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.

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.

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 Mike Dubrall, Gilwell Group

Despite the fact that your inbox is constantly filling up, email is becoming less important for B2B communications, especially with resellers. But, how can this be when your Inbox is always overflowing. The answer is that what you are getting in your inbox looks like email, but it's not really email. It's the early signs of a social media revolution.

Many partner managers set up their social media profiles to forward alerts and messages to an email address for later review. So it seems like the number of emails is increasing. However, emails are actually being replaced by all sorts of messages and alerts flowing from on-line communities, LinkedIn, Twitter, and you're other spaces. (If you want an empty inbox, turn off the notifications, but that would cut you off from a large part of the social media experience.)
Personal email used to be very important to me. I would log into my Microsoft Outlook every morning to check email (much like I used to use my new cell phone a few years ago to check voice messages every day on the drive to and from work). Review and delete, review and respond, drag to a folder for later action, and so it went until the inbox was mostly empty.

Now, I start my day on LinkedIn checking messages, taking a few minutes to visit my important groups, and usually leaving a few comments on the latest postings. Then it's on to my communities where I do the same thing. Twitter is, of course, running in a browser which gets visited regularly. Quick tweet on my current activity, thoughtful comment on a blog post here, review an invitation to join a group in another vendor community, and so it goes all day long (and all night too if I can stay awake).

When I finally get to Microsoft Outlook to check my email, most of the important messages have already been taken care of. So I review the RSS feeds. Recheck notices from all the communities. Delete all the electronic newsletters (how did I get on those lists?). Open my calendar. Then it's time to check Twitter again.

When I want to meet with someone, I start with a LinkedIn message, so they can check my profile before they respond. If they are following me on Twitter (or vice versa), I send a direct tweet. Often, they respond in minutes, especially if they have Twitter on their phone. If they are colleagues, we can use IM or open an on-line chat in Facebook. For complex issues, I can just start a discussion in an on-line community and trade messages 24/7. Of course, if it's really urgent, there is always Skype.

Broadcast email also used to be important. It was an important weapon in our marketing arsenal. And we all used it incessantly - often enough to create a huge opportunity for spam filter developers. Today, broadcast email is rated by resellers as the least effective marketing program provided by their vendors.

No wonder resellers don't like it much. Millions of emails are sent to channel partners every week with all sorts of important or mundane messages. How many actually make it through to the intended recipient? Unfortunately, the answer is very few. First, there is the issue of outdate email addresses when people change companies or accounts. Second, most experts say that up to 40% are blocked, most without bounce notifications being returned to the sender. Third, even if the message gets though the corporate filters, a large percentage then ends up in a desktop junk file, especially if it contains frequently blacklisted words like webinar or training. So when a vendor thinks it's sending emails to 20,000 channel partners, there is just no telling how many emails (if any) make it though the technical gauntlet and actually end up in front of an intended recipient. Probably very few.

For broadcasting information to a large group, Social Media is much more effective than email. Savvy vendors now post information about meetings or webinars in the relevant partner communities and members get notified immediately. No worries about current email addresses or reseller spam filters. For example, the Social Media Academy recently posted information about a webinar in a few large on-line communities, collected almost 1,000 registrations, and conducted the session - all within 30 days at no cost and without sending out a single email to market the event.

Chanel Managers. Wake up. Move on. Get connected. Email is the new snail mail. You can no longer communicate up and down the value chain unless you are in the same social media spaces as your customers and resellers.

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.

So while everyone else has a top 10, I decided to go one better...behold:

The 11 Deadly Sins of Channel Incentive Program Planning

Why to I refer to them as "deadly sins?" Because violating any one of these can diminish the effectiveness of your program and waste time and money. Yet, I often see more than one of these sins violated in the manufacturers rush to put a program in place-and then wonder why the program didn't work as well as they hoped after the fact.

11. Not targeting the right level of the demand chain. Incentive programs can target the consumer, the reseller sales rep (and/or sales engineer), or the reseller entity. Any one or combination of these may be viable depending on your objectives. Targeting any one has different merits, and challenges.

10. Not having the appropriate terms and conditions in place--or, "Ts & Cs" if you prefer. This is an official legal document that defines the eligibility, terms and parameters of the program which participants must agree to early in the process-not merely marketing hype that provides a program overview.

9. Not requiring acceptance and understanding of the aforementioned Terms & Conditions. Such acceptance should be done via positive acknowledgement in advance of participation.

8. Having overly complicated business rules to earn the reward. Like all things in life, "KISS" is the guideline here (Keep It Simple Stupid). Program understanding should be both compelling and easy to understand for those of us with a short attention span.

7. Ambiguous proof-of-performance requirements. In this case, by "ambiguous" I refer to "difficult to validate" through other means. The bigger the reward, the more there should be an audit trail in place that validates the transaction details.

6. Not validating that the program is actually "legal" in all the jurisdictions targeted. Many countries and even some states regulate how program may be conducted (or not). This topic could fill a book. If you're planning a global program, this can get real complicated in a hurry.

5. Not targeting the right channel segment or partners. Surprising as this sounds, I can't tell you how many programs "required the ‘buy-in' from X partners" to be successful, only to find after the fact that those very partners don't sell the particular product or the program didn't correlate with their go-to-market strategy. Many resellers may not even permit vendor-developed SPIF programs as it interferes with their own sales policies and practices.

4. Not considering advanced registration. If it is expected that more than one claim may be submitted by any one participant, then pre-registration offers many advantages. Among them, advanced registration provides metrics on participation levels early in the program period, and streamlines the claiming process for the user by not having to re-key personal information with each transaction among them.

3. Stacking incentive programs. A lot has been written about how many vendor companies have as much as 40-50 different promotions and incentive programs targeting the same partners concurrently....need I say more to justify why this qualifies as a "deadly sin?"

2. Thinking short-term and not optimizing your investment. Many programs are launched to attain a tactical need supporting a short term sales goal. Websites are built, infrastructure is put in place. The program is then dismantled after the program period is over in a few months. Then, six months later, the whole thing has to be rebuilt when a new tactical need is established. This lengthens time to market, is inefficient, and often doesn't leverage any of the key learnings from the prior program. It's most efficient to construct a single conduit that may conform to your promotional needs as they occur.

And the #1 reason why incentive programs fail.....

1. Ill-conceived communications strategy.....yep, you heard it right. As hard to believe as it is, in the post program analysis we conduct we find that the number one reason participants don't support the program is that they didn't know the program existed or didn't effectively understand the program attributes and how it fits with their business model. So, for instance, it's not enough to tell your primary contact about the program when it's a SPIF program targeting reseller sales reps, you have to make sure the reps themselves know about the program and understands the benefits to them.

So, these are the facts kids---I can't make this stuff up. Each one has enough content behind it to support an article on its own. In the meantime, if I've missed one or if one of you would like to share your horror stories, we'd love to hear it.

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.