Cisco just rolled out a new points-based partner program. I know many vendors, pundits and channel execs are going to talking about how this is the new model. (I have already seen many column inches about it in the last two months).

Here’s the thing, Cisco has very few peers when it comes to their partner program. Microsoft is really the only one that is comparable. HPE thinks it is, but with all their M&A, the program is too confusing to keep up with. Dell has gone through a period of getting rid of its M&A assets. VMWare is a mess.

The main reason Cisco and Microsoft can make these big changes is because their certifications are a billion dollar industry — and yours isn’t!

They have Brand. They create demand. They create business for their partners. More than 80% of their business comes from partners. They like their channel.

It is interesting because MSP M&A is not just heating up, it is an inferno of investor dollars. Yet the number of MSPs has actually shrunk from a high of 62K to about 44K now. While 85% of that 44K are too small to be involved in M&A. (I talk to investors often; they all want the MSPs in the $10-20M range in revenue and $2M in EBIDTA.)

At the same time that hundreds of vendors are looking to the channel, MSPs are stretched thin due to the share width of the IT space – from print to mobility to cybersec to managed services. For an MSP with 10 employees, that will be too much. It also doesn’t leave room for a dedicated sales rep.

All the more reason that the MSPs and VARs – especially the smaller ones – will embrace this, since they need to get points to maintain status, support and discounts!

I know smaller service providers (vendors) ($5M – 40M) are going to be looking to change their program too. DON’T.

Unless you provide leads to your partners, the change will not help you. In 2024, reports indicated an average of over $6 to $9 in partner value for every $1 of Microsoft revenue, depending on the specific study.  Do you make your partners $120 for every UCaaS seat sold?

Most of your issues with your partner program are foundational: no marketing, no strategy, no focus, no brand, no demand.

The biggest part of Cisco’s partner program is the certifications. And those certs are portable. And those certs are recognized by Buyers. It is a billion dollar industry, yet Cisco certification holders make an average of $94,840 a year!

Partners are invested in the Cisco program. Their business revolves around it. They are Cisco first. It is similar with Microsoft partners. TAs and other programs can work that way but usually do not.

Selling AI will be harder than selling most services. The hype balloon ruined it for many.

The CFO and CEO thought that they could install AI and let 1000 employees go. In fact, many CEOs are using AI as cover to layoff.

But selling AI for channel partners will be challenging. One is the lack of product knowledge, the other is the missing technical knowledge. But let’s assume a partner is going to charge into the void anyway to sell AI. This is the anatomy of that sale.

First, the partner will only be having conversations with Buyers/Prospects who self-select in, In other words, if they are already interested in an AI project and are looking for a little guidance from a Trusted Advisor. Because they self-selected, this will cut the sales time in half.

Now, the partner has to ask about business goals. What are they trying to accomplish with AI? What have they heard is working? Where do they think they can get the best benefit from applying AI?

This is when use cases for that specific vertical will be required. What are other {banks, dentists, manufacturers} doing with AI that is working? Well, Mr. Buyer, we have these 3 use cases from 3 vendors for you to examine.

After the Buyer agrees that a use case will work for them, now it is time to layout the POC (Proof of Concept) or trial. In detail, the partner will try to gather (1) What is the goal of this POC?; (2) What 2 factors will define success of the trial?; and (3) Bring in other stakeholders in order to flush out the Scope of Work (SOW). This might be when the TSB Sales Engineer is roped into the deal.

Next, the partner (or vendor team) will need to describe the responsibilities of both parties, in writing, for the SOW. This is important and not something most partners have ever done. There will be software and data requirements. There may be hardware requirements. What cloud platform are we using? What LLM? What database? Are there open APIs?

This is where the data issue rears its ugly head. Now the customer finds out they need a data project as well. Most data is in a silo without an open API. The data project consists of either scraping the data from an unfriendly software/SaaS app or replacing that SaaS/software with a friendlier alternative.

