New report favours channel over direct sales

North American IT buying is about to tip from direct sales to favouring the channel, says a new report from Gartner Inc.

Michael Haines, Gartner’s principle analyst for service marketing and sales worldwide and author of the report, said about 40 per cent of IT sales in the U.S. go through

channels. But by 2007 that will rise to more than 50 per cent, led by increasing channel sales of services and telecommunications equipment. The figures would be about the same for Canada, he said in an interview.

The change is partly driven by an improving North American economy, he said, and the realization by manufacturers and service providers that they can’t reach large, diverse and fragmented markets through direct sales.

That’s why now is the best time for hardware and software manufacturers to start critically examining their channel programs, Haines said, to realize the multiplier effect distribution can have on sales and profits.

They could benefit by looking at best practices established by such major names as IBM Corp, Cisco Systems, Microsoft Corp. and, in some categories Hewlett-Packard, he added.

Gartner divides channel programs into four segments and has outlined best and worst practices in each.

In program organization and management policies, best practices include executive sponsorship and oversight of partnerships, as well as program simplicity. Worst practices include putting executives with no channel experience in charge of channel programs, and making major program changes every year.

Best practices in marketing and business development campaigns include working with partners to develop plans, and providing partner-to-partner collaboration tools. Worst practices include channel stuffing (although Haines admits this is declining), and failing to promote partners in vendor marketing.

In what Gartner calls measurement and compensation programs, best practices include offering benefits for more than just selling – such as for customer satisfaction and renewals – and making available programs to teach partners business fundamentals. Worst practices include promising to deliver solid leads, but instead giving partners junk.

Finally, in what Gartner calls “”channel wants and needs,”” best practices include treating partners as family. Worst practices include stealing accounts and pushing enterprise products to partners who specialize in SMB markets.


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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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