Podcast 58: Inside Channel Training Systems with Brett Strauss

EPISODE 58: CHANNEL TRAINING SYSTEMS

Brett Strauss, President and Founder, NetExam

Today, I have the pleasure of comparing notes with someone who’s been defining extended enterprise learning since its earliest days — Brett Strauss, Founder and President of NetExam.

More than 20 years ago, when the commercial LMS world was starting to hit its stride, most companies were focused on HR-oriented employee training. Every LMS vendor wanted a piece of that big pie. But Brett saw the market potential for learning systems in a very different light.

At that crucial time in his company’s history, he decided to go all-in with channel training, leaving employee learning behind. Now we know what a wise decision that was.

Every time I get a briefing from Brett’s team, I see innovative new features and use cases. And today, I’m inviting you to learn the latest about channel training systems along with me. Tune in for the full story…

CHANNEL TRAINING SYSTEMS – KEY TAKEAWAYS

• If you’re familiar with employee learning systems, it’s important to know that these platforms differ from channel training systems in multiple ways. There are good reasons for these differences.

• Partner programs face unique business challenges and audience needs. That’s why channel education is more likely to succeed when it’s supported by an LMS built specifically for this purpose.

• New capabilities are being added to channel training systems all the time. But it’s not about adding bulk with “nice-to-have” features that are rarely used. The goal is to add value by helping companies and their partners measurably improve sales and customer experience.

CHANNEL TRAINING SYSTEMS – Q&A HIGHLIGHTS

Welcome, Brett. Why don’t we start with some background about NetExam?

Well, 20 years ago, I developed a content management system with our CTO, Himansu Karunadasa. But at that time, about 700 other companies were doing the same thing. It was a pretty brutal lesson.

Then one of our clients, McAfee, asked if they could use our CMS for training. We agreed. So they invested in custom development for our team to build a learning management system around the CMS.

McAfee started using our system to train channel partners, so the features we initially developed were specific to those needs, not HR. And after a couple of years, we decided to ignore the HR LMS side altogether.

At first Himansu objected because HR represented 95% of the LMS market. But I was interested in the other 5%. What if we could get 100% of that segment? It was a big chunk of the market and it was growing. Plus, companies like McAfee may have 4,000 employees, but they’ll have 75,000 channel partners. Those numbers are really attractive.

Yep.

On the other hand, organizations do spend a lot more on internal training. You might invest $2,000 to $4,000 per employee. Whereas on external training, you might invest $50-$100 per partner. But with so many partners, the numbers still look good.

That’s why we decided to focus exclusively on the channel. It was very freeing, because it allowed us to develop only the kind of features that benefit channel partners, while keeping us from diluting our business.

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Sure…

Actually, I think you see a lot of that dilution in the market among HR LMS companies that are attempting to sell into the channel market.

Sure, they have courses and exams and quizzes and stuff. But those LMSs aren’t really aren’t designed for the same animal. So organizations using those HR systems for channel programs tend to come up short. Or they use patchworks to solve problems that are unique to the channel.

And often, they lack the experience to understand how other organizations succeed with channel training systems. Do you agree?

Yeah. It reminds me of the Cheesecake Factory. You can get American food, and Chinese food, and Italian food. But none of it’s really that good. They’re trying to serve something for everybody.

But I’m a big fan of being very specific — an inch wide and a mile deep. Because if you’re trying to solve a specific problem, you can build a better product when you use a scalpel instead of a butcher knife.

Of course when you do that, you cut-out a large part of the market. But over the past 20 years, how many HR LMSs have come and gone that were constantly fighting over the same accounts? That’s a pretty tough market to compete in. I just felt the channel space was being underserved. And it really was.

Why don’t you take a step back and define the channel space for us?

Sure. An HR LMS is designed to help employees go from the mailroom to the boardroom in 15 years. It’s about personal growth and development of an individual. Through education, they can move up through the ranks in your business.

On the other hand, a channel LMS is built to help a partner organization go from $2 million to $5 million in sales within the next 3 years. It’s about helping people in other organizations sell more of your products. When this happens, both businesses benefit.

However, partners aren’t likely to have an exclusive relationship with your company. They’re actually likely to be selling products from some or all of your competitors.

In other words, someone doesn’t call a software salesperson and say, “Hey, I need 50 seats of McAfee.” Instead they’ll say, “Hey, I need 50 seats of antivirus. What do you recommend?” That partner is going to make a recommendation. And they’re probably selling products from multiple competitors.

This means that, as a software manufacturer, you’re fighting not only for a relationship with the partner organization, but also for the individual that answers the phone and completes the sale.

Right…

Now, don’t get me wrong about HR LMSs. They are critical. We recommend them. And they’re great for what they do. It’s just not what we do.

So when you adopt an HR LMS for a partner training program, you usually need to use some band-aids and electrical tape to fill-in gaps where that system doesn’t meet your needs. You can pull it off. But you’re really coming up short. You’re not getting all the benefits you need. And there are a lot of unique benefits with a channel LMS.

Good point. You’ve mentioned that you work with software companies. Does channel training extend to other industries as well?

Absolutely. We’ve worked with almost every kind of organization. But it’s important to remember that whenever you’re trying to train people who aren’t employed by your company, there are challenges.

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With employee training, I control you, right? I can tell you to complete sexual harassment training by next Thursday, or don’t pick up your paycheck. It’s easy to get a 100% completion rate. But if I want you to finish my sales training and you’re employed by my business partner, that’s a very different thing.

In this world, there are only two ways to get training done. It’s threats and bribes. Period. I’m either going to threaten you, or I’m going to bribe you.

Now, as a partner, I can’t threaten you because you don’t work for me. But I can bribe your boss. I can start giving you leads or increase the margins on deals you close if your organization achieves the training goals we’ve established for you.

This means partner CEOs become the threat. They’ll tell their employees, “Do this partner training because it benefits you, me, and the manufacturer.”

Mm hmm…

Another way to get partners to participate in training is with a deep analysis of its effects. I can look at your sales goals. Then, I can look at the performance of people after they complete training. I can look at this historical data for a large group of people. Then I can set very specific expectations. For example, I can say, “If you complete this particular course, you should see a 3.7% increase in sales this year.”

As a partner program provider, you really need a deep understanding of the cause and effect of channel training. Because other companies are trying to convince partners to do their training, too.

There’s only so much time in a day, and most of that must be spent either on the phone or closing deals. So how can you, as a manufacturer, stand out and get a salesperson to devote valuable time to your training?

Makes sense. You mentioned helping partners increase sales. Is it only about that? Or do partner organizations face other business challenges, too?

Well, you train your channel because you want to be sure their customers have a better buying experience and are happy with your product, right? So, if you’re representing my brand, you basically have my logo on your shirt. And if you’re not doing a very good job of representing my company, then it reflects badly on me.

That’s a tough spot to be in, because I don’t control you. So I need a system that encourages you to be the best representative of my brand that you can possibly be.

It doesn’t matter if you’re selling hardware, or widgets, or it’s a services business. I want to make sure anyone who represents my company does the best job they can, and the customer experience is positive. I want to be sure their customers get the right recommendations and buy the right product. And as they use that product over time, they’ll want to come back and buy it again.

The end goal is always the customer. How do I make the customer happier about my product — especially when I can’t directly control the people who are selling my products to them?

Great point. So, let’s talk a bit about certification. What role does it play in channel partner training, and what’s unique about that?…

…FOR COMPLETE ANSWERS TO THIS AND MORE QUESTIONS ABOUT CHANNEL TRAINING SYSTEMS, LISTEN TO THE FULL 30-MINUTE PODCAST!

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