Channel Champion

What struck me in this survey were the repetitive comments on the impact of channel program ROI. From measurement to trends to best practices, the ROI dynamic appeared multiple times as a response. Here are some of the pertinent survey questions:

Q. How do you measure the success of your MDF/co-op program?
A. ROI on activity.

Q. What measurements are important to your organization?
A. ROI, based on revenue.

Q. What are your biggest challenges with your MDF/co-op program?
A. Measuring ROI of activities.

Q. What have you done to overcome these challenges?
A. Implemented requirements for partners to communicate ROI.
A. Understand the importance of being able to demonstrate ROI.

Q. What innovations would you like to integrate into your MDF/co-op program in the future?
A. Better metrics/tracking of ROI.

Q. What changes have you made in your MDF/co-op program in the past 3 years?
A. Heavy ROI scrutiny-a good thing.

Q. What impact have these changes made, if any?
A. Better ROI measurement.

Q. Name one change to your MDF/co-op program that has made the most positive impact?
A. Focusing on ROI.

Q. Name one change to your MDF/co-op program that has made the most negative impact?
A. Funded programs that did not yield an ROI.

Q. 33% of respondents feel pressure from management to discontinue their MDF/co-op programs in the future. Why?
A. Lack of clear ROI.

In these challenging economic times when companies are scrutinizing every internal investment dollar, the last question and response is particularly relevant. Are you currently being asked to justify the value of your channel program? Do you have the ability to report in a timely manner on the metrics which tie your program objectives and activities to positive results? When push finally comes to shove, will your executive management team support your program because you were able to demonstrate a greater ROI versus another company program? It is not an understatement to say that the survival of your channel program may ultimately depend on how you answer these questions.

Yeah, social media is all the rage in channel marketing these days, but like sex in junior high school, everyone is talking about it, but no one is really doing it.

Clearly, social media has its place in today's marketing mix. That place is defined by your industry in general, and your own social media strategy in specific. So how social media fits in your marketing mix is beyond the scope of this writing, the bigger question often asked by our clients is: "Can/should we reimburse for social media as an activity within our promotional allowance program"? The answer, like most in marketing is "it depends".

Promotional allowance programs at their core are based on:

• Reimbursement for expenses incurred by channel partners to do mutually beneficial sales/marketing programs
• Established proof-of-performance that an activity took place (evidence that can be counted or tracked)
• Provide clear ROI, with business outcomes that are directly attributable to your brand/products
• Assuring message consistency throughout all branded, channel, and consumer communications

Your ability to overcome the challenges expressed above as it relates to social media that will define your answer as to whether it's a reimburseable activity or not in your MDF program.

However, here are some general thoughts on what we're observing today:

• None of our clients are offering reimbursement for social media efforts as of yet.
• One "best practice" may be to provide a comprehensive tool box to help partners start, or contribute to established social media vehicles promoting your brand or products (e.g.: "how to" flash or video content)
• If "reimbursement" is the issue, consider a sponsorship of private social media efforts (user group bulletin boards) that is either ‘flat rate' or tied to overall audience size.
• Consider the development of a sponsored social media vehicle of your own, in which partners are encouraged to participate as the "experts"-this however ignores popular the vehicles already in place, and thus shouldn't be your only approach.

Bottom line: don't feel that you have to be the first on your block to provide reimbursement for social media efforts through your promotional allowance program, but do feel free to experiment and to come up with creative ways to extend your own social media strategies down through the channel to encourage partner participation, collaboration and message consistency.

A common, and dangerous, misconception about social media is that it cannot be used as a business tool. Uninformed traditionalists go on-and-on about the inanity of reading personal posts about lunches, shopping trips, and even bathroom breaks. Executives rant about the loss of control and undisciplined communication that is encouraged by sites like Twitter, YouTube, Facebook, and even LinkedIn. Some companies even block worker access to popular social media sites in the mistaken belief that they divert workers from the real business of serving customers. My Response: ROTFL.

Despite the protestations of some, end-user customers increasingly use social media to get information about products, services, manufacturers, and even resellers. And reseller salespeople are following right behind. Here are some things they are already doing to build their business using social media tools.

