02 - 4 Best Practices to Lay the Foundations for Your Channel Partnerships

Paul Bird 00:05 

This is Partner Relationship Management: The Ultimate Channel Sales Podcast.

Welcome to another episode of The Ultimate Channel Sales Podcast. I'm your host, Paul Bird.

Your channel partners’ success can be determined in various stages. But the most important of these stages is right at the beginning and how you set the tone and set the foundation for attaining your channel sales goals. Make sure you pay careful attention to practicing transparency early on and give partners a real personal experience. This is the discussion we’re going to dive into today.

Our guest today has been described as the ultimate channel pro, with a deep understanding of channel strategies, channel programs, partner management, and really understands what it takes to kick start strategic partner relationships. 

He’s been referred to as a channel rock star. An award winning channel chief with three different companies in three separate markets over the span of 27 years and counting.

He’s developed quite the repertoire of transforming and elevating channel programs. Today, he’s the founder & CEO of Inner Onion, a company that builds alliances with international technology companies that either want or need representation in the United States.  

He’s here today to share his insights on the 4 best practices for laying foundations for your channel partnerships. 

Please welcome, Steve Kazan. Welcome to the show Steve, it’s great to have you here!

Steve Kazan 01:37

Paul, a huge thanks for having me and thanks for that introduction, the glowing introduction. I’m not sure I deserve all that, but I'll try to live up to it. 

And I love talking about the channel. I’m excited to be here and share some adventures and learnings and stories and ready to dive right in.

Paul Bird 01:54

Absolutely, well, maybe we can get started by getting a little bit about your background and how you got to where you are today.

Steve Kazan 02:01

Alright, well, so I was at a company that fired their vice president of sales, and I was the only guy left in the building. So the new president said, Steve, can you step in and run our sales department?

So I became an interim VP of sales. And he wanted to create a channel company, so he said: and by the way, you need to figure out a channel strategy for us, and we need to do it before the company runs out of money.

So that's how I got into channels and partnerships.

And from there, as you said, worked across different technologies, worked on different types of channel programs. So reseller programs, but also international alliances and global system integrators. And then the last place I've been at was artificial intelligence.

So, it's been an adventure.

Paul Bird 02:49

That's a great start.

So tell me a little bit about your current initiative, tell me about the mission of Inner Onion.

Steve Kazan 02:57

Alright, Inner Onion, what we do is help international companies, technology companies primarily, come to the US and come to North America.

We're trying to answer the question: what is the right channel sales model, sales methodology for our clients, and how best can they sell. 

We feel like our mission is to help them out. They have good ideas, they have good technologies and consumers in the US could benefit from those technologies. We feel like those international companies are at a disadvantage.

So we try to level the playing field for those companies and provide them the context that we have, being in Silicon Valley, which they don't have access to in their local countries.

Paul Bird 03:40

I'm sure a lot of people are wondering, how did you come up with the name Inner Onion? That's an interesting one.

Steve Kazan 03:45

Yeah you and my teenage daughter who gave me a hard time about Inner Onion. 

There's a book by Simon Sinek called Start With Why and he talks about answering that question.

Peter Drucker also wrote about having the foundation of what you want to do and having a purpose around what you want to do.

So the ROI is really supporting these international companies, that's what gets us out of bed in the morning. 

But the other layers within a business are the how you do business and the what you're doing business. So for us, those are the layers of an onion.

Paul Bird 04:24

 A few layers of that onion has relevancy and synergies to the topic that we're here for today.

So let's start with the basics. Why do you think it's so crucial to get things right, right from the beginning and why are we laying out these foundations and why is it so important to the relationship we built with these channel partners?

Steve Kazan 04:44

Well, when I step into a new job, there's always a 30/60/90 day plan, and there's always this urgency from the boss.

So, part of it is the boss and the investors, by that first board meeting, want to see: what are you doing to build out your channel? How have things changed since you hired this new channel person to come on and create these programs for you?

So, part of it is internal. Part of it though, is the channel partners themselves want to see something foundational. They want to see that you've got the strategy, you've got the structure, you've thought through those things that they're betting their business on. So, they're making an investment, the economics have to work for them.

