What are the key trends that will shape the channel in 2023?

Global economic uncertainties and the lingering impact of protracted lockdowns continue to have a significant impact on sales activity around the world. Growing trends towards self-service and increasing demands for rapid delivery are causing many businesses to rethink the way they service their clients.

These changes are also having a significant impact on the channel, which needs to cope with a changing economy. According to research firm Forrester, channel sales now represent more than 75% of total world trade.

As a result, many in the channel are having to restructure their operations to keep up with demand. During the coming year, businesses will have to change their strategies to take advantage of new opportunities while also meeting the needs of existing client bases.

The key trends that will shape channel strategies during 2023 include:

Partner discounting will increasingly be replaced by stronger enablement programs:

Traditionally, discounting has been the most important element of most partner programs. During the next 12 months, the priority of partners and vendors will increasingly shift to enablement.

In the software-as-a-service (SaaS) sector, for example, the initial transaction is becoming less important to technology partners. After the sale, it is the extent to which the product is adopted that is key to avoiding customer churn.

This shift means partners' professional services will be more important than any discount or rebate that is given. Partners will need to be provided with information that is important to end customers and not just to land the deal but also to be successful post-sale with the implementation to drive adoption.

In many cases, this will require a significant rethink of existing partner programs, and during 2023, many will need to be redesigned and budgets reallocated. Where most of a budget may previously have been allocated to partner discounts, this will increasingly be shifted to partner training and enablement.

The nature of the training being provided will also evolve during the year. It will no longer be sufficient to simply focus on 'elevator pitch' approaches. Partners will also need to be trained to focus on what is most important to their customers in terms of their particular business goals.

Channel partners will also be looking for much more assistance on the technical side as their business models shift to a more services-oriented model. Their business will depend on their ability to provide high-value services that drive customer success.

Customer success will replace sales volumes as a measure of success:

In the past, the top metric for measuring partner success and rewards has tended to be sales revenue. Partners progress through different tiers based primarily on how much volume they are selling.

Throughout 2023 and beyond, as transactions become less important, customer success will become the top metric for measuring and rewarding partners.

There will also be a growing trend to move away from the traditional tiered system of recognition. For example, Microsoft has announced it is changing to a point-based system based on competencies, certifications, and partner success.

While certifications and competencies will continue to remain important, the most significant factors will be final customer success and a high Customer Satisfaction (CSAT) score or Net Promoter Score (NPS).

During 2023, the need to accurately capture these metrics will have a significant impact on channel technologies. There will need to be an expansion by existing customer success platforms - such as Gainsight and Catalyst - into partner success. There is also likely to be the emergence of new technologies and new partner success firms that will help businesses to track these higher-priority metrics.

CAMs will be displaced in the channel ecosystem:

During 2023, Channel Account Managers (CAMs) will increasingly be replaced by Partner Ecosystem Managers (PEMs).

Ecosystems are becoming the cornerstone of business growth. This trend is highlighted by large consulting firms, such as Accenture, which are now offering ecosystem consulting services to help companies adopt this business model. Existing channel managers will need to shift their thinking and improve their ability to work with different types of partners in the ecosystem.

Historically, the most popular position in the channel is the CAM. This role involves managing Value-Added Resellers (VARs) and Value-Added Distributors (VADs) to drive transactions and achieve sales targets.

As CAMs evolve into PEMs, they will need to take on a broader role. This is because channel operators are increasingly expanding their partner ecosystems to include regional and global system integrators, managed service providers, and cloud hyper-scalers. This is a much broader role than what CAMs typically had before, so many will have to up-skill or be replaced.

It's clear that 2023 will bring both challenges and opportunities for the channel. By being aware of these top-level trends, businesses will be well placed to enjoy ongoing strong growth.