STRATEGY: Results are the only meaningful channel metrics

Small companies that try to run channel like the big boys will lose. It is not that small companies cannot run effective channels; it is just that for them the definition of channel may be dramatically different. Big companies run channels to extend their market coverage, reduce the cost of sales, to create barriers to competition, to leverage the brand, etc. Small companies run channels to invoice.

Because the risk is so much higher and the infrastructure is so much lower, smaller companies require a higher level of channel acumen and professionalism. Forget the standard tool box of programs, co-op, coverage maps, and reps. Instead focus on the fundamentals of account access and customer support.

The Five Results-centric Metrics I look for in a small channel organization:

Revenue/Partner: I discount the value of future channel revenue to zero
EU Exec Visits/Week: Sales partners need to bring a customer to the table
Support Expense/Revenue: Outsourcing support requires no local infrastructure
S&M Expense: Sustainable margins attract capital
Product Demand/Sales: Urgently needed in the channel to fill gaping requirement

The usual path for channel development in a small company is to outsource (a.k.a. abdicate) channels, strike OEM deals, create marcom, sell direct, recruit partners, and then create a plan to reconcile sales models. As case studies of Richard Gabriel’s “Worse is Better” mentality, small companies can live with unplanned channels but not without results.

Perhaps big companies would do better if they looked more at channel results than programs too.

Scott@ChannelVentures.com