And so, if you can demonstrate that you created that good foundation in terms of strategy, and marketing, and sales, and partnerships, and technology, and tools, I find that they're more willing to invest in me as a vendor when I come in and meet with them.

And the last thing you really don't want to do is have to turn things around.

So, charging off down the road without creating a good foundation. Adjustments, yes, they’re acceptable. Environments change, technologies change, marketing messages change. But, you want to make sure you're not changing your plan because you didn't put your plan in place in the first place. 

Paul Bird 06:05

That would probably be the worst, the absence of a plan, ‘fail to plan, plan to fail.’ So, have that plan in place. 

And do you think it should be 30/60/90, or do you think it's a longer investment in having that in place, like 2/3 years?

Steve Kazan 06:23

I like to look out to the horizon, and maybe this comes out of my finance background. When I look at a company, I want to see: where are you going to be in 2 to 3 years? And what is your strategy as a company to get there?

From that, then the programs get created to get to that horizon, and then the tactics get created to run those particular programs.

I've got a story. I started one job, and I happened to be reading a book by Stephen Covey, The Habits of Successful People. [Correction: The 7 Habits of Highly Effective People]

One of the things he talks about is, start something with the end in mind, is one of those habits.

And I sat down with my boss at the time, my new boss, and I said, if you're gonna go public in 24 months, I want a chapter in the S-1, which is the SEC IPO filing document, and I want my channel program to be highlighted in that document.

So we built out that program and then 24 months later, Bingo. We had that big section within that document. I wrote up, I don't know, 10 or 15 pages in that document. They used our channel program to go out and do the roadshow. So they presented it to the stock analysts. And they interviewed my channel partners as references, the investment bankers did.

So, part of the market cap of that company was based on the foresight and the planning of building out a robust channel program.

Paul Bird 07:46

So, do you think that when it comes to, because I guess this is kind of a key best practice, is to have that plan in place. If somebody's just starting out, like, brand new partner program, or considering somebody that you're helping enter the US market and they're going to sell through channel.

Do you think that they can get away with a shorter one, maybe, something that is 6 months, 12 months, or something like that? Or do you think they really need to look for their horizon a couple of years out?

Steve Kazan 08:12

Well, so it's sort of a balancing act because, on the one hand, you're going to do the research and the analysis with a longer timeframe, but you also have to show results in the shorter term.

So you have to start your meetings with your various partners, say within your 30 day window, and you have to be able to talk to those partners about: here's the right profile of partner we're looking for, here is what we're thinking about in terms of our partner program.

And, part of those conversations with those partners can be soliciting their guidance and their advice, and their best practices.

Actually, I had one really good boss who would constantly go out and get feedback from his channel partners. I think that did a couple of things.

It established, again, credibility with them, but it also made those channel partners feel like they were part of our overall program and success.

So there’s a good best practice in laying the foundation for building out your program.

Paul Bird 09:07

Any other best practices that you think are really critical to laying that foundation with partners?

Steve Kazan 09:14

Yeah, so part of the planning process, I run an exercise where I look at the channel programs or the partner programs with my competitors.

So how are my competitors structuring their channel programs? What are they saying to their channel partners? Are they in recruiting mode? Is there a particular type of partner they're recruiting?

What that does is it gives me the ability to message against those channel partners. And that helps a lot when I'm recruiting the same channel partners as my competitors are.

So, I build out a matrix, I look at the strengths and weaknesses of the different product competitors. And then that helps me target which partners I want to go after in my initial recruiting.

The other thing we do is we plan locally. So, we say go with the region. Account exec has the north-west or the Bay Area or the north-east.

We build out a plan for that particular region, and we do that relatively quickly.

One of the things we do is we go after particular partners that we want. So, if there's one partner that we want to sign and they're being hesitant about signing with us or committing to us, we’ll beat them. We'll go out there and we'll take a deal from them, or we'll take a customer from them.

