Tuesday, September 30, 2003

ARTICLE: The Born Again Channel Evangelist 

Excerpt from an Article on the Channel Ventures web site.

Brothers and sisters; some say that partners are unmanageable, some say that loyalty from partners is a thing of the past, some say that multi-tier distribution is a dysfunctional model. Yes, some even say that Michael Dell has proven that channels no longer function.

Are you ready for channel salvation? Read the complete article.

Scott Karren, The Channel Pro 

Wednesday, September 24, 2003

STRATEGY: Constancy is more important than change.

Channel management is the art of creating a consistent process for allocating budget, leads and product. Above all else, providers need predictable order and structure to succeed. People need to know the system to perform well and channels are no different. Consider the following examples:

In the October 6, 2003 Issue of Forbes, Steve Forbes criticizes the US Government pressures on China for currency reform. Forbes cautions that volatile exchange rates hamper economic growth.

In his book, The Roots of American Order, Russell Kirk identifies order as the prime human need. He argues that without order there can be no justice, and without justice freedom is only violence.

Spencer, Shenk, Capers and Associates' Personality Profile Indicator statistics show that less than 10% of the population enjoys an act for actions’ sake, “promoter” approach.

Don’t confuse urgency or importance with speed and change. They do not always go together. Acting quickly just to be proactive is hard on organizations. Channel professionals, while pressured with the same dissatisfaction about channel performance, do not preach revolution.

Sometimes drastic change is necessary, but only infrequently. If every issue is an emergency, you have a problem with channel management, not channel performance.


Monday, September 22, 2003

ARTICLE: Implementing a Strategic Sales Philosophy 

Excerpt from an Article on the Channel Ventures web site.

Lots of people say they support solution selling. In fact, it is hard to find anyone who does not espouse some sort of solution selling. Problem is that like TQM (Remember Total Quality Management?), solution selling is often no more than a slogan.

Serious about changing the way your organization approaches change? Read the complete article.

CAUTION: do not try solution selling at home, it should only be used by channel professionals.

Scott Karren, The Channel Pro 

Thursday, September 18, 2003

TACTIC: Do not blame the partner for your own channel failures

Why is it so hard for vendors to do the right things for their channels?

When channels do not meet expectations, the first response is to blame the partner. As we state on Channel Ventures' web site, “It often seems like the first step in any significant channel development process is to correctly assess blame … blame it on your boss, predecessors, subordinates or the channel …”

A few years ago, we created a list of lies vendors tell VARs to highlight why typical programs fall flat. This year we took a look at the how some channel executives could explain away underperformance.

It’s Not My Fault!

Below are some of the top excuses channel executives make for channel failure. Visit our web site for translations of the excuses that reveal the critical underlying issues. Do any of these excuses sound familiar?

1. My partners will not stay out of our protected accounts
2. Our partners are paranoid and withhold critical information
3. My partner’s business model is wrong and they stubbornly refuse to change
4. The partners are not loyal and opportunistically sell for competitors
5. The partners work us over for discounts instead of selling

Problems with conflict, communications, margins, loyalty, competition, etc. cannot be solved by blaming the channel.


Tuesday, September 16, 2003

TACTIC: Clarity is the key to motivation

Ambiguity is a major cause of death for momentum. When faced with ambiguity, employees, channels and customers tend to wait. People tend to revert to yesterday’s actions, not because they are thrilled with the results, but because it is easier than dealing with the ambiguity of doing something new. Few people enjoy blazing a new trail.

As an employer of management consultants, I used to ask my prospective employees how they deal with ambiguity. Only those who demonstrated an ability to define a clear path forward got hired. My favorite answer was “I cannot deal with ambiguity, so I make sure to eliminate it in all of my projects.”

If it seems too hard to get a good initiative off the ground, complexity and ambiguity are likely culprits. Direct strategies and action get results faster because they produce clarity. Not everyone will like what you do, but at least they will not be confused. That is what is appealing about philosophies like 'Worse is Better', ‘The KISS Principle’ and ‘Murhpy’s Law.’ All three assume that simple things are easier to understand, easier to implement and easier to fix when they inevitably go wrong. This is why I like direct strategies and simple implementations.

Change is tough enough by itself. Reduce the pain by making the plan simple, clearly identifying the actions required and publishing metrics.


