The Importance of Channel Conflict


Conflict in the IT Channel has always been around exists as a result of the friction created by businesses sharing the same ecosystem but with differing priorities.

The word ‘conflict’ often has negative connotations but from it can arise some really interesting new ideas and results. Therefore it’s important not to shy away from conflict as long as you can find a way through it to benefit you and your business.

Apple have spent pretty much their entire business life causing conflict within their field disrupting the status quo and carving new ways we consume technology. When iTunes first entered the market, the music industry struggled to understand its logic but it marked a step change in the way we, in the main, purchase audio tracks. Today, we wouldn’t think twice about this evolution but there is no doubt that the journey to get us to this point was anything but easy.

Conflict in public transport has sacrificed thousands of jobs to give rise to more innovative ways of doing things whilst creating new jobs.

Thousands of jobs were lost supporting horse-drawn transportation but gave rise to new and more innovative ways of travelling creating hundreds of thousands of new jobs in transport, infrastructure and beyond.

Getting the most out of channel conflict is a pretty easy thing to do, except most people fail to do so if they even bother. The reason for this is that understanding the various factors that culminate into a conflict can often mean you have to look under the radar. In most cases, a broken relationship between vendor and distributor, or reseller and their customer can more often than not be as a result of a lack of- or mis-communication. Chasing up those who have drifted is often very difficult if you don’t have the systems in place to track it and if it isn’t part of what your job is targeted on, the feedback gets harder to capture as the opportunity to drifts further and further away.

There are five main causes of conflict within the channel:

  1. Vendors compete with partners for sales
  2. Direct-market resellers and Large Account Resellers (LARs) compete with Value Adding Resellers (VARs)
  3. Resellers competing with resellers (often with the blessing of the vendor)
  4. Vendors redirecting partner-generated sale opportunities to preferred or larger partners
  5. Customers driving conflict to gain concessions

In all five situations listed above, you can see that the need to compete against another organisation is as a result of their own priorities. In fact, it is highly likely that an organisation may not always set out to compete against another organisation but it is the way they are targeting particular individuals within  that causes competition. To compound the problem further, certain organisations may be subject to internal cannibalism as different departments conflict with each other.

A good example of this would be Dell who has a very successful foothold within the direct-selling business and who is now developing a Channel Partner model. For me, who has previously worked within the direct-sales business, we would come up against colleagues only a couple of metres away as we tried to register deals before each other. They, with the Dell reseller fighting their corner, and we with the customer enjoying having Dell double up on the attention we paid to them (see point 5 above).

Conflict like this is pretty unnecessary and should be a priority for any management to address and iron out. But conflict where a business has seen a new opportunity to evolve and bring long-term benefits to their supply chain is something that should be driven hard and supported by a solid communication plan. This plan should then be delivered to the company’s key stakeholders and the broader market. That way, should conflict or confusion arise, there is plenty of information and the right people to speak with to help allay any fears.

Deal registration between the holy trinity of the channel (the vendor, the distributor, and the reseller) always crops up as a frequent cause of channel conflict and again there are various examples of individuals massaging deals to ensure that the greatest amount of revenue in the shortest amount of time is generated. The simplest way to address this is to strengthen your relationships with your account managers so that you, and no one else is in the forefront of their minds when it comes to giving the heads up on a new opportunity.

Finding ways to work together can often reap greater rewards than continuously fighting against each other.

Finding ways to work together can often reap greater rewards than continuously fighting against each other.

My three recommendations to avoiding unnecessary conflict is as follows:

Consolidate your resources

Having more than a handful of suppliers is not a sign of how well you’re doing these days – it’s more a sign of how busy you are not being necessarily productive! Carefully evaluate who you buy from and consolidate them down to a few, by doing so you can use the time freed up from managing them all to build stronger relationships with the few. This will also help your suppliers better understand your business plans and how they can better align to you.

Communicate clearly, consistently, and with a compelling message

Your business might be a David to your supplier’s Goliath but if your business is the right fit for the goals of their’s then you may have more importance that you realise. Understanding your ecosystem is very important in showing you where you ‘fit’. It may be that you are happy doing what you’re doing and don’t wish to change, but there are many in our industry who know that just because your in the SMB space, you have some pretty juicy clients that alongside you are looking to grow. New business opportunities are always a head-turner for suppliers because it fits in with their motivations. Moving business from one partner to another (see points 2 and 3 above) doesn’t necessarily tick any new boxes for them because they end up with the revenue either way, but if you can find them business that can be taken from their competitors then you have piqued their interest.

Understand what ‘floats their boat’ and the same of your customers and look at how you can help make it easier for them to achieve. By doing some of the work for them, you make a far more compelling business to work with and develop a stronger relationship that they will instinctively invest in too.

Co-operate

For the last decade or so, I have seen Partner Programmes, reseller communities, and the like spring up, peak, and wilt. They tend to come about because large vendors and the likes need to better integrate with the SMB market and see this as an effective platform to achieve this. Many of those who contribute to these groups often do so voluntarily as a result of a set of shared beliefs and values so that they can garner knowledge, mind share, and a stronger network to support their businesses. However, often the wilting can be induced quicker when those responsible for maintaining it are moved on and replaced by those who have less of an understanding that cultivating these communities can be a slow burn at times and often contrary to their short-term and more immediate priorities.

As a result, the trust and loyalty generated through the co-operation of the various organisations can often go un-requited if the wrong people are at the helm of the programme driving conflicting motivations born from an increasing level of mis-communication and low co-operation.

Be sure to apply your experience when seeking to establish stronger relationships within your ecosystem and emphasise the old adage that ‘two heads are better than one’. You’ll find at times that the balance of advantage can swing to you or to another organisation depending on the time of year and nature of the relationship, but like all good marriages it takes a good while of falling out and making up to really form something solid.

Whatever relationships you establish and cultivate during your business life, conflict will always be there to help forge new opportunities. The conflict you should avoid is anything that has a negative effect on the long-term success of your business. Therefore it’s important to ensure that whatever relationships you get into from the get-go are the ones right for the business plan you set for yourself and your colleagues.

Don’t waste time on the things that were never meant to be.

Further reading:

The 2112 group’s 2nd Annual Channel Conflict Report 2013

CompTIA’s Channel Conflict and deal registration (PDF download link)

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