Imperatives of Channel Management

For a software product vendor, dependence on channel partners as extensions of its sales, implementation and support teams has increased many folds. For these vendors building and managing the channel eco-system is critical. Critical as it may, sadly most of the product vendors and especially in the mid-market space lack a comprehensive sales channel management program, forget a sales channel management strategy.

We all know that Sales Channel Management is not just about talking and getting connected to a set of similar companies and coercing them to start positioning and eventually selling ‘A’ solution.

The discussion below tries to list down some of the few imperatives that a vendor must understand and undertake before embarking on a Sales Channel Management Program.

1. Business Objectives and their alignment with the Sales Channel Management Strategy

Listing down the business objectives is the first step that companies must undertake. And this is not a theoretical exercise. The section of Business Objectives which talks about increasing market share through customer acquisition needs to be elaborated further on how this would be achieved by a sales channel management program.

Obviously the larger objective is to create wealth and a whole lot of it, but it is the HOW which is important and more importantly how best would one like to achieve it via the channel. One of the objectives of the sales channel management program could be to extend the existing direct sales force. Popularly called more-the-merrier approach. Companies are looking to sign up as many partners as possible with the hope that someone somewhere will sell their solution. At this stage it is not about the money, but customer acquisition – at whatever cost.  The other approach could be to have a pragmatic approach to sign up fewer partners and run with them to create success stories and repeat the process.

It’s all about what is in line with the overall business objective – one size definitely does not fit all.

2. Getting the right partner mix

Once it is clearly understood as to how the business objectives through the channel program would be achieved, the next task is to find the right kind of partner(s) – let’s call them resellers. Most of the resellers today have more than one product in their portfolio. Moreover, it is the same handful of resellers for all the popular products in the market. Many of these resellers are comfortable selling any vendor’s offering as long as they win a deal. Clearly there is no loyalty. There is another challenge that the mid-market resellers pose to the vendors – skills and capabilities. More often than not, the mid-market resellers do not possess the right mix of talent to successfully deploy a solution.

With these constraints it is extremely important to fine tune the channel strategy – more the merrier v/s few and effective.

An important consideration in selecting the partner mix is the industry and more so the industry vertical that the reseller focuses on. While on one hand this is determined by the product offering, knowledge about the reseller’s target market definitely helps. A reseller may be in targeting the retail industry, but if his positioning is towards the Wallmarts, Macy’s and the Target’s; he would not be effective in taking on a retail solution targeted towards specialty retail.

3. Effective Program Design

A channel program can, and will have many constituents but the first place to start is by starting to speak with your customers to understand the needs of the marketplace. Start by asking your customers what is changing in the marketplace and what will be different in the foreseeable future. Such an engagement with the customer is extremely important because there is no point in sitting in meetings, discussing how you are going to change your company, if one is unaware of what’s changing in your customer’s world?

As a principal vendor, would you be an easy company to work with? It has to be kept in mind that most of the resellers today represent many products in their portfolios and have very little patience to adhere to even a slightly complex communication channel with the vendor. Not only should there be a single window of communication and point of contact, the complete process of engagement – starting from Pre-Sales to post-production support has to be extremely simple and highly process driven.

Principal vendors have to undertake the channel program as an investment and will have to rise above (as I call) nickeling and diming about the services & support that needs to go in creating and incubating the channel.

For a reseller, just as in for the vendor, it’s all about margins. Healthy margins apart, it is the simplicity in the margin structure and partner categorization which is the key. MDFs have become far more popular in today’s times and passing on the benefits of the MDF to the partner by executing marketing initiatives with the partners should be an important consideration in the partner program.

4. Partner Enablement

Indeed a widely (ab)used word and has different connotations depending upon the partner type and the target market. But still the broad strokes of the overall enablement process remain the same. When we talk about partner enablement we basically refer to five (5) most important aspects.

a. Training

The basic objective here is to ensure that the reseller staff is conversant with the product offering. The sales team understands the target market, features & functions and has a clear understanding on what it takes to implement the solution (in terms of time and money). The consulting & implementation team is confident of the installation and configuration of the product and the support team is adequately competent to address all level 1 and level 2 support queries.

b. Support

The support process encapsulates all the processes that go into supporting the partner during the pre-sales stages, the sales process and the post – production support. Imparting training to the reseller staff does not absolve the vendor from owning up the prospect. Vendors have to keep in mind that the prospect that the reseller is chasing is as much their prospect as it is of the reseller.

c. Marketing Material

The enablement process should not only include marketing & sales material for the reseller (including product presentations, battle cards, demonstration scripts, demonstration copies of the product, comprehensive product documentation like installation guides, user manuals, release notes, etc.) BUT should also arm the reseller with generic industry related information like trends and innovations. Leveraging Social Media – blogs, twitter, facebook are important considerations to reinforce domain knowledge of the vendor.

d. Partner Certification

Another important aspect of partner enablement is to have a process of regular and recurring partner certification. In the excitement of closing a deal many a times the reseller misrepresents the solution and worse still, the reseller may not implement the solution correctly. A formal certification process is a must to execute effective partner enablement.

e. What’s included and what’s not

Agreed that a channel program is a strategic investment, but it is equally important to emphasize to the resellers the differentiation and demarcation between three (3) aspects of support. Product Support, Post-Production Support and Implementation Support. First is free, the second is covered as standard support & maintenance and the third is pure services and charged.

5. Product Certification and Accreditation

As a principal vendor and as a reseller we can continue to blow our own trumpets till the cows come home, but a seal of certification and accreditation from an independent evaluator is an important differentiating point from the rest of the competing products. An accreditation report augments the claims in the brochures and lends credibility to the case studies that a reseller presents to the prospect.

6. Effective Communication

One may have the best of the products and the best crafted channel program, but all this can be rendered ineffective if the reseller is not communicated with. The days of newsletters and mailers are slowly going away (if not gone already). In the web 2.0 era where Social Media has taken the industry by a storm, connecting with the partners, customers and participating in the communities where the target market is, gaining importance. For a channel program to be effective, it is now imperative to have a clear Social Media strategy work in tandem with the channel program. By continually communicating and gaining response from your partners – be it through social media, partner surveys, or old fashioned in person meetings – getting this outside-in view of your channel programs will allow you to design and manage your programs for success.

7. Adequate Attention

Giving adequate attention to the partner is equally important. Traditionally 80% of the channel business comes from 20% of the partners. The rest of the partners conduct business on an incidental basis. In such a situation it is natural for a channel manager to concentrate on the resellers that give him business. A small shift in the amount of business these 80% of the partners do can yield big results.

It is all about providing adequate attention to the reseller, communicating with him and running with him to start generating revenue from this line of business.

Conclusion

If the principal vendors are ineffective with partners, their chances of being successful will only be so many. It is the channel partner’s capabilities and skills that will determine the customer’s buying pattern and their opinion about the principal vendor.

As dependencies on resellers increase, winning with resellers becomes the key to winning with the customers.

With the right approach Channel Management is not only an asset, it can be the key to competitive success.

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