Traveling to Minneapolis to Meet with Microsoft

Yesterday I was privileged to head to Minneapolis (12 hours round trip) to meet with Phil Sorgen, corporate VP of SMS&P (basically the SMB partner community among other responsibilities). He moved into this role replacing Michael Park earlier this year who moved on to a new assignment. It was my first opportunity to meet and discuss HTG and the state of the channel. We had a good discussion and were joined by two great supporters of SMB partners, John LaLonde from the Local Engagement Team (LET) and Lisa Hughes, the North Central Partner Community Manager (PCM). I was honored to be able to explain a bit about our peer to peer interactions and then to discuss the SMB channel and some of the challenges I see. Here are the key blockers to growth for many companies that I expressed:

1. Cash flow. Far too many partners are undercapitalized and don’t manage their cash well. No matter how you try and cut it, cash is always king. The companies who are able to consistently grow know how to manage their cash. That involves timely billing, collection and management of accounts receivable, cost containment, management of accounts payables and all things cash. It also means that partners are not running their business month to month on credit cards. Only one simple missed payment can start a spiral of disaster if that is the only source of outside capital. Every partner needs to have established lines of credits with distribution partners and also a local bank. At least any partner that really wants to grow. If you are going to leverage other people’s money to grow you company, which is a very acceptable approach if managed correctly, then it can’t be done with credit cards. Provide the needed documentation to your distribution partner and get a line established. And go find a local bank that you can establish a line of credit with and build it up by using it and repaying it regularly. Credit capacity is something that has to be earned by careful use and payment. It is not a right or a gift – it is a privilege that is harder than ever to earn. And you don’t typically get it when you are desperate, so be working on it while you don’t think you need it so when you do it is available. I see partners make a mistake here over and over.

2. Sales. Very few partners have a true sales process. They typically can engineer and implement solutions to any problem a client may have, but when it comes to replicating that and selling it to others, they get deer in the headlights looks and don’t know what to do. Sales requires a system. There are so many moving parts. You have to hire, onboard, manage, compensate, reward, motivate, train, and build their ego’s. But if partners want to grow, then they have to become a sales organization. Nothing happens until a sale is made. Vendors typically don’t provide good training and support in this area. They may provide bits and pieces, but that provides very sketchy success. You need to establish a true start to finish process that captures every step and document it and create a system to manage it. ConnectWise is the tool we use, along with QuoteWerks and some great leadership from our VP of Sales Larry Hedin. Building and managing a sales team is a never ending challenge. But it is critical if you want to grow through that barrier to growth. I often see it rear its head when companies are 1 – 1.5 M in revenue or have 7-12 employees. It won’t fix itself, so sticking your head in the sand and hoping it just gets better does not work. You need to find a way to conquer this area. There are some great consultants that can assist. There are peers that have it under control. But pretending you have it will not work over time and you need to make it a priority and just get it in place.

3. Marketing. This is like magic to most partners. There are lots of options here and it seems that if you ask around enough you can find someone who swears by them and others who swear at them. Telemarketing, drip mail, direct mail, cold calling, buying lists, event marketing, ready to go campaigns – they all work sometime and if you get lucky. But put them in combination with a sales process and system and the odds of success go up exponentially. Marketing by itself is really nothing more than advertising. When combined with a sales process where follow up occurs and pipeline is tracked and contacts are managed – well it suddenly starts to work. Too often partners want to sign up for and throw a little money at some activity and then just sit back and wait for the prospects to come running or sit and wait to answer the phone. More often than not, that is not the response at all and then the assumption is that it doesn’t work. Marketing is a waste of time and money. It isn’t the marketing that is the problem, it is the execution. In and of itself it is not a magic bullet. It won’t get a line of people knocking your door down. But teamed with a sales engine, it can prove to be very valuable. In fact, once you have a sales system that works you have to have a marketing engine to keep the prospect pipeline filled in order to take your business to the next level. It isn’t an optional activity if you intend to keep growing as a company. You have to figure this one out too.

4. Leadership. Most partners get so wrapped up with the first three they totally miss this one. But here is the reality – you cannot grow your organization if you are the sole person leading the pack. That works until you have 20-30 people and are very effective, but a growth company has to have other folks step up to manage and lead. While it would be wonderful if there was an unlimited pool of trained and effective leaders available in the employee pool for most partners – that is not typically the way it works. You need to invest in training leaders. It is a process that takes time. You have to make investment – spend time and money in fact – and build into those that will help lead your organization to the next level. This kind of training is not some sort of vendor certification. It is not the typical course that you pick up online. It is about people and relationships and requires hard work and study to learn it. Then it takes some on the job mentoring to put it into application before it is ready for prime time. But the key is you need to start building this far before you want to put it into place. You can’t send a potential leader to a class one week and expect them to take on a leadership role next week. That is not how it works. So identify your leadership needs early and invest in the appropriate people so they have time to learn and prepare to step in and be successful.

5. Strategic relationships. If I were to pick one area that differentiates partners from the pack, the ability to build and manage strategic relationships would be the key factor. Most partners never get this truth. They insist on focusing on adversarial relationships with distribution, vendors, other resellers and often their own employees and customers. Success is not based on being in constant tension with the entire world. It is rather built upon creating successful relationships that provide win-win scenarios where everyone is bettered by the results. Our company and HTG has made strategic relationships a key focal point and strategy. We spend time learning about the resources and programs available to us from distribution and vendors. We participate in their programs and leverage their investments. And we buy and sell their products, not based on beating them down to the lowest possible price, but by focusing on the value of the solution we are able to deliver to our clients. We focus on building beneficial relationships with our peers as they are a wealth of experience and critical information to help us accelerate growth. There is absolutely no reason we need to make every mistake ourselves. We can learn much by listening to and sharing with peers. And there is no shortage of customers that need to be served. Fighting over customers in a market is a less likely way to succeed than working closely with other peers that share our approach and want to work with us. And those that want to see their staff and customers as adversaries – well you are in for a long life. We need to serve our team and customers well, and exceed their needs and expectations. When we get over ourselves and focus on serving them we can truly find success. Strategic relationships will separate you from all your competition if you learn it and live it well.

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I want to express thanks to John and Lisa for helping make my visit possible and enlightening. Microsoft is making some significant changes in how they serve partners in the SMB space. The revised partner program, the transition of TPAM’s to distribution, the reinstatement of the Frontline marketing funds, the SBSC campaign funds, LET team, the new Var Champion program – there is a host of great things that are being done to enable us to succeed. With the creation of a role to focus on HTG, IAMCP and other peer to peer groups this fiscal year, Microsoft has put their money where their mouth has been and given us a great resource in Tina Hanson to help navigate our partnership. Already Tina has been able to generate more investment through the Windows 7 challenge and the soon to be released flex marketing campaign. John and Tina are helping us pilot some sales and marketing training in the North Central region that I think will be a game changer for partners. Arnie Mondloch in Redmond has been a consistent voice in helping us get the tools we need, like an extensive SharePoint site for collaboration. I am encouraged and excited about the investment that Microsoft is once again making in the SMB channel. And most of all, I am grateful for the opportunity to spend some time with Phil Sorgen and understand a little more of the vision for SMS&P. There is a great leadership team in place and as they listen and partner with us, we all succeed. So thanks for the time and the ear, and I look forward to our mutual success in 2010!