Now it is at least 3 weeks while we discuss the POC, and the data with vendor. This will be the proposal stage. In many cases, the professional services charges will break the budget and that deal will be put on hold. It isn’t unusual for the NRC to be north of $40K. Companies pay $30K for PS for CCaaS implementations. This will require more man hours to design and  connect the systems and extract data, in order to feed the AI.

After the proposal is accepted, there will be 2-3 weeks for legal to redline. It will take even longer if your legal team uses ChatGPT as a paralegal.

Finally, we get to the stage where we go over the details of the SOW, the POC and the contract. One more week of dithering before it is signed (hopefully, it could be longer if the NRC is 6-figures). We had one drag out for 2 months after the “agreement” between the legal departments of the vendor and Buyer because the owners were jerks from the jump.

This is at least 16 weeks – 4 months – with a prospect that self-selects. This is a fast sale in AI.

This is like after the pandemic when everyone was re-evaluating the UC&C they paid for during the haste of the pandemic.

I know everyone wants things to happen fast, but the sales cycle is at least 4 months long — and that is for the POC!

Then after the project, there will be more negotiation over whether it was successful and if they want to move forward and how.

Leading up to the Cloud Comm Alliance event this week, I have been thinking a lot about why partner programs don’t work. Two years ago, one speaker talked a lot of nonsense about “The Channel”. Quite a few CEOs of cloud comm providers were angry at channel partners and cheering her on. Doesn’t make what she said correct.

Channel Chiefs don’t last long and there are viable reasons for that. Not enough time to execute on a strategy. Not enough budget. No control over operations to improve things that partners complain about.

Programs take at least two years to bear fruit and that is with services that have a short sales cycle. If your services take a year to sell, it could be 4 years before the channel works for you.

It takes time to (1) recruit partners; (2) train or on-board them; (3) partners to start introducing prospects to your services; (4) then your sales cycle kicks in. Steps 1-3 can take a long time.

You might have the wrong partners. Maybe you have the wrong partner type or just the wrong partners. Who is your Buyer? That is usually Problem # 1. CEOs have no idea who the Buyer is. They don’t have an ICP (ideal customer profile).

Unless you are a top 8 vendor – MS, Cisco, HP, Dell, AT&T, VZ, Comcast, Charter – your customer is NOT Everyone. In fact, if you think it is Everyone, go look at your billing.

Most products & services are like the potato chip aisle.

 

Only Frito-Lay brands advertise and drive demand to that aisle. Every single SKU pays for placement in that aisle though. In the case of UCaaS, RingCentral, Zoom, Microsoft and maybe Cisco Webex drive demand to that aisle. If you are not one of those brands – Teams, Zoom, RingCX, Webex – there is a price to be paid to get in front of the Buyers. Zoom did it with a great video product that was free during a pandemic – the brand became like Kleenex – but the direct sales teams drove free to paid and mid-market sales.

Most UCaaS providers do not have a Brand. The services are not as easy to use or popular as Teams and Zoom. You need direct sales, but that isn’t producing the results you want.  I have had dozens of execs come to me thinking the channel was their answer to sales. They think it will be easy. Pay a TSB, fund some happy hours and Bam! sales in 90 days. Only it didn’t work that way. It never works out that way.

Buyers prefer brands because no one ever got fired buying IBM.

So as a UCaaS provider or even a CyberSec vendor, how much branding or marketing do you do to the Buyer? Most of you – NONE. Maybe you get a booth at some buyer oriented expos, but real marketing to Buyers with 6% of your revenue, very few.

You plow through sales people, because you have a ridiculous quota that is not supported by real numbers or marketing or product design or operational excellence.

Then you turn to the channel – the coin operated channel partners that you look down your nose on – and hope and pray that they will sell your shit. Most of you know that RNG and others pay Big SPIFFs – those bastards! – and fat, evergreen commissions to the TSBs along with MDF.  As Craig says, RNG is ruining the channel for everyone. To my knowledge, no company has gone broke due to commissions. Well, maybe one data center/cloud loser.

Let’s look at your company. Is it Channel-ready?