1. Find New Customers: Resellers are already staffing to identify new sales prospects in public on-line forums, communities, and networking sites like LinkedIn and Plaxo. It's even possible to join the branded communities of competitors and trade associations and participate in the dialogue. With this kind of access to information, it's easy to develop a qualified prospect list by reading their comments and posts over a period of time.
2. Improve Close Rates and Shorten Sales Cycles: According to a recent Powered Social ROI Report, customers in an on-line community are 68% more likely to purchase a product if they learn about it in an on-line community. And the cost of acquiring new customers (or staying in touch with old ones) is significantly lower.
3. Reduce Support Costs: According to Lithium Solutions (providers of enterprise on-line communities) social media can reduce support costs in a variety of ways - and they have the usage data to prove it. Support problems can be deflected to on-line technical communities, which are far less expensive than call centers. Within the community, technical issues can be resolved more quickly and with greater accuracy. Plus, language issues are less of a problem.
4. Increase Customer Satisfaction: Customers are happy when their needs are met quickly. So if they find information, get technical support, or communicate with an experienced user about a potential product purchase on a social networking site, then their needs are met quickly. Customer satisfaction surveys consistently show that customers are significantly happier when they are in active on-line communities.
5. Train Employees and Customers: Resellers can go to their favorite social media site and quickly get the information they need. For example, type Cisco into the Flickr search engine and get 50,000 matches, many of them detailed product pictures. Do the same search on YouTube and find 10,000 Cisco videos on products, programs, and services. Many of these videos are neatly organized into play lists so resellers or customers can watch them in order.
6. Build Partnerships with other Resellers: As the number of resellers declines, partnering with the ones who are left is more competitive. But not if you know where they hang out in the social web. Channel partners can join one of the many reseller groups on LinkedIn or Facebook -- or create a profile on Partnerpedia - to develop complementary partnerships. This is how many new SaaS developers are building their channels.

These examples are in addition to resellers using social media to help with advertising, building a brand, recruiting employees, disseminating information, filling webinars, and other business building functions.

Some vendors are already training their partners on how to use social media to build their business and increase revenue. (Cisco recently announced a program to do just that!) Unfortunately for the channel, most channel programs fall into the laggard category - and their channels will suffer for it.

Mike Dubrall is Managing Director of Gilwell Group, a consulting company that specializes in "Channels of the Future" research. He is a regular blogger on Channel Champion and manages the Channels of the Future group on LinkedIn. (All channel managers are welcome to join the group.)

Wrong: your promotional allowance program should be updated no less than annually to assure the program structure is aligned with your current objectives. What's more, as ROI seems to be the biggest issue expressed by marketers, there are techniques to assure your funds optimized against these objectives. By manipulating any combination of 8 different design variables common to all promotional allowance programs, your promotional allowance program can be both an effective "Carrot" or a "Stick" to:

• Leverage channel budgets to attain corporate objectives
• Maintain and extend existing partner relationships
• Recruit new channel partners with special "jumpstart" allowances
• Penetrate target segments, or geographic markets
• Win channel Mindshare and Share of Voice vs competition
• Leverage partner relationships with their existing customers to promote up-sell or cross sell opportunities
  
• Improve channel "readiness" by enabling training, certification, and sales incentive programs

Depending on your industry, these promotional allowance programs can fund or encourage WAY more business development activities that simply advertising, including:

• Demo Programs
• Telemarketing
  
• Events
  
• Purchase/Sales incentives
  
• Training and certification
• Facilities

Programs of these types are common to all channel programs today-all of which are core requirements to many channel or vendor businesses to be successful.

So, it's time to re-evaluate your promotional allowance program to assure it's aligned with the go to market strategies for your and your channel partners.

Craig DeWolf is Vice President of Sales and Marketing for CCI.

Craig's extensive experience spans over 20-years, across a variety of industries and distribution models. This background has given Craig an excellent perspective of the issues facing marketers and their distribution partners, and the solutions that will make them mutually successful.

Your success is directly tied to your ability to make it easier for the customer to do business with you and to provide the value-added services they'll buy. When you accomplish this, you won't have to worry about pricing, competition, or mergers because you will already have the keys to a very successful relationship. Your first and best customer is your channel partner; for your programs to succeed, you must know what your partners want. Only by asking your partners what would make it easier for them to do business with you will you be able to reduce redundancies and costs, and ultimately increase your competitive advantage.

How will the marketplace change your business?
Your customer is one of the best resources for accurate data. Ask your customers what is changing in the marketplace, and what will be different over the course of the next three years.

Why is that so important for your organization? Well, consider this. How can you sit in meetings, discussing how you are going to change your company, if you don't have a clue what's changing in your customer's world? That's a little scary. And yet, I've seen countless organizations talk about what they are going to change when they don't have a clue what's changing in the customers' world and in the market.

Effective Program Design & Management
When taking an inside-out approach to program design and management, there are four distinct areas of responsibility.

