LinkedIn this morning is buzzing with news that Mitel is going to file bankruptcy to deal with $1.15B in debt. Mitel has accumulated this debt, largely due to financial commitments to its owners, Searchlight Capital, with high interest payments to service the debt. [The telecom universe has many companies that are PE owned and weighted down with high interest debt.]

This financial crisis explains why Mitel wasn’t the winner in buying the NEC assets. Instead the NEC on-premise and private hosting assets went to an NEC dealer, Forerunner. And Forerunner probably has some PE debt as well now.

Some view this move as doom, others feel it is like Avaya who uses BK as a tool.

This does create uncertainty in the market – and uncertainty stalls sales.

Like Avaya, Mitel announced deals with both RingCentral and Zoom. Like Avaya I don’t think this was much more than buzz … for Zoom. Probably the only winner in both deals was Zoom.

Like Avaya, Mitel is focused on UC in on-premise and private hosted. Development is out the door. It is mainly about working with the largest customers to keep them happy. Hence, why Avaya is just working with its Global 1500 customers and all customers with less than 200 CC seats are dismissed. Avaya has presented its competitors with new opportunities. I think Mitel will too.

Will buyers not make parallels between Avaya and Mitel?

SMB prefers on-premise PBX due to a fixed cost. It also doesn’t have personnel to constantly hone and experiment with the communications systems. Out of the box, the comms package has to produce results. A small business doesn’t always get the outcomes they think with SaaS. That is what Mitel and Avaya are banking on, but they don’t want to serve SMB. Avaya has come out and said so. Mitel hasn’t yet.

The Global 1500 Avaya customers are kind of stuck because to migrate off their current duct-taped comms platform would require an interior godfather to evangelize and bet his ass on a new comms platform. That isn’t happening in today’s business environment.

Metaswitch 2.0 was when Microsoft acquired them. Metaswitch 3.0 starts now that Alianza has completed the acquisition.

I have a problem with their PR headline: Alianza Completes Acquisition of Metaswitch from Microsoft to Empower Service Provider Growth and Help Telcos Close a Massive Gap in Services Revenue.  It doesn’t say anything about how they are helping telcos with a massive revenue gap. Not a word. Or really how they would help with growth.

Metaswitch is in the voice network of about 1000 service providers worldwide. For many of them, Metaswitch has a role as a class 4 switch for GR303 and TDM. There is still 30M copper lines in service. Heck, Verizon just moved the NYFD off Centrex!

I don’t see how a wholesale in the cloud softswitch replaces an on-premise class 4 switch for TDM, but I understand that TDM is ending.

Many ISPs just need digital voice. It is where Alianza amd Momentum got their start — tier 2 and tier 3 cableco digital voice. It is where many ISPs will migrate now that the UCaaS battle has been won by Microsoft (I say that tongue and cheek, but I hear it from folks.)

Approximately, 700 of the telcos will just pay software maintenance. There are about 700 mom-and-pop telcos with less than 5K lines.

That leaves 300 to possibly choose Alianza for their next softswitch.

As RAD-INFO assists service providers with switch decisions, there are many questions to answer.

• Does the platform scale? We don’t know how many lines they have now. We don’t know if it can scale to 30M lines.
• Are they financially solvent? There is debt from the acquisition. Can the company stand on just software assurance?
• How will they afford all those Metaswitch people? That is a significant payroll.

These are questions that need to be asked, because no one wants to migrate to a new platform to do it again in 2 years.

Got this in email today: “a recent Channel Marketing Association study found that over 60% of channel companies spend more than $250,000 per year on events—but only 30% track or see measurable ROI.” Well then, if only 30% track this spending, the results kind of are skewed or irrelevant.

Most companies do a lot wrong at events.

The booth graphics don’t give a simple, clear message. Often the messaging is too much (TL;DR) or vague or me, too. At the very least, you want the booth and its graphics to make people stop or remember. Think about all the TV commercials like Liberty Mutual or GEICO or Progressive. The colors are the same. There is a recognizable mascot, even if it is a human. The message is the same, repeated over and over. That is branding in a nutshell. Create recognition of your  logo, your color, your Value Prop or motto. Make it yours.

As I walk around expo halls, I find myself looking at booths unable to discern what the vendor does – and ask myself ‘What were they thinking?” They spent money and didn’t even add a tag line like CyberSec for MSPs or White Label VoIP. How many people are going to ask you what you do? Not many.