Monday, September 15, 2003

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.


Good businesses requires good communication.

The Channel Pro is right on the mark.

Weblogs are just another form of communication. Yes, they use web technology, but they use it in a new way. I ran into this same argument when I started building web sites for companies in 1994. I was asked over and over, "Why do I need this? Doesn't it just do the same thing I'm doing already?"

Later I heard the same type of response when I helped pioneer electonic commerce. Senior executives would say,"Okay, I understand why companies have web sites, to provide information. But nobody will ever use them to buy and sell real products."

Web technologies offer a variety of new ways to communicate. You can expect to see continued innovation in this area because it can help improve communication. And good businesses requires good communication.

Respond to: weir@light-motion.com 

Friday, September 12, 2003

TREND: Blogs to become critical parts of channel community building and communication

A friend of mine, the CEO of a $20M dollar professional services company, after visiting The Channel Professional said: "looks suspiciously like a web page, what’s the dif?" A lawyer friend had a similar reaction to Windows when it first came out. "What a stupid program! It does not do anything at all!"

Behavioral consultant Hedges Capers likes to say: "If you miss subtle communication signals, don’t worry, you will get a more obvious signal later." Unfortunately, the less subtle signals have negative repercussions. Even Microsoft now recognizes the power of the blogs like slashdot for non-linear communication.

The channel book I am writing, It Takes an Individual, is based on the premise that individuals create villages, not the other way around (sorry Hillary.) Like politics, businesses and channels are driven by individuals who are unwilling to accept the status quo. Blogs are powerful because passionate individuals use them to create loyal communities. For those who don’t get it yet, Blogroots lays it out cleanly.

Blogs work for channel communication because they allow motivated individuals to create communities. The question is not if your channels will be using blogs to communicate and do business, but if they will include you in the process.

Posted from a T-Mobile Hotspot


Thursday, September 11, 2003

ARTICLE: Motivating Volunteer Organizations 

Excerpt from an Article on the Channel Ventures web site.

Why is it so difficult to get volunteer organizations to accomplish things?

The good news with volunteer organizations is that the members want to belong. Unfortunately, they do not always know what to do. In this paper we focus on three specific activities and try to set some guidelines for managing volunteer communities: Impact, Management and Frequency.

Impact. Since they are not being paid, impact must be made obvious. Volunteers join business organizations because they believe in the organization and want to have an impact. The fact that they agreed to give you their time in and of itself can be counted as a success. However, without the right motivation, many will drift away or even become bitter about the experience. ....

The full article is posted on channel ventures at http://www.channelventures.com/articles/volunteers.html


UPDATE: As discussed in the article, human motivation is a critical part of any sales, channel or volunteer program. Understanding how personality impacts communication is a theme covered by behavioral consultants Spencer, Shenk, Capers and Associates. Of special relevance is their Process Communication Module .

Tuesday, September 09, 2003

TACTIC: Certification programs are not value propositions.

As I listen to CAMs pitch their accounts, I am amazed to see how often training is offered as a benefit or reason for buying a given vendor’s products. One VP even built his entire program around the proposition of “24 hours of CBT” (computer based training.) CRN’s newest Channel Certification Study supports my viewpoint.

Channel companies are motivated by market opportunities and will invest in training ONLY if the return is high enough. Small solutions providers sought 33% to 99% returns on trained personnel and larger solution providers sought up to 170% returns on the training. Even so, most were fuzzy about the value of certifications overall.

Perhaps the real value of this survey is to show you what product categories are hottest in the channel. For example, Sun’s strong certification popularity is a rare window of optimism for the company. It gives them both a momentum and a little time to get their act together in sales. Positioning you product inside or tangent to these hot markets is the real issue, not making another mandatory certification.

Remember, it is more important to pitch market opportunities than to require certification.


Monday, September 08, 2003

TOOLS: Simple, strong tools can increase attach rates.

This weekend I bought a new truck. One of the few highlights of that torturous process occurred during the contracting process. When pitching the extended warranty, the dealer employee asked me to sign a waiver if I declined the optional coverage. Even though we had designed a similar waiver for a storage client a few years ago, my initial gut response was still “Hey, I don’t want to sign away any rights.”

