Reseller exclusivity in the marketing automation market: Is Eloqua making the right move?

All,
Thank you for a great discussion and some very well articulated points of view. It’s interesting to see the discussion of this decision as it plays out. One idea that has come up frequently in the discussions is the idea of a consulting organization being able to be an unbiased advocate for the customer. This is an idea we truly and whole-heartedly support, and in many ways was a fundamental driver of this decision. There are many organizations that do this in the market, and do it very well – Forrester, Sirius Decisions, Raab Associates, to name a few. These organizations decline to represent and resell vendors because they provide an unbiased view on the market to potential buyers.

In a reseller scenario, however, the economics and the loyalties become more murky. Resellers, as a general matter of practice, are “loyal” to the vendor who brings them into a deal. While they might represent multiple vendors as a business, in that deal, they really are representing one vendor. We have long strived to be as transparent and upfront with our customers in every way possible, and in looking at the structure of this situation there was a glaring conflict of motivations. We are much more comfortable engaging with customers when we can look them in the eye and accurately represent the motivations of everyone at the table. If we are working on the opportunity with a partner, they are there to provide added value and advice, but will not suggest that they are an unbiased advisor.

As the leader in this rapidly growing and maturing market, we felt that the burden was upon us to make the relationships much clearer to customers. Independent consultants in the space provide unbiased advice, and that is excellent. Resellers provide added value and guidance, and that is equally excellent. However, customers deserve to know why they are receiving the guidance that they are receiving. Others in the space may choose to blur the line between what is an independent consultant and what is a loyal and economically motivated reseller, but we chose not to.

This is the reason why leading organizations like Salesforce.com, Successfactors, and most others pursue a similar structure. Transparency of intent is the best thing for customers, and for the market in general.

We remain very respectful of The Pedowitz Group, and their results in the market place. However, as we and they both looked towards the future and decided on the organizations we strove to become, we found that our visions were not as aligned as we felt our customers deserved.

We hope that this move to a greater level of clarity and transparency is as beneficial for the market and our customers as we intend it to be. As always, thank you for your insights and contribution to a very important discussion. I look forward to observing the discussion moving forward.

Steve

A marketing consultant should look out for their client's best interest first and their relationships with vendors second. In other words, consultants like Pedowitz should either be a reseller and commit to one partner, or sell their clients the best solution for their needs.

Marketo’s CEO, Phil Fernandez, wrote a thoughtful commentary on this issue at:
http://blog.marketo.com/blog/2010/09/putting-the-customer-first-in-the-channe...

We think Eloqua’s move is unfortunate — for The Pedowitz Group, of course, since this directly affects their business — but also for the market at large, because there’s no way this is a good thing for customers.

At Marketo, we think reseller and channel independence is best for the customer. An independent partner can evaluate multiple solutions and pick what’s right for the customer, and can work to share best practices across the entire industry. We trust that our partners have the integrity and processes necessary to protect our IP, and are confident enough to let our partners represent any solutions they think are valuable – knowing that we will win more often than not on an on an open, level playing field.

A major portion of my 20 year career has been spent working with reseller/VAR channel partners, partnering with Microsoft, and working with SI's and ISVs. The one area that almost always creates a rift is the discussion of exclusivity.

(Full disclosure: I am a big fan of Eloqua, a former customer, and we do provide referrals and service existing Eloqua customers.)

With our company, we want to present the best solution that meets the customer's requirements and frankly that's what our customers want.

I think Eloqua's move is dangerous for their business and may create some shudders with their other top certified partners. While some technology vendors may require exclusivity, most do not. Yes, I get the whole discussion of protecting IP. However, it seems to me like Eloqua is afraid of unethical behavior from competitors or partners. I would think that in order to build a trusted relationship with partners, which in turn helps innovation, the best partners should be given the option of who they represent.

This will be interesting to see how this plays out. While I am still an Eloqua supporter in most instances, I don't support this decision and I admire Pedowitz for sticking to their guns.

Question: Which of Eloqua's certified partners elected to drop other vendors?

Cheers,
Brian Hansford
President
Zephyr 47
www.Zephyr47.com

This is an invaluable discussion to have for both vendors and the channel community as it addresses implications for both vendors and customers.

I would like to add a third perspective: that of the VAR or reseller.

I just published a post that discusses the business risk for VARs when the reseller goes exclusive with a vendor.

Hope you find that it brings some insight:
http://www.directimpactnow.com/blog/index.php/2010/10/07/the-risky-business-o...

Best,

Robert Lesser
www.directimpactnow.com/blog

www.plrprivatelabelrights.com/plr-reports

A marketing consultant should look out for their client's best interest first and their relationships with vendors second. In other words, consultants like Pedowitz should either be a reseller and commit to one partner, or sell their clients the best solution for their needs.