tale may be allegorical, but the minister’s wisdom is timeless. Consider this:

How many of us are bleeding business to competition after being in a dominant position?

How many among us are running standard channel programs, assuming that they still address the channel loyalty requirements in a new world?

How many of us are truly committed to building our partners’ business and are giving them the tools they need to grow?

How many of us are really listening to our partners, and cultivating forward-looking intelligence to understand loyalty?

These points are not necessarily new, but I invite you to take a long hard look at them in your current environment. Let’s talk about loyalty as the tale continues…

Topics: channel partners, Kris Bose, channel partnerships, channel loyalty

Click here to subscribe to Tech Bytes & Insights

Subscribe by Email

Search by Topic

see all