Dear Routes to Market

I work for a major software vendor, which is wrestling with how to transfer named accounts to partners.  There are several big problems.

Firstly, I would like to know how to manage the expectations of the customers who are being transferred.  The truth is that many partners don't want to pick up the gamut of processes that we carry out.  Often our partners want to sell boxes and aren’t interested in holding the customers’ hands and having a long-term relationship with them.  They don't want to answer the countless customer questions and queries we answer. 
 
We are also finding it difficult to work out which accounts can and should be transferred. Some of them are not going to produce any business at all for two to three years, so we really don’t feel we can give those to partners.  But we don’t want to just hand over our crown jewels.
 
Margins are also an issue.  Our large direct accounts get 40% discounts and yet our partners only receive 30%, so some end users will inevitably see price rises.

Please help!
BH, Enterprise Software Vendor

My first question would be: "Why do you want to hand over these accounts to your partners?"  I guess it will be either because you think the channel will be able to do it more cost-effectively, or because you think that partners will increase your sales.  You need to be clear what you are looking for – it may be worth giving partners more margin, if you think they will increase sales by 5%.

Either way, you need to be clear about your real cost base.  Do you know how the cost of directly managing these accounts compares to that of going through partners?  Until you can answer that accurately, it is difficult to see a way forward.

Perhaps you could try a hybrid mix.  At Oracle, for instance, we tend to keep an account manager involved in accounts where we think there is long-term value – even if a partner is undertaking a project. 

You could also move away from a straight discount to one that rewards added value.  At Oracle we give rebates to value-added distributors who run training or who exceed their partner-recruitment targets.
Tony Mulligan, Oracle