What I see coming for the channel in 2020: Part 1
Preparing for this year’s list of future channel trends has been an immersive experience, to say the least.
To sum 2020 up in simple terms, we are seeing a monumental shift in how buyers acquire products and services and how companies are reacting with their go-to-market and routes-to-market strategies.
Indirect Sales Will Shrink Every Year For The Next Decade
We are watching several buyer trends in this area. First and foremost, 73% of B2B buyers report that buying through eCommerce, web direct, or marketplaces is very convenient. Consumer trends, such as direct to consumer, are starting to shift into business. Brands are developing the capability to sell and fulfill directly to consumers, and this will extend to their B2B buyers, as well.
The cloud and emerging technologies such as AI, automation, and the internet of things (IoT) are growing quickly and carry lower indirect percentages than some of the legacy technologies they are replacing.
The $2.26 trillion of indirect technology spend will continue to grow but grow more slowly than direct sales causing the 64% split to drop each year for the next decade.
Marketplaces Make Their Mark
Forrester is predicting that 17% of the $13 trillion in B2B spend will flow to marketplaces by 2023. While some of these marketplaces are indirect (e.g., Amazon or Alibaba), most of them will be run by big tech vendors (e.g., Microsoft, AWS, Google, Dell, Salesforce, or IBM).
I foresee 20 “super” marketplaces taking a sizable share of this marketplace revenue and creating a whole new set of tech jobs (such as marketplace SEO, community managers, and ecosystem strategists).
Channel Leaders Contemplate A Trifurcated Channel Model
For 38 years, the channel has been synonymous with resellers and transacting partners. Programs have been anchored on precious metal (gold/silver/bronze) pyramid schemes, and the partner journey has been predictably linear from recruitment to onboarding, incentives, co-marketing, and management. In 2019, we saw Microsoft announce that 7,500 new partners were joining the program each month. What it didn’t announce is that 80% of those partners are nontransacting.
What is a trifurcated channel?
–> With buyers spending 68% of their journey digitally before speaking with a salesperson (direct or partner) and an astounding 71% of them reaching vendor selection after a digital-only journey, brands are wising up to the importance of getting in front of customers early and often. Creating an “influencer channel” made up of affinity partners, referral agents, affiliates, advocates, ambassadors, and alliances is critical to success in 2020.
–> The traditional “transactional channel” doesn’t go away. In fact, those partners that have spent years on the “long-tail” list may find a home somewhere else in the program that has, up till now, only pushed them to resell. –> Because almost every company in every industry is thinking about or actively converting to a recurring, subscription-based model, a new “retention channel” is starting to take hold. Knowing that the customer journey never ends in a subscription scenario and that brands will need to re-earn a customer’s business every 30 days, partners that can drive adoption, ongoing customer experience, and the ability to upsell and cross-sell become critically important.
This post was written by Principal Analyst, Channel Partnerships & Alliances Jay McBain, and originally appeared here.
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