A scenario where what was promised isn’t delivered is all too common in the b-to-b channel world when suppliers fail to properly align with and train partners that have been brought into the fold to deliver a range of pre-sale and post-sales services. This brief defines four pillars of best-in-class service channel relationships and shares the components that make up each.

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Research Brief
Business travelers planning a trip often head off to a favorite travel Web site
beforehand to book transportation and lodging. Hopefully, there won’t be
too many instances where the traveler finds that an expected window seat
resulted in a middle, a full-size rental car became a compact and a five-star
hotel was really a dump.
Such a scenario where what was promised isn’t delivered is all too common in
the b-to-b channel world when suppliers fail to properly align with and train
partners that have been brought into the fold to deliver a range of pre-sale and
post-sales services. In this brief, we define four pillars of best-in-class service
channel relationships, and share the components that make up each.
One: Compensation
Suppliers and partners commonly strike deals for a partner to offer pre-sales
services such as proof-of-concept pilots or post-sales services that can include
implementation, training and maintenance. In either case, a first step will be
to determine how a partner will be compensated for services rendered, with
considerations that include:
• Margin calculation. If a partner generates the sale, chances are it will
receive a purchase order (PO) from the customer, place the order with
the supplier and then coordinate delivery. If the partner has committed
resources toward obtaining the sale, its payoff should come in terms of
margin, which is calculated as a commission payment or in the form of a
discount. Margin for reselling services can vary anywhere from 10 to 15
percent (vs. 20 to 40 percent for products); exact numbers tend to be based
on the partner’s contribution to the sale and their level of exclusivity.
• Dealer services index. Suppliers that want to compensate partners based
on variable margin can employ an approach called a dealer services index.
Using this method, suppliers will assign a percentage to each task (e.g. 10
percent for pilots, 5 percent for presentations), then add up the services
performed to calculate partner payments. Such an index can be implemented
by adding checkbox fields to deal records in partner registration systems and
allowing channel managers to check off services as they’re performed. To
avoid channel conflict or abuse, changes to the record should be transparent
and recorded into the audit history.
• Booking process. Whether an order is booked by the supplier’s sales
force and then brokered to a partner or transacted by the partner itself, a
The Dynamics of Service Channel
Partnerships
Managing a service channel
partnership entails more than just
defining a set of services and training
partners to fulfill them
Clear guidelines for what you will pay
for services – and what you expect
in return – are keys to building a
successful service channel
Standardizing the way that services
are delivered and training partners on
these standards increases customer
satisfaction and loyalty

2. Research Brief
© SiriusDecisions. All Rights Protected and Reserved. 2
customer will typically issue one PO and be invoiced for
both product and services. The process should be simplified
so that the customer only sees one invoice. Suppliers should
make it easy for partners to add services to the solution
mix by “standardizing” them so they can be included
as a line item; include standard services (e.g. three-day
implementation) in channel price lists with reseller margins
clearly spelled out.
Two: Delivery
Consistency is key to delivering services through channel
partners. Properly enable these partners to deliver by
focusing in three key areas, including:
• Services blueprint. If you want partners to deliver services
in a standardized manner, a blueprint must be built and
shared. A services blueprint should include a step-by-
step description of the service, and who within a partner
should participate in each step. Use historical data and
anecdotal feedback from internal service reps to document
why service engagements fail and communicate these
pitfalls to channel partners both within the blueprint and
during training programs. Finally, provide a detailed list of
deliverables that partners can include in their statements of
work to help customers better understand the service that
will be delivered.
• Certification practices. Certification can be used to ensure
that a partner can meet a baseline set of criteria when
delivering services to customers. Moreover, individual
services can be tied to specific certification “tracks” so that
only partners certified at higher levels can deliver more
complex services, while those at more basic levels are
constrained to delivering rudimentary services.
• Service innovation. As service partners learn through
hands-on experience, they often develop best practices
for delivery. By including training that teaches partners to
record key innovations and then share them with suppliers,
the entire service channel will improve. Consider building
newsletters or blogs that can be utilized to socialize best
practices; you may also choose to reward individual
partners to encourage them to develop and share service
innovations.
Three: Sales and Marketing
Delivering services is one thing; selling and marketing them is
another. If you’re looking for your partners to hunt for their
food rather than have it fed to them, they will need additional
layers of preparation. Here, a best practice approach includes:
• Sales readiness. Business development reps at channel
partners are continually challenged to scope projects and
deliver estimates, which if done incorrectly can prove very
costly in the long run. Consider developing pricing tools
and guidelines to help eliminate errors when estimating
the amount of resources and duration of projects for
customers. Also offer standard statements of work, change
order requisition and detailed service descriptions that can
be used in request for proposal (RFP) situations; this will
help eliminate needless partner hours scouring through
service literature and training manuals, and promote
response agility.
• Partner adoption. Getting partners to use a portal to
access training materials or customer-ready content is
challenging at best; channel marketing can mitigate this
issue by promoting how the partner stands to win by
adopting new service offerings. If retooling existing staff or
processes will be required to offer the service, communicate
it to executive partner staff and share how their business
will ultimately benefit from offering it.
• Demand creation. There are a number of ways that
suppliers can drive demand for services to partners. Using
a partner portal, partners can solicit services from one
another through service catalogs, while partner locators
broken down by product or types of services make it easier
for customers to find what they require directly from a
supplier’s Web site. Leading companies often set up partner-
specific profile pages within their own Web sites, then track
visitor behavior to present prospects with proper content,
customer reviews and partner ratings.
Four: Operations
The wrapper around a best-in-class services partner channel
is a set of day-to-day processes, systems and metrics that help
partners operate in a standardized, measurable manner. Our
final set of specifics include:
• Process playbook. Support for key processes such as
booking orders or becoming certified should be spelled out
in a channel operations playbook. If these processes involve
resources outside the channel organization, key interlocks
should be assigned between organizations so that single
points of contact can be established in order to facilitate

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Research Brief
inter-departmental collaboration. For example, key support personnel should
be identified and escalation processes defined that can be relied on when
partners are reporting issues that crop up during customer installations.
• Portal 2.0. In the brief “The Evolution to Partner Portal 2.0,” we describe six
key areas of functionality for the next generation of partner portals: creating
demand, driving adoption, assisting buyers, influencing behavior, managing
opportunities and building knowledge. These areas should be applied to
service channel partnerships so that suppliers can maximize their ability to
raise awareness and adoption for service opportunities with partners and
customers alike. Suppliers should personalize the portal experience so that
partners can easily find content relevant to their type of partnership, rather
than wholesale content that may be useful to other types of partners (e.g.
distributors, resellers).
• Dashboards and KPIs. Your measurement strategy should include data
that can serve as leading indicators for future performance, such as the
number of partners reaching certification. Other dashboard elements that
are meaningful to developing a service channel include: average margin per
partner, which can indicate what level of contribution partners are delivering
in variable margin situations; deal frequency, which provides an idea of how
quickly partners are moving from customer to customer; and opportunities
assigned by partner, which can show whether channel managers are playing
favorites and point out which partners are performing at higher levels.
The Sirius Decision
Historically, suppliers have recruited service partners with tantalizing
statements such as “for every dollar you sell, you can deliver seven times that
in services.” These days, partners are skeptical of such statements; while they
listen carefully, they’re not about to retool themselves to deliver a new set of
services just because suppliers want them to. Suppliers must present partners
with a comprehensive services strategy, and more important, demonstrate
how they will help them market, sell and fulfill. Otherwise, if your organization’s
services are delivered ad hoc by partners without the tools or support they
require, be prepared for the customer to hold you – not the supplier –
accountable.