And we've done this really successfully, and then we go back to that partner, and we say to them: hey, if you don't want to lose to us again, you'd better sign up now.

And, those channel partners, we put the pen in their hand and they're signing on the bottom pretty darn fast after that.

The other, sort of overall strategy is, again, if you can capture all the really good channel partners in a region, you're cutting off the oxygen of your competitors.

I worked at one place where we methodically went around and signed up all the best partners. Then, a few years later, I was wandering through a trade show, ran into that competitor, and talked a little bit with them. And they said, yeah, we couldn't sign up anybody. You had everybody locked up.

So, as a competitive spear, taking away their access to market by signing up the channel partners, was very effective in that case.

Paul Bird 11:24

Now, do you think the market has changed over the years? I think back when I started early on in my channel journey, everyone was a Microsoft partner. You couldn't walk 10 feet without finding a Microsoft certified partner somewhere. And they just completely flooded the market.

Do you think that as you're going through and recruiting these channel partners and making sure that you put some blockers in the route to market for your competitors - do you think you need to be selective as well and really kind of be more selective on partners or do you think more is still a better practice?

Steve Kazan 12:01

To answer your first question: have things changed? Absolutely, it changes all the time.

Like every day I go up on LinkedIn and there's a new partner who's sprouting up in Dallas or Chicago or Denver. And the technologies change and the tools change.

So, you can't sit back and be passive and assume that you know what's going on out in the channel.

You have to be staying in touch with the folks, your contacts, to know what's changing and what's shifting.

The other question: is more better?

I mean, the old adage is you're gonna get 80% of your revenue through 20% of your channel partners.

I've had situations where it's 90% of my revenue from 10% of my channel partners. But the longtail - like those channel partners that you don't do a lot of care and feeding. They're the ones that will show up with an opportunity or a deal kind of out of the blue.

And that incremental revenue, that added little piece of revenue, can make the difference between being 110% of plan and being 150% of plan.

Paul Bird 13:06 

For sure.

Steve Kazan 13:07

I mean, my bias is that the cost of managing those extra partners these days is not that great. So, I would rather have 150 channel partners than having 30 or 40 channel partners.

But you might get a good argument from other people who'd rather keep the number small and keep the number limited.

I guess the real question is commitment. So, are all of those channel partners making money with you and committed to you? And then are they doing any business with you?

I mean if every year there's a pruning process and if you're getting zero out of your channel partners then lop them off.

Paul Bird 13:44

So, if you look at establishing that commitment with a channel partner, what should a vendor consider doing to start building more mutually beneficial relationships?

Steve Kazan 13:57

Yeah, so, one of the exercises I go through in building out the strategy in the program is to run the numbers from the channel partner’s perspective.

So, get out the spreadsheet, right? And say, ok, so what is the channel partner looking at in terms of their investment and their return and how much, in terms of income, am I putting into the pockets of the owner of that partner?

So, when I sit down and I have lunch with that partner, manager, president, VP of sales, we can have that conversation about, ok, here's what it's going to be in terms of the cost for you to invest in us, and the return that we will grant to you. And here's the commitment that we need from you, mister channel partner/exec.

And if you've done your math and you have your strategy and your messaging right, you should get a yes. 

But not always. Sometimes folks are set in their ways and they want to retire and you don't fit into their retirement plans. They can't buy their boat based on the revenue they're earning from your product, so they take a pass. But it's not just getting that commitment at the high-end. Getting commitment at the street level, I think, is really important as well.

So you have to then invest that time and effort with the rep's, right? And be in the trenches with them and work deals with them and share leads with them.

And you'll build that loyalty at the low end, as well as at the senior levels, right? You'll get that commitment. You'll build that trust.

I had a sales rep and he was one of my best sales reps in terms of channel partners. It was so funny because every Friday afternoon at 4:30 he had this call with his favorite channel partner. They would talk about what they did for the week, what they were doing for the weekend, what they're doing the next week. It was just great for both of them because they both were able to generate a ton of business by having these pre-weekend ‘have you opened a beer’ calls every week.

And that built that trust between our rep and then the channel partner rep in the trenches.

