My last post provided some commentary on an excellent presentation on Partner Lifecycle Management, by Chris Dogget, Vice President of Global Channels at Sophos. That presentation was given at the Channel Management Summit held earlier this summer in San Jose.  The point of the accolades in the last post were to recognize Chris for providing a formal approach around a subject that could be holy grail of getting more effectiveness from your channel partners while benefiting from greater efficiency from your human and financial resources—something we’re all short on these days.

I have always thought this was an area of untapped potential, and perhaps Chris was the first one to come forward with a sound, quantitative process for meeting this challenge. (For more information on the benefits of a formal partner lifecycle management process, and Chris’ approach in specific, do take the time to review the last post on the subject.)   Channel models are changing so fast that the survival of the fittest has never been more true….and frankly, I think the rate of change is going to increase exponentially, meaning the need for employing an approach of your own is going to grow.  The days of “the more the merrier” as a foundation for a channel strategy is quickly drawing to an end.

To create a similar approach on your own, one first must subscribe to these principles:

• Partners are mapped on a quadrant that plots your investment (x axis) with their revenue (y axis) with changes in each tracked over time. Further, ALL partners will start out somewhere in the lower left hand portion of the quadrant ($ 0 revenue and $0 of investment, or near so). Any changes to any one partner’s position on the map should be monitored at least annually, if not on a quarterly basis.  Ideally, partners would proceed on something that may resemble a 45-degree line to the upper right hand quadrant.
• Investment considers both real cost and resource allocation to cover both partner readiness and joint marketing activities with the understanding that partners must also be committed to investment of both time and resources on their end.
• It assumes (correctly) that all channel partners will reach a point of diminishing return wherein additional investment will no longer yield proportionate sales gains. Once they do, they are considered mature partners (upper left hand quadrant), and emphasis is directed to a maintenance mode with less aggressive investment levels. Other categories on this quadrant would also include those partners identified as At-Risk (lower right),  Growth (upper right-- or the “magic quadrant”), and Emerging (where all partners start, the lower left quadrant as stated earlier). 
• Investment on those Emerging partners in the lower left is really focused in the area of partner enablement—rather than joint sales.

Other components that are equally important to this process include:

• Partners should be segmented by go-to-market categories and potential—not simply sales volume--as a basis for establishing “Silver”, “Gold” and “Platinum” tiers.
• Potential is really a score that can consist of multiple dimensions relative to how you—and your partners-- do business. Criteria can include, but is not limited to, rate of sales increase, % opportunities closed, Gross Margin %, sales team enablement, attainment of stated business objectives, etc. These metrics should be identified by channel segment—although some may apply to the partner population overall.  Any changes in these metrics over time can be leading indicators that an individual partner is still on the growth path, or are nearing their point of diminishing return.
• Business planning is conducted annually, and quarterly marketing plans are completed—or reviewed—quarterly, and consider each of the key metrics that are used to evaluate potential as described above.

Hmmm, this all seemed some so straightforward when Chris presented it…  In any case, his model would need to be modified to adapt to your business model. So, hopefully enough of the concept was conveyed between the two postings for you to develop your own partner lifecycle management model. If you need help, give me a call or send an email—I’ll try and fill in the blanks.

Image Credit: Monty Python and the Holy Grail

Having just returned from a recent channel marketing conference in San Jose, my usual self would summarize some key learnings and insights. That would be pretty easy to do as I was the host of day-two and as such was requested to take copious notes. The reality is, that there was essentially three key take-aways, only one of which I’m going to write about today. (I’m sorry, but the other two will have to wait for future editions—and besides, they emphasis points made previously in this blog).

There was great quote from a delegate during a standard post-presentation Q/A session:

“There is no silver bullet channel program.”

Amen, brother. This is one of those points you instinctively know, but somehow don’t articulate quite as clearly as someone else—a truly “duh” moment.