I love seeing great sales pitches. I almost jumped out of my seat to tell the guy how great his form was. This is a great tool for several reasons:

- First, it repositions the problem from selling me something extra to taking something away
- Second, it creates urgency
- Third, it is simple and easy to implement. (The dealer’s document was a sparse half page form.)
- Fourth, it was designed to increase sales and margin for the channel

When we initiated a similar initiative with our client, we increased attach rates for tape storage to servers measurably. We succeeded because we linked the value proposition to the channel's problems and not to the product features.

Powerful sales tools are the hallmark of strategic implementations.


Saturday, September 06, 2003

STRATEGY: Going to war with your channel should be a last resort

Auto Manufactures finally have reversed course in their attempt at internet disintermediation of the car dealer network. Friday’s Seattle Times reported that instead of trying to cut dealers out, automakers now are embracing dealers to capture net savvy customers.

Why the u-turn on channel strategy away from direct internet sales? Unlike travel agencies, car dealers remain a critical part of the auto purchase process. Although despised by consumers, car dealers still provide test drives, financing, inventory, and after sales service.

Conflict is caused by not understanding the channel life cycle. We use this model frequently at Channel Ventures to analyze the impact on proposed channel programs and strategies.

Understand where the power in your channel lies before you try to compete with it head on.


Friday, September 05, 2003

TREND: Co-op is under pressure and will be replaced by increases in direct vendor advertising.

Universal, in addition to cutting prices, did away with co-op advertising. The Wall Street Journal quoted a Universal VP “It (co-op) was a misnomer. It was money that went to retailers. They did not co-operate in any way." Instead Universal will raise its own advertising budget significantly.

Expect greater scrutiny of channel expenses and increased expectations of measurable ROI.


STRATEGY: Simple is better.

That is the bet that Universal is making. The Wall Street Journal reported on 4 September that Universal slashed prices by up to 30% for CDs. The move was greeted warmly by music resellers as leveling the field between Wal Mart (who sells CDs for as low as $8.99 as a loss leader) and music shops.

Mature products benefit from simplified channel pricing. Universal will benefit because it reduces channel expenses from administering co-op, from reduced account management, from reduced headcount and from reduced conflict. Perhaps Cisco could do the same to reduce the imbalance between its smaller VARs and the large solution providers.

For a VC's perspective on Universal's move and its impact on the music industry's channel, look at Tim Oren's Due Diligence blog.

I am more optimistic about the impact on the channel because if sales rise, the entire channel will be better off. Without the move, resellers were doomed anyway due to sluggish sales.

Regardless, savvy channel professionals must find ways to simplify their channel infrastructure while driving the same results.


Thursday, September 04, 2003

TREND: One of the largest trends in the channel now is reducing the channel sales expenses.

Since one of the main areas of cost in the channel is the field headcount, executives continually return to field productivity metrics when justifing their budgets to the executive committee and the board. The trend is clear: field sales in the channel will be outsourced or eliminated unless it can PROVE its value. Three great ways field sales can are demonstrating value are as follows:

1) Creating accountability in channel sales
2) Changing the account interaction
3) Delivering value beyond standard programs

Two key quantitative metrics senior executives watch are average sales per channel employee and channel expenses as a percent of total sales. Qualitatively, executives are evaluating field sales ability to secure executive committment in the channel.


ARTICLE: The 'Pro' in Channel Account Profiling

Excerpt from an Article on Channel Ventures.com

Sales people never like requirements for information about their accounts. They understand that some account information is needed by the corporation and may admit that managers have a need to know some specifics. Over the last 15 years as we have worked with over 10,000 sales people, we hear the same refrain. “We have to spend out time selling, not filling out forms.” “Our accounts are private; they will never share this kind of information.” “My account’s main issues are discount and price.”

All of these excuses indicate that the sales reps are still flunking Sales 101.

When they say that the information is irrelevant, that it takes too long to collect, or that it is a waste for their valuable time, they are demonstrating that they do not yet understand the real reason for profiles. Most account reps still incorrectly assume that the data in the profile is for corporate marketing or sales management. ...

The full article is posted on channel ventures at http://www.channelventures.com/articles/accountpro.html

UPDATE: A VP of channels opines in e mail that he struggles with how to control his destiny while selling 100% through the channel. The difficulty is keeping the sales organization from becoming an expensive support organization versus a true sales organization.


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