Distributors Don’t “Sell”

When I was with the channel team at MessageLabs (now Symantec.cloud) we faced the problem Allen is describing:

The bad news: distributors completely, really, totally, absolutely don’t/can’t successfully sell/distribute a product (or service, or combination) that is (1) new, so requires educating the end-customer, (2) requires training of the distributor’s salesforce to understand, (3) isn’t immediately easy to sell.

MessageLabs was early mover in the cloud-based email security space.  We had a number of very large re-sellers that  gave us great reach, but their salesforces just weren’t suited to selling a product that required a high level of customer education.  Our channel partners became very effective “introducers” but  our direct sales team still had to do a lot of c0-selling.

The introductions gave us access to great accounts but the scale and economics companies typically look for from distributers wasn’t there.  In some ways, it was the worst of both worlds.  We were giving up margin to the partners and still incurring the high costs associated with a direct sales model.

Jobs on Partnering

Steve Jobs and Bill Gates meet yesterday for a joint interview at the Wall Street Journal’s All Things Digital conference. The excerpts are fascinating to read [subscription required].

Given all the public bickering and bad blood it is interesting to read about the extent to which Apple and Microsoft cooperated in the early days, and still do.

When they were both asked what they wished they had learned earlier from the other, Jobs’ said:

You know, because Woz and I started the company based on doing the whole banana, we weren’t so good at partnering with people. And, you know, actually, the funny thing is, Microsoft’s one of the few companies we were able to partner with that actually worked for both companies. And we weren’t so good at that, where Bill and Microsoft were really good at it because they didn’t make the whole thing in the early days and they learned how to partner with people really well.

And I think if Apple could have had a little more of that in its DNA, it would have served it extremely well. And I don’t think Apple learned that until, you know, a few decades later.

Here you have the leader of one of the most notorious “do-it-all-ourselves” companies recognizing that partnering earlier could’ve helped.

Very interesting

[some excerpts are available without subscription but not the Jobs quote above.]

Partnering Gone Bad

Businesses use partnerships for number of reasons; wider market reach, lower cost of sale, lower cost to service, access to new technology, and etc. But partner relationships introduce risks as vendors lose control of the customer relationship and information exchange between multiple organizations affects customer service.

As a consumer, I am currently caught in a perfect storm of a poorly integrated partner ecosystem that is illustrative of these risks.

In December, I bought a Reebok exercise bike for my wife. We went to a nearby Sports Authority and demoed several models. We narrowed the options to three models that appeared roughly equal and ultimately choose one from Reebok because it was a brand we trusted.

After using the bike for about 30 days, it suddenly stopped working. My first call was to Sports Authority because I had allowed the sales clerk to sell me the extended warranty. I learned that extended warranties don’t include the time the equipment is covered by the manufactures warranty and I would have to call “Reebok” directly.

It turns out that the bike is actually manufactured by Icon Fitness and Reebok allows them to distribute the equipment under their brand. The representative I spoke to at Icon tried to trouble-shoot the problem over the phone and agreed that a technician would need to come to my home to fix the bike.

Icon sent my information off to a local service partner but I had to call the technician myself to setup the appointment. The first organization they referred me to lost my appointment. The second send an unqualified technician who was able to unassemble the bike, but unable to fix it and left it in pieces. After several days where there was no further contact from anyone regarding next steps, I called Icon for the fifth time. The rep I spoke to agreed to take the bike back but that was close to a month ago and they have failed to follow up as agreed.

So, here is the scorecard of the players:
– Reebok provides the brand
– Icon Fitness manufactures product
– Sports Authority sells the product
– Local companies provide the break / fix support

Licensing arrangements like this are not uncommon and this could be another story of the miracle of modern business where every participant in the value chain performs their own specialized task resulting in a surplus of economic profit. Instead, my basement houses a $500 exercise bike in a hundred pieces and I am seemingly helpless to get it fixed because none of these participants feel ownership of my problem.

I haven’t attempted to contact Reebok directly yet, but I can’t image that they’d be pleased with the way their brand is being used in this partnership. I wouldn’t say I’d never buy something from Reebok again, but the brand is certainly diminished in my eyes.