Paul Bird 16:02

Those relationships and gaining and building that trust, that does seem really critical to having that channel partner that really is going to give you - you get their mindshare and then you get the wallet share.

So, those relationships go a long way.

Steve Kazan 16:20

And the other thing to do is make sure you're dragging your senior execs out to go face-to-face with your key channel partners.

And part of that is, you want to educate your exec's on what the channel partners are going through, the channel partner’s customers, the channel partner’s buying decisions - all those sorts of things.

So, it's probably as important, or more important, for your bosses to understand the channel partners as it is for the channel partners to see the commitment from the vendor executives, to have them out in the field.

The last few times I took my boss out, we did a little roadshow, saw three channel partners in a couple of days, and at the end of the trip he was completely enthused, engaged, excited about working with these channel partners. And I hear these comments over and over like: I didn't know these people were so enthusiastic! And we would say: yeah, they are, they love our stuff. They want to sell our stuff.

Paul Bird 17:16

I think a lot of people have just been - we've been moving things to email and the endless Zoom and screen sharing meetings. I think that, press the flesh to do it in person, sit, talk with people, and really get an understanding.

I don't think that is used as much as it has been in the past. I think that we've become so used to simply just - oh, I’ll send them an email, I’ll text them.

This level of face-to-face interaction, while it's been challenging over the last year, is really something that I think people would get a lot more value out of by having those dinners, having the conversations, being in the office.

So, yeah, I would agree with you completely. That's definitely a strategy people should be leveraging.

Steve Kazan 18:00

Yeah, that's coming back. I have sales reps that are having face-to-face meetings, probably with masks on, I hope. But, yeah, they're getting out there and that stuff's coming back.

I'm not really good at staying up late and sitting in a bar until all hours of the morning with channel partners. That's not where I'm very good.

But there are salespeople and reps and executives who I've worked with who really have created strong friendships and relationships with folks that I've introduced them to.

So, that's really - in one way it's kind of an income, psychic income, of, hey, you put the exec together with the channel partner and the two of them got along and had some laughs and had a drink or two. And it just makes the companies tighter together.

Paul Bird 18:44

So, we've got two. We've got a best practice of really having that critical plan in place, and being able to establish the commitment and the relationship with partners, especially new ones.

Anything else that you can share as far as a best practice would go?

Steve Kazan 18:58

Yeah, I think I have two more.

One of them is branding. So, one of the things I focused on with my channel programs is to create a brand.

So, we created, at Infoblox, a program called Channel Blocks, or Blocks Channel. At ScienceLogic, we had the ScienceLogic channel.

So creating that brand then gets pushed down to the channel partners and the channel partners can remember you, remember your program, remember your company and its products, based on those brands.

And things like beer glasses. One of the first things we did was we put our company name on beer glasses and we gave half a dozen beer glasses to most of our good channel partners. So we probably sent out 30 boxes of beer mugs. And I would go back five years later and those beer mugs are still in the kitchens of those channel partners.

Paul Bird 19:51

That’s great!

Steve Kazan 19:51

And that sort of branding, whether it's a cereal bowl or a hot pad, sticks in people's minds, and they see you, and they're reminded of you, and they know that you're still out there looking for them.

The other thing about creating relationships, is creating relationships across the organization.

So, the relationships that I had with the best partners - I knew the sales reps, I knew the sales management, but I also knew their operations people, I knew their tech support people, I knew their finance people, because we'd be taking orders and getting paid by them.

One of the key learnings there was, one of my favorite reps would tell me to always take the coffee.

This was, in the old days, he sold in the Pacific north-west, which, of course, they had a lot of coffee, but he would walk into the lobby, and the first thing that the receptionist would do would be to ask him if he wanted a cup of coffee.

His answer was always, always, always, yes. Say yes to that, take the coffee, and then go with the administrator to the coffee room.

So, what that would do is it would give him the opportunity to walk through the office, go to the kitchen, spend time talking to the receptionist, talk to whoever was in the kitchen. And while he was taking the coffee he would meet executives, CFOs, finance people in the kitchens and learn a lot more about the business by just having chats near the sink.