If you are spending $250K, that is at least one event per month, so having a marketing plan for these events is important. The plan should be about the brand, the message, the action plan, what you would expect to gain (why and how).

The people in the booth need training. What is the goal? What is the KPI? What should we be asking? What is the profile of the partner we are seeking?

Most booths have the people talking amongst themselves – or looking at their phone. When I have manned a booth, we gamify it. Talk to everyone who walks by. Be friendly. Say Hi.

If you have a tchotchke, offer it. You don’t want to take it back home. It at least allows for an opening question, “Do you want one?” If nothing else, your name gets out there.

Some vendors check ROI on a show by how many new partners were touched. It has to also be how many old partners were touched. How many meaningful conversations?

It would be great if you were able to just talk about deals – how many deals were closed because that person walked by our booth at that show – but that takes sophisticated tracking.

What if the partner saw you at three shows  before they engaged with you? Several partners and I joke about how many vendors will be in Vegas once. We will see them in Vegas and then never again. Partners want to know you are long for the channel, not looking for a quick hit or just dipping your toe in. Why? Because if we sell your stuff, we want to get paid. Can’t get paid if you are out of the channel in 2 years.

What is your sales cycle? If it is 6 months, then you won’t see a sale from any partner for at least a year. Why? Meet them, court them, get the contract signed, on-board them, get the first quote and close in 6 months. And if you are selling to Enterprise, the sales cycle and budget cycle could be 2 years! Most Channel Chiefs don’t last 2 years.

A smart plan is a recognizable booth with attentive friendly staff who are scheduling partners for a webinar or a call to learn more, but who are also disqualifying partners who aren’t a good fit. At most channel shows, there are a mix of channel types – MSP, VAR, TA, TSB – which are you looking for? Know! Stop wasting time with people that aren’t a good fit.

If you don’t have a profile, you don’t have proper messaging, you haven’t trained the staff, then you are wasting money even if you aren’t tracking it.

Need help? Give RAD-INFO INC a call at (813) 963-5884

This is purely from personal experience, but between 2 TSBs, I truly think they are maxed out. They have no human bandwidth left to place new orders, change orders, and follow up on anything outside of mainstream stuff.

Scansource filed that their TSB, Intelisys, grew 4% YoY.

When you consider that most renewals for network, which is more than two-thirds of orders, are at the same or a lower rate and new orders are at a slightly lower rate, then growth requires a significant amount of volume and scale to process that volume.

If you want to debate that network renewals are not a growth sector, look at ILEC wireline year over year. VZ Business, Lumen and AT&T have all taken huge write-downs in each sector.

Even on the voice side, migrations to SIP trunking is a reduction in revenue. Recently, the NYFD moved off Centrex. Verizon was the winner and the loser. That was a write down of revenue.

Two months ago, a client was hit with a $13K PRI bill. The move to SIP Trunking will reduce that by almost 98%. Imagine all the 30M-40M POTS lines and PRIs that bill for $100 per channel that will be replaced — that’s $3B in revenue that will likely become $600M. Commissions will also shrink proportionately.

So the TSBs have to crank out an enormous amount of orders – renewals, MAC/Ds, new – in order to grow. I think they have maxed out their bandwidth to do so. And growth is maxing out at 4% per year on a ARR rate.

I can see why the PE firms that have $675M invested in “super-agencies” and TSBs are wondering how to cash out.

If the loans I can see in EDGAR are for 13% interest, it isn’t sustainable.

More and more when a Channel Manager is hired, there isn’t a lot of training. The on-boarding consists of the vendor portal, product portfolio and maybe the sales process. Everything else is on the job training. Sadly, the only expectation is production based on a couple of KPIs which are usually number of new partners signed and sales dollars.

James Anderson wrote a good article about CM churn. Yet the major reasons for churn for partner managers is lack of training and lack of fit.

Like partners who have had a long string of success selling voice and data, channel managers have had a similar streak – selling transactional, replacement products. In the CLEC hay day, the Integrated T1 was THE product for SMB. It provided some voice lines and some data. It was replacement at its peak. It replaced POTS. It replaced other T1’s. Today, up to 85% of orders at any TSB is for network.

Then you take that partner, who sells transactional products, and want him to sell cybersecurity or UC+CC, which are NOT replacements or transactions or a short sales cycle. Do you grasp the issue?