Do you have an ICP? Do you have a Value Prop? Can you explain Why You instead of Zoom, Webex, Teams, RingCentral, Vonage or OneTalk? Do you have Reference Customers?

Those are fundamentals that the partner is going to need to know in order to convince a business owner to buy your shit.

SPIFFs work to get attention. There are over 1000’s of vendors in the channel. If you don’t have a Brand, then you better have another way to raise your awareness. BTW, SPIFFs help to offset payroll for the partner, so they can do the pre-sales and post-sale work. SPIFFs also work if your churn is low. If you churn 2-3%, no SPIFFs don’t work. At one time 8×8 had customer retention at 50 months. You can pay back CAC, SPIFFs and on-boarding with that.

My favorite activity is to go to a conference and walk from booth to booth asking Why You. The nonsense you hear. Very few providers have a formalized reply. And so the partner facing a Buyer won’t either. And for the partner it is far easier to walk into a business with Zoom or Cisco or Microsoft than it is with an unknown provider. Partners have to stake their own reputation on your company.

In that meeting, the partner has to sell not just your company as a viable provider, but that the service will in fact benefit the customer and work. That is a leap of faith – because Trust is required for any sale.

So when CEOs of providers whine about the Channel, I know it is because they are doing a lot of things wrong.

Office Depot jumped into the Channel and hired a big name to run it. It closed the program in less than 2 years time. I surmise the reasons were aplenty, but it just goes to show that even a Big Box Brand can struggle in the Channel.

Do you have a Buyer Profile? A customer profile? A Partner Profile?

I have written about this extensively in Channel Myths, in Kindle format at Amazon or in paperback from Lulu. Or you can hire me to help you fix the partner program so you can stop being angry.  (813) 963-5884 or catch me at ITEXPO in Fort Lauderdale or Cloud Comm Alliance in Delray.  Vonage and Verizon and 100+ other service providers have hired me, why wouldn’t you?

 

 

 

 

 

 

 

 

BTW, on SPIFFs. Private Equity acquired B2B cableco WOW and launched the PE era with SPIFFs:  6X on network is unheard of. So please, stop whining that you can’t afford SPIFFs.  You can IF you can retain a customer, deliver on your promises, bill correctly and have a modicum of customer care.

Someone sent me this Podcast with James Anderson & Kameron on Spotify.  James is a writer for Informa TechTarget that posts on Channel Dive – what kind of name is that?

Kameron spent 3 years at Telarus and now runs a family business called Channel Advisor for vendors.

I agree with James, most people that touch the channel not only do not understand the channel, but can’t recognize the different business model types within that sphere.  This literally is the reason so many channel programs fail. If the vendor is not aligned with the channel partner and its business type, trouble. Period.

Even Kameron struggled with the names of channel types. Agent (now called Trusted Advisor), VAR (box pushers), Inter-Connects (PBX pushers), MSP (managed services is in the name), MSSP (cybersec), ISV (devops), SI (projects) and Referrals/Ambassadors/Affiliates. There are likely a couple of others, but these are the major ones I have seen and worked with and in.

There are also Master Agencies that are now called TSBs and TSDs. They are brokerages that carry the vendor contracts and partners sell through these TSBs in order to get paid commissions.

There are distributors like Ingram Micro and TD Synnex that are logistic partners for Microsoft, Dell, HP, IBM and 100K other vendors that need parts, licenses and hardware shipped out globally for partners to do their business. I worked at a VAR for 3 years and TD was our primary disti. I worked with TD a few times over the years to help them develop a TSB. They just don’t get it.

Ingram has a TSB and a cloud brokerage inside the company, but a majority of its revenue is in legacy distribution.

Distribution can have 100’s vendors because they are similar to Amazon and work through a SKU based system. No SKU, no sale.

TSBs are maxing out at 400 vendors because it is a lot of work to add suppliers to the back office. Even harder to sign a contract with a vendor that gives the TSB MDF and a small quota. Quota is the problem. The TSB doesn’t know if any of its partners will actually close deals regularly for that vendor.

