The term "win-win" will be familiar to most people. It's one of those management speak phrases that has been used so much it's in danger of losing its meaning. Everyone wants to win and no-one wants to lose so why should there be any other way of doing business?
Let's go back to basics for a moment and remind ourselves what win-win means in a business sense. In a straightforward customer-supplier relationship, a very simple win-win scenario would be as shown here. The supplier has a product to sell; the customer is interested in acquiring the product. When the customer values the product more than they value the amount being asked for, they will want to buy. When the supplier values the amount more than they value the product, they will want to sell.
The transaction goes ahead and everyone is happy; everyone wins.
But how can this work when we have more complex offerings and channel partners too? How can the supplier, the channel partner and the end customer all win at the same time? Firstly, let's define what we're looking for. With a third party in the equation, there are more interactions and scenarios to consider.
Here we can see that there are three scenarios resulting in win-win outcomes; this is good for two of the parties but not all three. If we think of some examples of each, that can help inform our strategy to avoid such scenarios:
The supplier wins, the channel partner wins but the customers do not. This could be where the supplier and the partner have worked together to come up with an offering that suits them both but have forgotten to take into account customers and their needs.
The supplier wins, the customers win but our partners do not. This could be where the supplier primarily sells direct to end customers and does not sufficiently value the contribution that the channel partner can make.
Our customers win, our partners win but the supplier does not. This could be where there are unequal market positions; perhaps the channel partner is large and has significant purchasing power whereas the supplier is comparatively smaller.
These scenarios can occur in all channel partnerships but, inevitably, they lead to dissatisfaction and do not result in a sustainable, profitable or reliable business in the longer term. If your strategy includes channel partners, then it is in the interests of all concerned to find a position which benefits all concerned.
That ideal position is the win-win-win scenario where all parties make a valued contribution and gain from the transaction. That seemingly simple statement is the key to building a channel business. It's pretty obvious too: if everyone benefits from a transaction, they will want to repeat it. And if everyone continues to benefit, they will want to continue repeating it.
The question is how to get there? The answer, of course, depends on where you're starting from so let's look at the examples from above:
The supplier wins, the channel partner wins but the customers do not. The supplier and the partner have failed to take into account their customers and their needs. As you can see from the red shaded intersections in this diagram, neither the supplier nor the channel partner gain when the customer does not gain.
Perhaps the supplier feels one stage removed from the customer and relies on the channel partner for feedback. Perhaps the partner feels the product offering is the responsibility of the supplier. In both cases, supplier and channel partner should work together to understand what would deliver value to the customer. This exercise can be lead by either party but both should be involved; it is in both their interests to gain a better understanding of what is necessary for them both to succeed.
The supplier wins, the customers win but our partners do not. Where the supplier does not appreciate the value contributed by the channel partner, they again need to work together to appreciate each other's role in the relationship. The red shaded intersections in this diagram show that neither the supplier nor the customer gain when the channel partner does not gain.
If the channel partner is genuinely unable to contribute value, then perhaps a channel strategy is not appropriate with this partner.
More likely, the channel partner does add value but this is not sufficiently well defined, understood or communicated between the parties. This is a joint responsibility. The supplier's channel strategy should define what value they expect from channel partners. The channel partner's business strategy should define what value they contribute. Both parties can help articulate each other's strategies and, where appropriate, assist with strategic development. Strategy, combined with communication, education and understanding requires effort by both parties but produce results for both parties.
Our customers win, our partners win but the supplier does not. Where a small supplier is insufficiently valued, or perhaps dominated, by their channel partners and/or their end customers, it is easy for the supplier to feel vulnerable. The critical activity is to establish the value offered by the supplier. If they are genuinely unable to contribute value, consideration should be given to revising their channel strategy.
Often, the supplier does provide value but doesn't fully appreciate the value they provide or how to communicate it. Smaller suppliers often have expertise in specialist technology areas but not in channel management. In these cases, they need to make the extra effort to understand their channel partners; how to communicate their message and ensure that it is understood.
Appreciation of the value contributed by a specialist supplier is easily lost or forgotten by the larger channel partners. Especially when the latter reorganises or experiences personnel changes. Professional organisations have supplier management functions but these are often overworked and under pressure, with more suppliers than can be fully appreciate. In these cases, it is a joint responsibility between suppliers and channel partners to appreciate the value of each other and how this can best be communicated. Often times, it is not the lack of value, it's the lack of communication that causes issues.
Below is an example process that a supplier might follow when establishing their value to their channel partners. This example is from the supplier's perspective and similar flowcharts can be extrapolated from the channel partner's and customer's perspectives.
A defined channel strategy is a prerequisite and sufficient, proven value is the objective. Establishing our message and communicating it are the keys to success along the way. Meaningful feedback, ongoing learning, adaptation and evolution ensure that the message remains relevant over the life of the partnership and help deliver a win-win-win outcome for all involved.
For more discussion on win-win-winning, you might like to check out my blog post "How do we win-win-win bigger?"
Ash Madden is Founder and Director of Madden Associates Limited, the Specialist Channel Sales & Partnering Consultancy