And when he would get back to the meeting room and the conference room, he’d put the coffee down and he would never drink it because we would have four meetings a day, and he just could not possibly drink that much coffee.

Paul Bird 21:30

That much coffee, huh. 

I did something similar to that when I was building channel for this software company out of New Jersey. Even though I would only meet my channel partners 2 or 3 times a year, I’d always remember how they took their coffee.

And when I came back the following time, I’d bring their coffee, how they like, it with me. It was a little note that I took in my Blackberry - it was the greatest device on earth. Ran on an AA battery, it let me keep the notes. But I completely support that strategy of taking the coffee, and if you've seen my profile picture, I drink a lot of it.

Steve Kazan 22:04

No, I mean, you're absolutely right. Learning about them and their families and what they’re good at, bad at, what their hobbies are, what they do over the weekends. All that stuff, I think, in a way, it's just kind of core to selling. But it also establishes long term relationships.

And people ask me for proof points of being a successful channel person, and I would say: do you have relationships, good, strong relationships with your partners that have lasted over the years? Can you go back to them and ask for help, or advice, or guidance? 

One of the things that I've really found rewarding with Inner Onion is, starting this new company, we've gone back to a lot of my contacts either asking for leads or advice or guidance or something. And it's given me the opportunity to rekindle lots of old relationships.

So that's been a whole lot of fun.

Steve Kazan 22:53

And the last, sort of, foundational topic I think is tools and technology.

And you asked the question, have things changed? And oh my God, tools and technologies have just changed like crazy in the past, say, three years, four years. Everything now is a SaaS product. Everything now can be integrated with other products.

You can generate a lead from one product and have that contact information flow through three other products.

So, keeping abreast of tools and technology is sort of a fourth best practice.

I mean, you have to invest your time. You have to sit down and take the demo. I get pinged all the time from the sales reps from these companies and they say, do you have 30 minutes for a meeting, or 45 for a demo?

And if their product looks interesting and useful and it's one of the market leaders, I'll have to bite the bullet and do my homework to understand what they do and how they do it. And that might be a product that I would buy, I would use, or it might be a product I would buy or use or recommend to somebody else.

So I'm constantly doing my homework about automation tools, technologies. Constantly asking my colleagues, my peers, what are you using for XYZ function?

I think that's an area or best practice, that people don't spend enough time on, is doing the research and understanding the changes, not only in core technologies that we get bought and sold, but also enabling technologies in the sales process, in the marketing process.

And to expand that one little step further, social media.

So what are the social media platforms, and how do you use them? Part of our value-add to our clients coming in from overseas is how they can leverage LinkedIn and Instagram and Facebook and Twitter to build their brand and their image in the US market. 

And that step, again, is changing - every month, it seems like it's changing.

Clubhouse is a new application where you have people talking about different technologies, new technologies.

One of the technologies Inner Onion is looking at is NFTs. So we can go on Inner Onion and Inner Onion, in an hour, will tell me pretty much everything I need to know and where I need to go for more information around NFTs or digital asset management.

Paul Bird 25:19

Nice!

Steve Kazan 25:21

There's a whole group of people on Clubhouse in the museum space.

So I guess, cutting through all that, just keep doing your homework when it comes to technologies.

Paul Bird 25:32

Oh, absolutely.

I remember, this goes back to working with a channel partner of mine back in 2001, I know it was a long time ago - but they told me about this new little thing called Salesforce.com.

They were telling me all about it, and I know my response. I said, that's going nowhere. First of all, nobody is going to take their customer information and their sales data and put it online. Everything's going to sit in a client server environment in our nice, safe server room at the office.

Now, lo and behold, a year and a half later, I was using Salesforce. I had brought it in and set it up for my sales team.

But, you're right, the amount of acceleration when it comes to the available technologies has really been remarkable and it's just getting faster and faster.

I mean, Clubhouse has had a remarkable run in a relatively short period of time.