1. Good, Solid Information
Organizations often do not-and worse yet, cannot-make the best decision because they are unable to access the right data. And just as often, decisions are made based on data that is faulty, untrustworthy or outdated. What are you doing well, what could be improved? What do your partners, end customers and marketplace have to say?

2. Timely and Accurate Data
Channel promotion and incentive programs present companies with countless opportunities to gather information related to geographies, organizational size, revenue levels, products/solutions supported, training/ certificates achieved, markets served and contact information beyond the owner or principal. This information is essential in understanding which partners most effectively serve targeted markets as well as which warrant continued investment in programs such as co-op advertising, MDF and co-marketing.

3. Reporting and Analytical Tools
One of the most difficult problems faced by the channel marketing program manager is measuring the program and determining if objectives have been achieved. This problem is complicated by the uncertainty surrounding the correct measures to use when making assessments. Only if all activity is funneled through a central payment and tracking source will a fact-based environment that allows for the analysis and evaluation of results be created.

4. Ongoing Education
Ongoing training and education about the channel, end-users and competition is required to insure that those who make the decisions do so with the best foundation of domain knowledge possible.

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.

by Michael Dubrall- Gilwell Group

As the Internet continues to play havoc with the traditional IT sales process, resellers are discovering a hard truth. Customers are flocking to interactive Web 2.0 communities being introduced by their vendors, downloading vendor videos from YouTube, "friending" their vendors on Facebook, and following their vendors on Twitter. Lured by the popularity of social media sites and the proficiency in which many vendors are starting to develop direct customer relationships, resellers are finding that the informational cord that used to bind them tightly to their customers has been severed.

From a market perspective, this is happening for all the right reasons. Customers get huge benefits by meeting their vendors on-line: better access to information, peer-to-peer networking, faster problem resolution, and easier vetting of new products and services. Besides, what is their alternative? All they can do with their resellers is find a website , download a data sheet, and call their sales rep for more information; a very time consuming process in today's hyperactive marketplace.

If they are going to survive, resellers need to take a hard look at their on-line capabilities and vendors have to help. Let's start with the basics - reseller websites.

Original web 1.0 websites are static and one-dimensional. They were meant to be used by people who were just learning the basics of email, internet, and on-line communications. These websites use "frames" to display documents and files that could (originally) be downloaded over dial-up lines and visitors (customers) were expected to download the information and then leave the site. Today there are more than 100 million of Web 1.0 sites, many of them set up and managed by channel partners. They look outdated and are difficult to use. Outdated web sites are slowly suffocating the channel as vendors just watch their resellers struggle.

Many vendors have moved to next generation web 2.0 websites, which allow visitors to do more than retrieve information. These sites are interactive, interconnected, and multi-dimensional. Their goal is to engage customers (stickiness), to give AND receive information through blogs, wikis, forums, RSS feeds, videos, social networking and more. They engage customers and satisfy more of their needs. Many web 2.0 sites have already evolved into full-blown communities, managed by the new Social Media organizations of IT vendors.

Customer buying behavior has changed a lot since resellers created first their web sites a decade or more ago. Purchasers are now in social media sites, getting product information, educating themselves about vendors, and comparing prices before resellers even know that a sales opportunity exists. Many end users even expect to purchase their products on-line and have them shipped without dealing with a salesperson at all! In other words, a significant (and growing) percentage of the market has moved into an interactive world that makes one-dimensional Web 1.0 reseller sites irrelevant and even annoying.

According to recent Channels of the Future research, SMB resellers give their own web sites a lowly 4.08 rating (out of ten) as to their effectiveness as a marketing or sales tool. Most reseller web sites are still lacking basic web site features like RSS feeds, blogs, wikis, or even forums. In fact, less than 14% of resellers have incorporated any Web 2.0 functionality at all! To make it worse, reseller employees are personally using Web 2.0 tools like social/business networking, blogging, and virtual communities much less than people working for IT vendor companies. The eventual result: resellers are increasingly absent from the sales conversation and vendors are moving ahead to build direct marketing relationships with their end-user customer base. Can direct (on-line) product sales from vendors or aggregators be far behind?

Channel Partners that cannot conduct their own on-line dialogue with customers are allowing their vendors to suck the air their marketing opportunities . The result, a slow death for channel partners.

Michael Dubrall is the Managing Director of Gilwell Group, a research and consulting company that researches "Channels of the Future." He is a regular contributor to Channel Champion and other industry blogs on the subject of next generation partnerships. Join the Channels of the Future group on LinkedIn and visit www.gilwellgroup.com.