Telecom, UCaaS, CCaaS, CPaaS and many other technologies are not easily SKU’ed.  Check your bills for all those line items and see for yourself.

The podcast and many other folks get confused about the MSP space. James should have had these facts because they come straight from Informa:  “Recent research indicates roughly 341,000 channel partners in North America offer managed services, including MSPs.  Channel Futures reports roughly 341,000 MSPs globally by 2025; North American MSPs are estimated around 150,000 to 160,000 based on Canalys data.”

The exact number of MSPs can vary depending on how a “Managed Service Provider” is defined. Industry pundits like Jay McBain (Chief Analyst at Canalys) often categorize these firms into three distinct tiers:

– Pure-Play MSPs (~43,000 – 45,000 in North America): These are firms that derive more than 50% of their revenue from recurring managed services. This number aligns closely with the United States census figure of 44,584.

– Hybrid Providers (~86,000 globally): These are firms where managed services represent at least 30% of their revenue, but they still rely heavily on project-based work or hardware sales.

– Broad Channel Partners (~341,000 globally): This includes any IT firm (VARs, System Integrators, etc.) that offers at least one managed service contract. North America accounts for roughly 45% of this global market’s revenue.

Now, take any of those figures and realize that 80-85% of these partners do less than $5M in annual revenue; have less than 10 employees; and the only sales rep is the owner. The average MSP has less than 150 customers. The average business is the US has 12 employees.

[12 employees x $100 per laptop for managed IT x 120 businesses x 12 months = $1.7M per year ]

The podcast touched on compensation.

SPIFFs – vendors have tried to get rid of SPIFFs, but then find out that sales dip. Some of this has to do with the partner business model. Some of it has to do with how much work goes into a sale – pre-sale and post-sale effort from the partner.

While many vendors express that partners just throw a lead at them and are not involved afterwards, I say you should change the comp for THOSE specific partners.

If the average sales size if $240 (12 x $20 for SaaS/UCaaS or AI), it is simpler, faster and easier for a partner to sell connectivity than to try to sell SaaS, UCaaS or AI. SPIFFs will get the attention of the partner.

Think about this: the CAC (customer acquisition cost) for cellular involves a phone – $1000. It gives the carrier, price and customer lock-in for 3 years.

In UCaaS direct sales, there is lead gen, SDR, and account reps involved in every sale. What is that cost?

SPIFFs and commissions are success based. You only pay when you close a deal and the customer pays – and stays. (Vendors claw back SPIFFs if the customer doesn’t pay and stay for the contract term.)

Evergreen commissions – I hear it is unsustainable for vendors to pay for evergreen commissions. So far commissions have not been the reason any vendor has gone bankrupt in the 27 years of me being an Agent.

I didn’t understand the comment on the podcast about coin-operated.  Vendors have always thought that Agents are coin-operated – and they treat us that way. Then get mad when we want out success based commission. Someone explain the disconnect?

There are many vendors who want in the channel but don’t like the comp model. They can certainly try a different comp model, but they better bring demand for their services. Big demand. Cable doesn’t SPIFF or pay much commission on cable modems because there is demand. Microsoft pays nickels for MS Teams comp.

As I explain in my book, Channel Myths, the channel does not create demand, we just supply it. But vendors don’t understand the channel – in fact, most consultants, advisors, channel heads and pundits, don’t have a full grasp of the channel, just on a piece of it.

James asks, If this space had an analyst???  I think Jay who works for Informa would question this comment.

An additional thought on Informa. Informa owns Channel Partners, MSP Summit, Omdia, Canalys, Black Hat, Enterprise Connect and more properties (events, websites, research). It bought TechTarget in 2024. The firm says the channel is growing, yet all the channel media is being acquired by one org?! That doesn’t represent growth. Neither does shrinking conference attendance.

Once the podcast starts discussion about how many vendors does Pax8 or TD Synnex have, I gave up.

