What Senior Management should know about channels but may not
Since my entire career has been focused on indirect sales channels, I often feel caught off guard when I deal with senior executives who just don’t “get it” when it comes to understanding channel needs, and more importantly, how to do business through the channel. Clearly, those companies that are 100% reliant upon the channel to achieve revenue goals must get it, yet it’s surprising to me how many others don’t. As such, this article is offered as a supplement to a prior entry entitled The Three Basic Tenets of Channel Marketing—an article dedicated to helping marketers assess whether they have a “channel culture”—or not. This entry is intended to go one level deeper to remind all those involved with the channel what makes the channel tick, and more importantly how you can take advantage of that.
Support the three value builders when communicating your programs to partners. My channel experience began long before there was a high tech channel (do I show my age?). At the time, my focus was the consumer products categories in retail. Way back then (when phones had dials), all programs targeting retailers had to be presented in terms that were compelling to those retailers: the ability to 1) increase basket (shopping cart) size, 2) increase shopper frequency, or 3) increase the number of shoppers. Those foundational principles still apply in B2B channels, only the terms have changed. “Basket size” becomes average transaction value or margin, “shopper frequency” becomes the number of transactions or number of sales opportunities from any one customer, and “number of shoppers” translates to net new clients. If all your partner programs were communicated to help them understand how you can help them to accomplish one of these three, you will be more likely get their attention. After all, they don’t care what your programs will do for you, they want to know how your programs will benefit them.
It’s your job to build the brand—not the channels’. Your channel partners are not interested in building your brand. Their job is to grow their own business. So stop sending marcom templates that match your graphic standards and messaging with a “your logo here” placeholder—and referring to it as “partner customized.” Marketing materials you provide have to focus on the partner’s value proposition—with your products featured as a means to their end, not as the focus.
Keep it simple. This subject has been covered in depth in prior posts (see “KISS and Tell,” for one). Most vendors make it too difficult for partners to do business with them. Examples of this complexity include complex PRM systems that require different logins, escalation paths that are unclear and vary from program to program, and convoluted partner tiering systems that seem to change without rhyme or reason. Yeah, this may be easy for you to understand, but because your partners are doing business with anywhere from 8-25 other vendors, they are never going to understand your programs as well as you do, so you might as well make them foolproof.
Standardized configurations. The industry is moving to managed services providers (MSPs). Unlike the transaction-oriented resellers, MSPs are seeking to standardize their deployments across common components to streamline installation and support and to maximize buying power. This means that they have a predefined short list of preferred vendors. If your product is in a commoditized category, and your brand has not made the short list for a given MSP, it’s going to take more than a simple incentive program to displace the preferred supplier. The battle for partner “share of wallet” is going to get more difficult as a result. This leads us to….
Partner mindshare is proportionate to a vendor’s ability to add value to the partner’s business—Maybe you represent a product/brand that creates demand in-and-of itself—essentially providing a “pull through” engine for their business. The resulting ability to create end-user demand (or preference) may be valuable enough to partners. However, other vendors in more commoditized categories have to add value other ways. Many of those ways are stated above, others are provided in a separate post, “How to add value in a commoditized market.”
Like your products, partners also have a lifecycle. As your resources will become increasing scarce (your available staff time and money), you must know where to focus your resources for maximum returns. To that end, it is important to know when you have reached a point of diminishing return on your partners, signaling a maintenance mode or possibly even dropping them from your roster. The need to manage the partner lifecycle had never been truer than with the current rapid adaption of the MSP model. Too many channel marketers are hoping their partners can adapt to a recurring revenue model. Hope is not a strategy, and the reality is that many will be unable. It is not your job to keep your partners in business. Begin your segmentation process by identifying a key set of metrics for partner performance, and then monitor the trends across each partners over time. For instance, monitoring trending line for number of new deals open, close ratios, average value per transaction, support time, customer satisfaction can be very revealing, just for starters. Use these metrics to categorize each partner in the appropriate life stage. Use “new”, “growth”, “mature”, “decline”, and “drop” at a minimum–whatever it takes for you to know when to slow investment, and when to recruit new partners.
Creating and maintaining channel programs are not “Set it and forget it”—it is a constant evolutionary process. Those that effectively turn their channel programs into a competitive advantage start with a channel mindset. Applying these basic tenets becomes a routine. The bigger point: it’s not really that hard, just put yourself in their shoes.