Steve Kazan 26:24

Yeah, very quickly. And I’m sure as we're sitting here six months from now, we'll be talking about some other different technology. So, it's going to happen. It always has happened, at least through my career, and sort of to be expected.

Paul Bird 26:40 

So, here's a question: what challenges can people face or run into, if they're not following any of these best practices?

Steve Kazan 26:40

Oh, Lord. It becomes really messy. 

You have breakdowns in trust. You have your sales reps who don't trust your channel partners. You have your channel partners who don't trust your sales reps. You have channel partners who are skeptical of your company because they don't think you've thought through your plan. Your personal credibility takes a hit.

So if you don't have structure around your programs and your plans, it might be time to find a new job, quite bluntly.

Yeah, it can be very damaging and to put it more broadly, it's not only damaging you as an individual or to the sales team, it's also damaging to your company.

So, if you expect your company to grow and succeed and go public - and everybody wants to work very quickly and very fast but, if you don't do your homework, and you go flying out of the gate, without doing analysis - I've seen situations where the wrong program was put in place and it just failed. The channel partners didn't respond to it. They didn't pick up the product.

Just really valuable time, three months was lost, six months was lost. And that time, when you're in a technology environment and when you are competing with a number of tough competitors, losing three months is just a really bad, negative thing to happen.

Paul Bird 28:11

So, as we start to wrap up, if you follow these best practices, what kind of results can you expect? Is this going to generate higher sales, it's going to impact the channel growth?

What kind of results do you think people can expect?

Steve Kazan 28:23

Yeah, so, I mean, there's the quantitative results. We put channel plans together with specific channel partners, and we grew them from $2 million to $16 million in three years.

So, you focus on the dollars and you focus on the funnel and how you build the top of the funnel and get the stuff out of the bottom of the funnel.

And those could be with security partners that are boutique partners or they could be with CDW. The size is not really important there.

You also, though, can generate company value. I talked about market cap, but you also can generate a lot of brand if you have a lot of channel partners or a good number of channel partners who are talking about your technology, and they're excited to buy it.

Then their clients will hear that, which become leads, but their other technology partners will hear that too.

And so, I've been in situations where other technologies or the vendors of other technologies have come up to me and said, hey, such and such partner raves about your product, what is it that's so special about this? Can you give me a little bit of information about it?

And then, boom! The partnership forms between two different technology companies and away we go.

And that sort of brand builds on itself and builds on itself and expands out into even in the analysts space. So, the Gartner's of the world, the Forrester’s, pick up the phone and they call these channel partners and they ask the channel partners, so who are the hot companies that you see?

And you want your company to be on that list, the tip of the tongue of that owner, who says, oh, you need to take a look at XYZ company. Their channel partner and exec were here last week and they are doing fantastic, you better call them up. And, boom! Lo and behold, you're now on the radar of one of the big analysts, you're included in their reports, and the company grows from that perspective as well.

Then lastly, the final proof point, following the best practices: creating strong relationships, and branding, is - yeah, you become a channel chief if you fill out the channel chief webpage, but you'll also have these strong relationships with people, really globally.

Like, I was on the phone with a channel guy I worked with in Australia last week and we had a great time catching up.

I've got a good friend who is a channel partner in France, and if I ever get back to France, he and I have promised to crack a bottle of wine.

If you get the chance to do a favor for any of these channel partners - if you can help them find a job, if you can connect them to a recruiter, or if you can connect them to another vendor that's not competing with you, that could really benefit them - you're doing them a favor, that's another way to solidify that trust and get that final proof point of building those relationships.

Paul Bird 30:59

Alright, so to wrap up, reach out to Steve or check out their website at www.inneronion.com.

Steve, thanks for joining us today, I really appreciate talking to you.

Steve Kazan 31:09

Yeah, pleasure is all mine, take care.

Paul Bird 31:12

Perfect, thanks! 

All right guys, thank you for listening to The Ultimate Channel Sales Podcast and please don’t forget to join us next time where we’ll have Tan Tran on the show to discuss 3 Little-Known Ways to Engage Your Channel Partners. For more information, please visit channelsalespodcast.com.

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