[When you listen to a podcast or a speech, remember that it is all anecdotes. Mine included. ]

This is from Jay from Informa/Canalys today:

In the cellco space, DISH is crashing. Almost filed BK, own billions to Crown Castle, Am Tower and other supplies for towers and fiber after they acquired Boost Mobile from T-Mo to be the 4th Cellco. Well, now DISH – well, Echostar really, because the parent company swallowed the DISH. DISH got in a fight with the FCC – Techdirt has the snarky summary HERE.

Echostar has decided to sell its 3.45 GHz and 600 MHz spectrum licenses to AT&T for $23B. EchoStar (parent company of Dish Network), announced in September and November 2025, that it sold significant wireless spectrum licenses (AWS-4, H-block, and unpaired AWS-3) to SpaceX for approximately $19 billion total.

That puts the nail in the 4th cellco coffin because USCellular sold its spectrum to AT&T, T-Mo and VZW.

So now it is just an MVNO war.

The largest US MVNOs are Comcast and Spectrum with 9M and 11M subs respectively. These cablecos use a wholesale agreement with VZW from a spectrum sale years ago. They move as much cellular traffic as they can to wifi offload (traffic goes onto their own cable ISP network). Now they are building out CBRS small cells to get further independent of the MNO (VZW). “Charter Communications and Comcast have deployed $922 million in CBRS spectrum and are now converting it into strand-mounted small cells, fundamentally changing the economics of their wireless businesses.”

The cablecos are in a unique situation, ‘Comcast CEO Brian Roberts explained that 3% of Comcast’s geography generates 60% of its mobile macro network traffic.” They don’t have to build out nationwide.

“88% of Spectrum Mobile traffic now runs on Charter-controlled infrastructure, including Wi-Fi, CBRS and cable partner networks. That 88% figure represents a near-complete inversion of the traditional MVNO model, where operators pay wholesale rates on virtually all traffic.”

The MVNO market in the US is awful. Visible, Cricket and Mint are owned by the MNO/cellco, VZW, AT&T  and T-Mobile, respectively. Some now call them brands instead of MVNOs. I think the corporate structure would point to MVNO land.

With Echostar’s Boost Mobile brand dying on the vine, Echostar itself is using AT&T’s network, so technically Echostar and by extension Boost are MVNOs. To be an MNO you have to own and operate the network. dish

I think most consumers try to balance price with reliability. And this twitter user explains why a large chunk of buyers shop by brand: He doesn’t trust the brand. He thinks that MVNOs don’t own the network so they don’t have priority.  (I hate to tell him that unless he is paying $99 per month per line, he isn’t getting priority from the MNO either.)

Peter Adderton is the CEO of MVNO MobileXUS. He calls out all the BS in the MVNO and cellular industry. He posted this: “Seeing reports on Reddit that some MVNOs are now capping their “unlimited” plans, and that plans which were once free are becoming less free. The reality is these offers were never sustainable. They’re designed to grab as many customers as possible, then quietly change the terms and hope most people won’t bother to leave.”

Adderton thinks that the FCC has failed the MVNOs and that no one really wants MVNOs in the US market. Truthfully, MVNOs are just CLECs. CLECs had regulatory cover to offer services they purchased at wholesale in full from the ILEC and charged less for that service. The idea was that the CLEC would gain customers under this wholesale plan, then build out their own facilities. That is what Comcast and Charter are doing. Most CLECs did not build out facilities at all. When the FCC changed the UNE-P ruling and the CLECs mainly folded. Some like Granite and MetTel signed wholesale deals with VZ and AT&T to stave off closing. AT&T started a wholesale program called APEX because wholesale was still a big revenue channel and they didn’t want to lose it.

APEX and VZW allowed for wholesale of the 4G and later 5G networks. Many partners use it for broadband backup, not for consumer cellular.

Everything repeats itself in telecom. There isn’t really innovation. The vendors do the R&D. Then sell that turn-key to the providers. Branding, Packaging and Marketing are the differentiators (if there are any). And that is in all types of telecom – voice, cellular, UCaaS, broadband, POTS replacement and even AI. (Agentic AI is mainly putting a new Lovable face on ChatGPT.)