The Cost of Non-Performing Partners
It was recently announced that Trend Micro will be reducing the number of partners they have through a formal review program. The company cut 600 U.S. partners in 2013 as a result of the review process, and may cut another 12 percent to 15 percent of its 6,000 partners this year – which means that another 700-900 are on the chopping block.
It is extremely hard to cut partners. Many companies continue to keep non-performing partners in perpetuity (which means a really long time or an annuity that has no end). These companies feel that the partners are not a risk, offer upside, and are a captured audience to market their wares.
On the surface, it seems there may be little cost to maintaining partners that do not perform. However there are actually a number of risks associated with non-performing partners; including dissemination of competitive information, the increased cost of maintenance and sales cycles spent trying to increase these partners’ sales, increased cost of marketing communications, and the devaluing of the relations with your performing partners.
Lou Gerstner, during his tenure at IBM, was famous for revitalizing the company. One of the strategies he used was to annually cut the bottom performing 10% of the staff. This was viewed as harsh, but the results were very positive. It can be argued that the impact of across-the-board cuts punishes the most efficient units most and the least efficient units least. However, applied to the channel, making a ten percent cut to a low or non-performing channel makes sense.
Focused efforts on the top performers and the next tier of performers will lead to greater sales results. There will always be the up-and-coming partners and those with great potential that need attention and care to evolve into the sales dynamo that you expect. Those can be part of the program, but after investment of time and resources, if performance does not increase it’s time to move on. These are hard choices but in the end the organization will be better off for making these tough decisions.