Business Strategy

Forget B2B: Why tech vendors with channel partners need to focus on B2B2C

Forget B2B: Why tech vendors with channel partners need to focus on B2B2C

Channel partners working with tech vendors are prioritizing customer experience (CX) measures ahead of sales metrics. That’s one of the surprising findings from a recent Vision Critical study that looks at the way channel partners measure the success of their cloud-based businesses.

The 2015 study highlights the growing need for vendors to help channel partners understand the end tech customer. We asked 199 channel partners—companies that resell computer hardware (systems or components), software or services manufactured by other B2B tech companies, and earn at least some revenue from cloud-based solutions—about the importance of customer experience in their operations. In doing so, we found that these organizations are starting to rely on customer intelligence to drive business decisions.

When asked how they measure success in their cloud business, 46 percent of channel partners said they track customer satisfaction, while 45 percent indicated they look for customer feedback. These two CX measures top the list, beating sales metrics like monthly recurring revenue (31 percent), number of new customers (30 percent) and year-over-year sales growth (30 percent).

How channel partners measure success in their cloud business

So why are channel partners prioritizing CX measures ahead of revenue numbers? My hunch is that these partners are thinking long-term. In the cloud-subscription model, success and profitability in the long run comes from keeping customers happy over time. When customers are loyal, channel partners get recurring revenue with very high margins. Since an effective CX program strongly correlates with increased customer loyalty, it makes sense that channel partners are focusing on CX metrics.

B2B companies are also focusing more on CX. A 2014 Accenture study found that a majority of B2B companies consider CX very important to their strategic priorities today, with 70 percent of B2B marketers indicating that CX-related considerations will play a larger role in overall corporate strategy in the next two years.

Despite the importance of CX management, however, most channel partners are not engaging with end customers effectively yet. Accenture’s study found that, in a majority of B2B companies around the world and across industries, CX investment is currently ineffective. Only 24 percent of B2B companies are considered CX masters—enterprises that “excel in both customer experience strategy and execution capabilities.”

Indeed, our own study shows that most channel engagement programs aren’t very sophisticated or holistic yet. Partners still rely on basic and informal traditional ways of measuring satisfaction and collecting feedback. As these sample responses indicate, a majority use email, phone and in-person meetings and one-off online surveys to hear from their customers:

  • I try and keep in contact, preferably in person or phone call just to check how things are going, or use email if more appropriate.  Also always ask for them to drop me an update on how things are or if anything needs fine tuning.
  • Verbally—in face-to-face conversations. (The old-fashioned way.) 🙂

Also, very few channel partners have a systematic measurement process or cadence.

  • Nothing formal. We simply talk to given clients and see what they think of what they are using.
  • In face-to-face conversations, asking questions. Randomly and periodically. No set schedule.

While channel partners don’t have a systematic way of measuring CX, there is clearly an appetite for better ways of engaging with end customers. Three quarters of partners indicated that it would be beneficial to their business to collect more detailed data on their customer satisfaction and to gather more regular feedback.

Ultimately, tech vendors with CX programs that don’t consider channel partners and their end customers are missing a huge piece of the puzzle. Instead of thinking of themselves as strictly B2B companies, vendors need to change their mindset to what consulting firm Temkin Group calls B2B2C and consider ways of “enhancing the end customer experience in a way that satisfies the needs of channel partners.” To improve CX, tech companies need to consider the entire customer journey—and that includes getting closer to the end customer.

Conclusion

What our study shows is that B2B companies and their channel partners often have a limited understanding of their end customers. There needs to be a better partnership between B2B companies and their channel partners to gather and share end customer information, including solution needs and business opportunities, customer success and experience or satisfaction measurement.

B2B organizations that want to strengthen their partner programs need to consider ways of supporting their channel partners’ CX efforts. Doing so requires effort, but the goal is worthwhile. Influencing a positive end customer experience has a tangible payback not only for B2B companies but also for their channel partners. When the end customer is happy, both vendors and partners attract new customers, retain current customers and see higher revenue.

The Vision Critical Partner Intelligence Suite can help B2B companies assist channel partners engage the end customer. Watch a four-minute demo to learn more.

Vision Critical Partner Intelligence Suite



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