For those readers that attended, I'd be interested in your response to the conference overall, as well as any key learning that may have come out of it. This is all somewhat subjective, as all attendees have their own agenda as to the desired learning from such meetings, as well as their actual take-away post conference. I have read impressions of this conference from other attendees on other sites, so I thought it was fitting to submit my own key take-aways:

The economy sucks for everyone right now. Can I use that word? In this context, I mean it in the true sense of the word (cut to the sound of a vacuum taking everyone's budget). During a recession, it is customary for vendor's to rely on their channel to "get the job done", yet -per a reseller panel-each has expectations of the other that are impossible to fulfill due to resource constraints and poor program execution. There was a lot of finger pointing at that session. But the take away from the debate was that resellers' (as a whole) were bad marketers and that vendors aren't sensitive to the needs of their channel partners which ---and this is key-is unique to each reseller, be it leads, cash flow assistance, or simply to ‘butt out' (queue next topic).

Manufacturer sales assistance for reseller-originated opportunities should be invited with their roles clearly defined: A reseller panel (and the conference host himself) articulated instances when a vendor's sales rep tried to "close" an opportunity outside the reseller's processes. This not only complicated matters, but jeopardized the closing due to conflicting information. Apparently, this happens more often than not. Could you be guilty of this?

The financial obligations of vendors to assure channel partner solvency during tough economic times. This is another hotly contested topic as democrat vs republican politics, or Daniel Craig vs Pierce Brosnan (or Sean Connery if you're as old as I am). The net result, though, is that for companies who rely on channel partners for their sales, there is a co-dependency for success, and that even something as simple as adjusting credit terms or as complex as developing sponsored leasing programs can go a long way to assure channel velocity, and maintain cash flow for channel partners-the life blood of small businesses.

Vendor's are totally enamored with Social Networking as "Marketing 3.0". Which is interesting, because no one really knows how to formulate (or at least articulate) a clear social networking strategy-especially for channel partner integration--nor provide clear metrics. But yet, the room falls to a hush when the subject comes up.

Segmenting "lifestyle" channel partners from those who have real growth potential. Gee, there seems to be something like 40,000 registered VARs and resellers in North America (don't hold me to those figures), yet most of them are content with their size with no intention to grow (I believe the speaker said: "they already have their Ferrari"). So how can Vendors identify these "lifestyle" partners so as not to over invest? It takes a comprehensive profiling and scoring system that includes both objective and subjective data-and the list of characteristics is the subject of a future article...so stay tuned for more on that (via a workshop that was conducted by yours truly)

Co-op/MDF programs are "mature" yet most vendors struggle with how to get it right. Per a luncheon presentation, theses funds can make up the lion's share of the channel budget, yet most vendors are not confident that they can effectively measure ROI from their program. I could write an article on this, but I already have. There is enough content on this blog and website to end that problem for ever-‘nuff said.

In the beloved film classic, “The Wizard of Oz”, when Dorothy asks Glinda--the kindly witch of the North—how to start her journey to Emerald City, Glinda responds, “It’s always best to start at the beginning.”  

In my opinion, Glinda would not be my first choice as a channel program consultant.  Effective channel program planning actually starts with a clear vision of the “end game,” in other words identifying the success metrics that originally inspired you to create the program.  It may be growing the size of your partner channel or--more commonly-- increasing channel revenues over a certain period of time.

Surprisingly a number of companies that have approached us looking for solutions to automate their channel programs have failed to articulate their business objectives, either because the objectives are poorly defined or are not defined at all. Here are a few open-ended questions that should stimulate your thinking when it comes to identifying program objectives:

1. What are you trying to achieve with this program?
2. Are your program objectives supported by your corporation’s business objectives?
3. How can you quantify or measure the progress of your program objectives?
4. What channel partner behaviors are you trying to motivate?
5. What do your channel partners gain by participating?
6. Are your products, channel, and marketplace conducive to launching a specific type of program?
7. Do you have an execution strategy which logically maps back to your program objectives?

by Michael Dubrall, Managing Director of Gilwell Group

Social Media is confusing. What is it anyway? There are dozens of different definitions (check the blogosphere) and even more perspectives on how it can be used to improve channel performance. Unfortunately, there are still partner managers that are struggling to accept social media as a transformational technology. They cannot yet see the future, even as it begins to overwhelm them.

So in response to all the questions about what it is and how social media might be used to help channel partners be successful, here is a list of the top ten social media applications. The sites are used primarily for marketing, although sales results are definitely being impacted, especially by business networking sites like LinkedIn. (The use of social media to solve technical problems is already well documented.)