Why is this point so profound? Because I can’t tell you how many channel marketers, that despite having the title of “Senior Manager”, “Director”, or even “VP” come to me and say: “I want the same _____________ program that works best for your other clients”. Fill in that blank with your choice of programs—SPIF, MDF, Rebate, Deal Registration, Lead Management….. whatever. In fact, that just happened to me yesterday when talking with a client about their trade-in program. The bad part is that the request is always followed by an anxious moment when I fumble in my attempt to say for the um-teenth time that “There is no such thing, the program design is really based on your objectives and requirements”. No matter how subtle or bold I say that, or what words I chose to use, I get the same look on the subjects face as if they just saw a ghost—or heard their mother in law tell them that they are “no longer good enough for their daughter”. (Note, just to be clear, that last statement was never expressed to me so I don’t really know the feeling first hand—but I hear it’s horrific). You see, this otherwise “Senior Manager” was hoping we would say: “OK, we’ll have it ready for you in the morning”.

I can honestly say that despite how may ____________ (again fill in the blank) programs we do, no two of them are alike—even a little bit (really!). For instance, just take the aforementioned trade-in program: Do you really require physical return of the merchandise? Or, is this just another disguised incentive program where a serial number plate or certificate of destruction would do? Is the incentive based on what’s purchased? What’s traded in? or both? Who gets paid? End user? Reseller? Either? Who receives and validates the trade-in? Trust me, the list of variables goes on and on and on and on……….But that’s the easy part. The process really starts with your objectives, defining key metrics to validate program performance against goals, and special parameters and processes you specify. But even then, the ideal recommendation would have to consider things like: what you are doing now, what has or hasn’t worked in the past, what competition is doing in specific and the industry is doing in general, what geographies the program encompasses (for regulatory review, logistics and currency issues) and again---on and on and on and on. But wait, there’s more….your market and product have a lot to do with program design as well. For instance, are you a core technology, or a commodity product? Are you an industry leader or follower? Do you have to “buy” business or is there already a strong demand? The answers to these questions have a big impact on your program, and address why Microsoft can do what they do, yet Tier 4 switch company can’t seem to pull it off when they try to do the same thing.

Instinctively you already know this though, don’t you?

by Martin McNally
Director of Product Management, CCI

As a product manager and product marketer, I am very clear on the value of software. How about you? Why do you use software to manage your channel, and in particular, the incentive programs you offer them? Or, if you have not yet introduced automation, what might your motivations be for doing so?

The adage "change is hard" can be very true indeed. Rolling software into existing process and relationships requires careful consideration. When a large population of the impacted parties are external (to your company) stakeholders (in this case, your channel partners), treading lightly and deliberately is advisable. But don't let the need for planning stop you. With a well-planned rollout, the immediate and sustained benefits of automation are both significant.

Current market momentum validates the use of software solutions for channel management. It can add value in many ways - relationship-building, access to vendor information and materials, timely communication, increased collaboration among vendor and channel partner, and knowledge transfer to name a few. When introducing software, consider where it can best add value for your organization and channel initiatives. 

• Where might standardization of process be most beneficial? 
• What activities and information need increased visibility?
• Where within your channel program would you like to introduce greater financial controls?
• What components of your channel program - be they program additions or changes - need quick time to market?
• For which aspects of your channel program would you like to better manage costs and understand ROI?

Once you determine why and where you want to automate, the mechanics can be pursued. Keep the goals in mind as you define the "how." You have your blueprint; now build the house. A solution that provides transparency and predictability should be the foundation of any software initiative. Moreover, it supports your growth as well as that of your partners. These objectives will foster channel loyalty, collaboration and compliance and ultimate attainment of shared rewards.

by Martin McNally
Director of Product Management, CCI

The saying "the buck stops here" has always been relevant in business. Embarking on a new channel incentive program is a prime example. There must be ownership. Decisions must be made and accountability must be accepted. The stakes are high, as a well deployed program involves multiple partner organizations, thorough communication, strong execution from all parties, and measurable data.

As the owner of a channel incentive program, you know the program is needed. Moreover, you've designed the program to be compelling to your partners with the eventual result of enhanced bottom lines for both you and them. Correct? Confident? To be convinced of a successful return on your investment, leave no stone unturned in its definition.

Program definition - not to mention results - benefits from a thoughtful analysis on your current goals as well as a careful review of history. Know your true needs - and that of your partners. Identify a program structure that will support those objectives and drive value through your demand chain. Do your goals align with corporate, partner and customer needs? What feedback do your partners have on your current and prior channel programs? What marketing activities or initiatives are generating the greatest ROI? Are you utilizing any market research? Are the reward and its value aligned to the desired behavior of your partners? Will your new program 'meet' or 'beat' competition, thereby winning valuable mindshare of the partner community? Will the program structure and operations generate actionable data?

