The Channel Is Broken: Introducing New Methods of Distribution

IT Operations

By Phylip Morgan, Chief Revenue Officer at Pax8 

Guest Author


According to Canalys, annual worldwide cloud infrastructure services expenditure reached $65.8 billion by the end of 2022 — an astonishing 23% year-on-year increase from 2021. This spend isn’t expected to slow down either, with Gartner finding that 72% of tech leaders expect to grow their revenue in 2023. With a significant amount of technology industry expenditure now flowing through the channel, this provides businesses with an opportunity to work closely with partners to capitalize on the growth of the market, while gaining access to an increasingly wider pool of customers. The channel’s growth shows no signs of slowing down and TSP’s (Technology Service Providers) can enhance their offerings significantly by leveraging new partnerships.  


However, in its current form, the IT channel ecosystem is no longer fit for purpose, and the issue is two-fold. Firstly, many organizations are moving towards a subscription-based model for their solutions. With many of the emerging generation preferring this new method to purchasing, and with the expectation that millennials will soon make up the majority of buyers, there is an opportunity for the channel to capitalize on this change in behavior.  


The second ongoing issue is that customers feel that they are currently underserved and they expect a seamless purchasing experience 24/7 365 via the cloud. Therefore, distributors and vendors need to provide more value-added services and as channel behavior continues to evolve, partners must be able to adapt to meet changing demands. 


The rising prominence of subscription based models 


The subscription based model has seen a significant rise in popularity in recent years with subscription business revenue growing 437% across nearly a decade, according to a recent study undertaken by Zuora. Indeed, this method of purchasing products and services appeals to the customer’s desire for convenience and novel experiences where they don’t have to make a decision every single time they purchase a product. 


Global businesses in a wide range of industries are moving towards this method of purchasing products and the channel should be no different. Traditional methods of selling products and services in the channel are becoming outdated and distributors need to freshen up their approach in order to meet customer demand. By providing a subscription-based model for customers to purchase products and different value-added services, distributors are able to effectively meet demand and grow their existing customer base. 


Streamlining existing processes 


The channel is continuing to grow at an exponential rate and with growth comes the potential for complication, where manual processes slow down operations and restrict businesses in providing a seamless purchasing experience. Instead, distributors need to streamline the payment processes for their customers, in order to provide additional value. With consolidated billing in place, distributors are able to combine multiple subscriptions into a single invoice. 


As a result, the billing process is simplified and the need to manually track and complete payments is eliminated. With an automated approach, the payment process is streamlined, improving the customer experience as a whole. Less time is also spent on manual processes and more time can be spent on performing more valuable tasks within the company. 


Satisfying customer demand 


Facilitating a seamless checkout process through a subscription based model is a key method for distributors to provide additional value. However, providing a dedicated account manager can further achieve this, enabling MSPs to stay informed on important information with a key point of contact who is readily available to speak about new products, services and opportunities. With many distributors operating without a channel account manager, having this main point of contact enables MSPs and resellers to communicate their needs properly towards their customers. Through this relationship, they can build trust with their clients and increase their overall efficiency. 


In addition to the communication challenge, many channel partners offer a limited number of services that don’t provide any additional value to their customers. In such a highly competitive environment, strong relationships are vital. Being able to offer additional value to the customer — such as integrations with industry leading PSA tools, or providing networking opportunities — enables distributors to become integral to their partners and develop stronger, long-term relationships. Therefore, channel partners must review their current process and freshen up their approach. 


A new and improved method of distribution 


Distributors must adapt to change and look to find new and innovative ways to cater to evolving customer demands. With the traditional method of purchasing products and services becoming outdated, the implementation of consolidated billing and dedicated account managers is just the beginning. The current channel ecosystem is restricting its partners, and the businesses that adapt will come out on top in an increasingly competitive landscape. Altogether, the channel must strive to push boundaries and provide maximum value for its partners and customers in order to generate long-term business success. 


This is a sponsored blog post.


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