This ranking is mostly based on our on-going Channels of the Future research, with some fine-tuning from client projects. Every site mentioned has a least one worthy competitor vying for attention. This is the briefest of summaries, which only hints at the impact of these gathering places.

1. On-Line Communities: There are already thousands of partner-centric on-line communities in Google Groups and Yahoo, plus hundreds of branded and closed communities managed by the largest vendors (IBM, Oracle, Microsoft, Cisco, etc, etc. etc.) The amount of information exchanged is staggering - and the number of deals influenced is beyond counting.
2. LinkedIn: There are hundreds of thousands of reseller salespeople visible on LinkedIn, plus reseller groups, events, jobs and more. Salespeople who are not already using business networking for prospecting and customer communications are probably already on performance plans.
3. Blogs: Resellers rely on vendor and industry blogs for information. They have replaced newsletters and magazines as the primary reference point for new technologies and product releases. (Which means marketing managers also have to understand sites like Digg and Delicious.)
4. Facebook: Business has invaded this once personal/private site and vendors, resellers, and customers are scrambling to change their photos and update their profiles to make them more professional.
5. MySpace: There are more reseller groups and channel job postings than Facebook, maybe because MySpace is older and more basic in its approach.
6. YouTube: Resellers can view instructional videos on everything from changing printer cartridges to keeping products under warranty. Among others, Cisco uses it as a training platform, creating playlists that group videos by product or specialty.
7. Yahoo Video: Channel partners can check out the latest vendor pronouncements (IBM is very visible, among many others) on products, programs, and customers.
8. Twitter: There is already a whole micro blog ecosystem to communicate with resellers about special pricing, new products and programs, big deals, and company gossip - all in 140 characters or less.
9. Flickr: Perfect for posting pictures of products and schematics that help resellers maintain hardware products. Vendor-provided photos can also be used in marketing materials, websites and communities.
10. Tactical Sites (SlideShare, Issuu, Podcast, etc.): There are hundreds of free sites where channel managers (sometimes without "official" sanction) can post presentations, white papers, documentation, and podcasts so they can be easily linked to on-line communities or emails.

Vendors that do not understand and take advantage of these social media gathering places are already well behind their channel competitors. If you work in a partner organization that is not active on most of these social media sites, perhaps you should be updating your resume. (If you do not personally use most of these tools, then probably you should be thinking of retirement.)

Michael Dubrall is the Managing Director of Gilwell Group, a research and consulting company that researches "Channels of the Future." He is a regular contributor to Channel Champion and other industry blogs on the subject of next generation partnerships. Join the Channels of the Future group on LinkedIn. 

Back in the 90's (remember then? Clinton was president. We had a budget surplus, stocks were increasing in value. The internet was in it's infancy as a marketing medium...but I digress). Back then there was a HUGE marketing movement called "Word of Mouth" or WOM for short. The "concept" behind WOM (as it was called to us marketing veterans) was the realization that there was no better form of advertising than personal endorsements by actual consumers....nothing you can pay for can actually be stronger for the brand. To substantiate it, there were all kind of statistics tossed around like: "if someone likes your product they'll tell 4 people, but if they DON'T like your product, they'll tell 40 people". Don't hold me to those numbers, but those metrics are about right.

Well, there were all kinds of newsletters and seminars devoted to "Word of mouth" Marketing as a result of this implied power of referral (positive or negative). While basic in concept, for some reason this was a "revelation" to many marketers.

With the dawn of the "Information age" , what was established as "Word of Mouth" marketing became "Peer to Peer", or in it's more simpler form "P2P". Suddenly, people could actually email their friends about your product, or even join user groups and bulletin boards to pontificate on the virtues and/or frustrations of a brand. Wow!!! What a concept!

Now, as we close one decade in this 21st century we find ourselves as a morphing of the concept once again as P2P becomes "Social Networking."

What's the difference that drove this change? Suddenly the "Media is the message."

You see, the core of "WOM" was "Keep your customers happy" because if you don't, they'll tell a bunch of people and sink ya'. If you do, they'll be your greatest ambassador. Hey, look at Nordstrom's. They have less than half the budget of their nearest competitors but had a stronger growth rate because of the customer satisfaction levels.

Now, however, with "Social Networking" we have somehow gotten away from these core marketing attributes of WOM to focus on the vehicles themselves.....from Twitter to submitting restaurant reviews on "Yelp". My point? The technology itself will constantly change, so don't get hung up there. The principles of WOM should not be forgotten and should really be the basis for your social networking initiative.