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

At a recent channel strategy conference in San Jose, the keynote speaker Chris Doggett, VP Channels from Sophos (security software) focused his presentation on managing partners throughout their lifecycle.  The crux of the presentation presented a formal methodology that Sophos uses to identify where partners are in their lifecycle, measures their potential, and helps to plot a contact and support strategy for each as they evolve.

I was fascinated by this as partner lifecycles is a topic we are conscious of, but it is my experience that very few companies have a formal process for scoring, segmenting, and supporting partners at each phase with an appropriate investment strategy.  Investment, in this case, considers  manpower time, $ investment via promotions and programs, training and any other resource drain.  Why am I fascinated? Because without such a system in place,  marketers practice some combination of the following methods to classify their partners and make adjustments in the investment levels of an individual partner:

• Assume that the large are going to get larger and the small will stay small. They design their CAM assignments and investment strategy accordingly—even though it may be difficult to get a higher share from the large ones, or identify the true potential in smaller partners. Many of companies to relay solely on sales volume for medallion assignments are practicing this method.
• Rely on qualitative feedback from CAMs and/or gut feel for how investment practices should vary for an individual partner
• Assume there are two phases to partners:  Start-up (new partners), and Mature (partners who for no other reason are beyond the start-up stage).  And, like accepting “Friends” on Facebook, have a philosophy that having more is always better than less.

Neither of these approaches seems scientific or defensible, does it?  Plus, if you practice one of these methods, you are probably over-investing with some partners, and under-investing in others—which translates to gross inefficiency.  Maybe we accept this inefficiency as status quo because we’ve always done it this way but it’s one of those things that are on the list of rainy day items to address the second we get some free time.

The model used by Sophos, as presented by Chris, assigns scores to partners based on a number of criteria. Those criteria, including their target levels include,  Pipeline Converted (better than 30%), new deals opened vs. leads (1:25), % new deals opened by partners (50%), Team engagement (40%) and gross margin on closed deals (15%+). The score is assigned to each partner who is otherwise plotted on a quadrant of Revenue $(Y axis) and Investment $ (X axis).  Without getting too complex for this blog, those who improve those number from period to period, and improve sales warrant further investment as they are classified as a Growth partner. Those who remain static are identified as Mature and assigned a maintenance program, and those who remain flat or decrease in sales, and don’t improve their performance benchmarks are classified as at risk investments for further review.  One of the things that is surprising here is the number of large partners who are assigned to maintenance mode, because there is simply no opportunity for growth via further investment.

We are not saying that the criteria and process is directly transferrable to you,  and while clearly oversimplified, the point is that Chris has designed a quantitative way to score partners and provide a foundation for identifying which partners should deserve more attention from his staff and budget, and equally important, those that may be cut back or simply maintained.  Considering the resource constraints imposed on most of us these days (read: the need to do more with less), that would be a good thing.

Why?

Well, to answer this question lets first address the appeal of a standardized global program: Today's multi-lingual, multi-currency SFA/PRM solutions facilitate a common platform throughout all global territories. The resulting standardization assures that consistency and simplicity program-wide is attainable now more than any other time in the past. What's more, the universal set of program standards and reporting inherent in the design give executives a strong sense of control and empowerment-which feels really good if you're writing the check. It is no wonder that this is the key selling point for system standardization. However, the people writing the check aren't the people that ultimately get the work done.

Very few channel partners indeed have a global trading area. And although the promise of a "Global Village" is nearing every day, I contend that for most of us it is far from a homogenous market. Channel marketing, by definition, implies "creating efficiencies through partnership to delivering products and services to the consumer". When designing a channel program, there is a lot to consider about its application on a global scale because while consumers en mass are indeed global, any one purchaser is local. For a global program to be truly effective, there needs to be common standards across the following: category maturity, channel maturity, regulatory requirements (as to how incentives may earned and paid among them), GTM strategy, solution "mix", value added requirements that must be fulfilled by the channel, distribution strategy, availability of local resources, logistics and fulfillment, culture and language (and its impact on the sales process), business processes associated with program management, marketing mix, pre- post sales training support requirements, customer purchase motivations..........do I really need to go on?

The point is, any difference in any one of these conditions from market to market will require some adaptation of your program. Therefore, the sheer number of conditions that require localized adaptation then multiplied their relative importance to your channel GTM will address the full scope of localization required for your program to be equally effective globally.

The good news is, that there are solutions out there that will allow you to "have your cake and eat it too" through localized flexibility and centralized reporting and control. But no solution is ideal for everyone ("You can please some people all of the time or all people some of the time......"), so it's best to REALLY understand your requirements before you completely push your pendulum from localization to centralization (or visa versa). In closing, I repeat what I stated in previous posts: it shouldn't be a matter of one extreme of the other (as seems to happen), as the ideal global program is likely a compromise between local flexibility and centralized systems. I know we can help you get there.

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 Dale Taormino

Maybe it's something in the air, (perhaps the economy?) but quite a few of our clients are in the process of reviewing their partner base and taking a new look at how they segment and prioritize their partners.

Hence, I've been thinking about segmentation. No doubt it's a useful exercise. Segmenting partners in to groups helps clarify and crystallize a strategy around them - making it clearer and easier to execute on that strategy. Segmenting also is obviously helpful in understanding where to spend limited resources - where you say ‘yes' and where you say ‘no'.

That said, it can also be risky business. By its nature, segmenting involves stereotyping. (And you know what your mother told you about doing that) Segmentation is also is typically done on quantitative measures that don't capture the full picture. (Did your SAT scores reflect your intelligence and capabilities?)

I think we need a fresh approach to segmentation - certainly let's move away from the typical rearview mirror approach to a forward looking format (past POS data vs. forecasted sales). More important is understanding and incorporating the measurement of more qualitative, ‘softer' skills and qualities. These can be better indicators of a partner's relevance and ultimately their impact on sales. How you segment needs to relate to where you are - but also where you are going as an organization and where your partners are and are going as well. It also needs to reflect the complex and interlinked relationships between partners and their relative value add and influence on the end user customers decision making process. Simple, hierarchical approaches to segmentation will increasingly not fit the bill in delivering on channel objectives.

So, how do you segment your partner base? Have there been changes from how you did it in the past? What's been most effective in engaging and growing healthy and profitable relationships? Would love to hear your thoughts...

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.)

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.

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?