Channel Improvement Planning – Beware of Shortcuts that will Increase Costs

Chris Walter — Wed, 08 Feb 2012 17:36:00 -0500

Now that you are fully committed to looking for ways to improve your partner channel overall performance, one of the areas you may be considering is relying more on your channel distributor, but beware. This is a particularly popular approach for companies that want to cut costs and improve the efficiency of their coverage of SMB. Here is a common scenario I run across:

“For years I’ve been leveraging my own resources to support my channel partners. It’s how we’ve always done it, but this year I decided to do something different and take the SMB end of my product segment and rely exclusively on my distributor to support the business partners. It all seemed to make sense –it was a way of reducing my support cost while continuing to drive the same revenue performance.

è However, my sales almost immediately began to go down. What went wrong?

Here is what happened. Distributors do an amazing job in technology distribution channels. In a business model fraught with risk, year in and year out they get it done on thin margins. While they run programs for vendors and may provide segmented sales teams for larger companies – at the end of the day their teams are there to facilitate the orders of resellers. In other words, they are predominately brand agnostic–they are focused and motivated on moving products. They satisfy brand preference and do not drive brand preference in the market.

Instead, properly recruited and developed channel partners have a short and long term vision about what they are trying to accomplish for your product or service, within a specific market, and for the relationship they have with you. They have skin in the game, they understand the nuances necessary to anchor into a market, and they ultimately serve as your best brand ambassadors. Channel partners are an extension of your sales organization and, without your direct engagement, how would you expect your interests and your brand to be properly represented?

Main piece of advice: Fight the temptation of quick fixes and focus on what is more effective.

While the move to a distributor supported partner channel model may seem like a quick fix, at the end of the day it is not effective and will ultimately be the most costly choice. A move like this will not only cost you in sales, but you’ll then have to pay the expense of reestablishing your channel partner relationships and rebuilding the loyalty you’ve worked so hard to develop over years.

I hope this article helps shed some light on what to avoid during your channel partner improvement efforts, and look forward to your comments. Also, if there a specific aspect of channel partner improvement you’d like me to blog about, please don’t hesitate to contact me.

New Year's Resolution: Improve Channel Partner Fitness (Checklist)

Chris Walter — Tue, 31 Jan 2012 15:46:00 -0500

Now that 2012 budgets and company objectives are in place, sales and marketing executives are looking to meet revenue goals the most efficient way possible ---by increasing the health and performance of channel partners. As these sales and marketing executives take a look at their current channel activity, they are asking tough questions such as:

- My market share is eroding, my partner channel’s sales are declining and the usual “fixes” don’t seem to be helping. What’s changed? (The economy excuse is getting old).

- What is the best way to identify the root cause of the decline and underperformance of my channel partners? (More training and channel investment is getting harder to justify).

- If we miss an opportunity within a market, is there an opportunity to course correct and get a second chance? (How do I save our investment into a market/specific relationship?

- How do we expand/manage new channels with half the budget and more activity? (This year’s underperformance can’t happen again).

The key to successful management of channel partners is ongoing analytics. Not just the sales analytics (are they selling products or not) that most of us focus on but other data points that capture the nuances that help us understand exactly how each relationship can be maximized.

It may seem counterintuitive, but partner level data down to the greatest level of detail is the right starting point and can yield a gold mine of information that will give you the tools you need to “turn the ship around.” Below is a quick checklist of some of the other analytics to capture and consider when developing a channel partner improvement plan:

Sales Consistency – Look for trends where groups of partners have become less consistent in sales over a period of time. With a quarterly view over a couple of years, you may see a trend where a segment of your partners have reduced purchase frequency – during good overall channel performance you may see purchases vary quarter or 3 of 4 quarters and that trend will shift to spotty purchases down to 1 quarter in four. It is critical to identify the cause of this change in brand loyalty and sales performance these partners are exhibiting.

Product Categories – Here you may see segments of your partner channel moving from one product category to another. During times of poor performance you may find this new focus provides low average sales price, lower market demand, and other negative consequences. You might ask why partners would engage in something that seems to be counterproductive for them – look to the market. What you don’t know about what is happening in the market is the most likely cause in this behavior change.

Product Road Map – You may find a segment of partners being “left behind” in your product roadmap. Good performers will most likely follow the roadmap and take full advantage. Poor performers may stick with what they know and are comfortable with. This was seen by many technology companies when roadmaps went from traditional switching and routing into wireless, security and VoIP.

End-user attributes – Shifts in end-user focus is another area to seek correlations. Attributes such as vertical, business size, geography etc can correlate to poor performance. Once again a look out into the market can help you understand this shift.

A partner channel is more than just a route to market or sell, and understanding the details and complexities of each one is critical to maximizing channel relationships that in turn boost revenue and visibility for your organization. Furthermore, data-based management of channel partners enables your organization to make decision based on objective facts and empirical evidence rather than ad hoc interpretations of dynamics impacting partner performance.

I hope this checklist helps and I welcome your comments and feedback on this piece. Until then, here is hoping we all meet our revenue goals in 2012.

The Sales and Marketing Outsourcing Blog

Channel Improvement Planning – Beware of Shortcuts that will Increase Costs

New Year's Resolution: Improve Channel Partner Fitness (Checklist)