This is just the beginning. A myriad of other considerations await and the synergies among them will actually help slay these dragons instead of overwhelm you. Once the program is defined, you'll see your vision deployed into an operable, measurable initiative. As you come full circle and obtain program and partner performance data with which to optimize the program, be sure to revisit all the points evaluated during design so you stick to your objectives - or intentionally reset them. Now is no time to "pass the buck."

Our team just returned from an event targeting channel marketing professionals yesterday in San Francisco. Attendees from about 50 companies were present to talk about what new (and old) challenges are facing us. To that end, here is a rundown of some of the "more lively" topic's as gleaned from the pulse of the attendees.

1. As a vendor, are you easy for your partners to do business with? Many of us forget that our channel partners represent more lines than our own, and therefore assume that our partners' as a whole are accepting of our quirks and understand all the changes we make to our programs and extranets on a routine basis. They don't. My take: this is a topic of growing significance-and indeed vendors are starting to listen. In fact, I'll be talking about this topic at a future conference, so stay tuned.

2. Vendor sales certification and training for partners. Among the issues most pressing to channel professionals is the sales readiness of their partners. The discovery is that different partners need different types of training-unique curriculums that align the solutions they sell and their business model. Sales training is not about product training, it's about solution understanding and the best way to design and package solution to meet the needs of their prospects-training is not homogeneous anymore.

3. Using POS data to provide complete channel and program analytics. While many vendors use POS data for rebate and commission processing, still others don't collect it at all. Some more progressive vendors have unlocked the secret to using POS data to analyze program performance, evaluate partner performance, and to conduct a gap analysis for coverage and skill sets. This is the wave to be on, if you're not already doing it.

4. Social media is changing the face sales engagement. It's understood that social media has its place in vendor communities and partner communities but it is also a growing sales tool. While most partners haven't fully taken advantage of it yet, some of the more progressive ones are leveraging social media as a prospecting tool by using it as a way to learning about prospect needs and pain points before they make the introductory call. This advanced insight creates a fast track to building prospect rapport as well as targeting proposals since the sale person is already familiar with the prospects needs as they are conveyed on the social network.

I promise you that there will be complete articles on each of these areas in our newsletter moving forward, so if you haven't signed up for it, now is your chance. (just sign up on this site). I am also anxious to hear about the challenges, rants and raves from other channel professionals so we can address those in the newsletter or this blog as well. So please leave your comments as I love to read them and to use as a basis for future content. This is only good for me if it's good for you.

by Martin McNally

Director of Product Marketing, CCI

Channel sales and marketing is one of many business functions for whom incentive programs are commonplace. They are an expected ingredient of the model. But just having one is not enough: It has to hit all the right notes to generate desired results. The design of an incentive program must focus on the goal. Consider how the incentive program will help achieve the business objective. Just as important: What's in it for the channel partner?

In designing an incentive program, identifying the behaviors to incent is half the equation. Those parameters focus on the business - activities, dates, funding allocation, etc. Part of the program design must also focus solely on the channel partner. Incorporating enticing rewards is where you can forge the best likelihood for success. Consider what will compel your channel partners to be active participants in the incentive program. Include desirable rewards that will generate activity by channel partners and thus achieve results for channel marketers.

A wide range of reward models are available to channel marketers to fit both your program financial model and partner composition. Choose a reward that truly has value to your channel partners and don't be reluctant to experiment and mix it up. Nobody will say no to money, though some may view that approach as too predictable and therefore uninspiring. Points-based models can make thing interesting, as redemption can be available for a myriad of merchandise, events or other experiences. The partner may very well gain something that they would not otherwise acquire. (Points-based incentive programs work well for ongoing programs, as opposed to transactional programs, though that's another angle to pursue.) It may also be appropriate to hold the reward close to the vest and offer soft funds only. This too can be appealing to the channel if subsequent co-op/MDF marketing activity is likely. It always feels good to have a credit on the books, so to speak. And don't forget about stored value cards, another reward vehicle that can feel like "money in the bank."

Whatever reward you choose, know that although reward fulfillment is the last step in an incentive program cycle, it may be the first consideration of your channel partners.

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.

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?