On the other side of that is the channel manager who also has spent 10-15 years helping partners order network – T1’s, Metro E, DIA, broadband, maybe some frame relay back in the day or an MPLS network or two. Now these CMs have to learn a new company, new portfolio, new systems, new culture, and find partners to sell the new. Unfortunately, it is rare that the old partners will switch for a lot of reasons.  We saw this often when CMs who came out of cable went to UCaaS vendors. It wasn’t usually successful. The sales cycle and sales process are different than network.

All this is set against pressure due to a short runway. Most partner programs take three years to succeed, yet most partner program heads only last 20 months! Twenty months isn’t even enough time to plan strategy, hire chess pieces to execute the strategy and let the strategy play out. That’s one reason there is so much churn.

The other piece is that when word gets out that a vendor has a high pressure program, who wants to go work there? There is one UCaaS player who has an awful employment reputation due to random ass hiring and firing.

There is that debate about the Relationship sin the business. Let me describe it a different way: at any given time there are 3 sales being made simultaneously: the partner has to believe the CM; it has to trust the vendor to not only deliver the goods but to pay them; and it has to accept that the product will benefit the customer. At the same time, the Buyer has to trust the partner, vendor and product. A Brand like AT&T, Comcast, Verizon, Cisco, and Fortinet helps to bring some trust. An unknown vendor has an uphill climb here.

Even aggregators have a tough time against the Brands. And the cablecos now do aggregation!

People that don’t understand the channel or who maybe came from hardware, don’t really grasp these nuances.

The trust thing is even bigger when you want to sell to Enterprise. Ask 8×8, who struggled to sell to enterprise – and had to buy Fuze to beef up its Enterprise. Meantime, RingCentral had the hype machine pumping out the noise that they were the choice of Enterprise. If that were true, Microsoft Teams wouldn’t be sitting on 400M desktops.

As a vendor, you are asking the partner to trust you and then borrow the partner’s reputation to acquire a customer. That is a big ask. Even if I like the Channel Manager and we have worked together before, at a new vendor, the CM lacks domain knowledge; deep connections to get things done – like billing errors fixed, escalations on repair, and maybe customization.

The Channel Manager is the conduit to the vendor for the partner, but without training and a really good manager who can get things done, it is a chance to take.

This quote from James’ article: “On the other hand, the notion that the channel is all about relationships might miss the full picture, one source close to private equity told Channel Futures. This is the idea that the channel is only about relationships. If vendors are winning channel business solely because of existing relationships between channel managers and partners, what does that say about the value of the vendor’s product? On some level, there must be something about the vendor’s product or services that must motivate the advisor to recommend it. If that’s the dynamic, then the best channel managers do more than bring a relationship. They help the partner navigate the ecosystem of the vendor they work for, guiding them from quote-to-cash and advocating for them.”

That assumes that the vendor has a good product, which isn’t always the case. That also assumes what I just described: that the channel manager was properly trained and on-boarded and his manager has deep connections at the vendor. PE can make jumps like the product is great (or more likely on parity with the market) but unless they are sitting with Buyers, they don’t have a clue. Does the vendor have a reference account from the major verticals that can describe the outcomes clearly? Has marketing done its job?

BTW, he said the best channel managers – that isn’t all of them and that doesn’t necessarily mean they were great at Vendor T and will be great at vendor C due to the on-boarding, the program itself, the processes, the connections, and the domain knowledge. I don’t understand how the smart money guys don’t see that.

There are so many pieces to a successful program puzzle. And most programs are missing pieces. Most partners will just struggle through it for certain vendors – the big names and their favorites. But the process is pretty broken throughout. The CM is supposed to be there to help close those gaps or smooth things along, but when the CM is on the road, recruiting, on-boarding, selling and managing partners, there isn’t a lot of time to fix process issues.

This may sound mean but not everyone has 10 years experience; sometimes they have 1 year of experience 10 times.

The joke is we go to expos to see where people are working. Some CMs have spent 15 years with 7 different vendors. Some of it is timing, training, process, the program, the vendor and some of it is the CM himself. The way everything has changed in just 5 years, if anyone is still doing the same thing as six years ago, their success will be stymied. You have to keep learning in this industry.

Need Channel Manager Training? Call RAD-INFO Inc at (813) 963-5884, we have trained over a 1000 channel managers!

Or get the books – Secrets of Channel Management and the new one, Channel Myths: Strategy and Advice for Channel Leaders.