Thursday, March 11, 2004
Strategy: Top Five Issues in Channel Program Design
When starting a channel program, there are many things to keep in mind. Channels are more sales management than sales. This has a big impact on everything you do; the kind of Channel Account Manager (CAM) you need, the complexity of the sale, pre and post sales support, demand creation and sell through. When we design programs, we look at the following areas: objectives, target, benefits, communication and budget. Each of these areas has multiple sub-elements and each company has to develop a strategy that is unique to its strengths and weaknesses.
Objectives: You have to be clear what you are trying to accomplish with a channel program. Simple answers such as “More feet on the street” are not sufficient. Some companies build channels for user support, some for competitive geographic coverage, some to address user buying preferences, some to stuff product, etc. Unless you are clear about what you want from a channel, chances are you will end up with a mixed bag of resellers and sub-optimal results.
Target: You have to be very sure of the type of account you are looking for. There are at least 60,000 traditional product resellers in the US alone. Double that number if you include ISVs. Triple it if you include non-traditional partners who influence but do not sell products. As mentioned above, channels is about sales management, if you do not really understand the skills, objectives and reach of the participants in the ecosystem, you cannot expect to reach them with a program. Even recruitment turns out to be a waste of time and money if targeting is not done properly.
Benefits: Programs are designed to accomplish three things: entice providers into joining your program, support the channel in their efforts to sell your products, and reduce the costs of administering benefits to members. For a small start up company, the enticement or reason for joining is probably the most important because without members, you have no channel. For a larger or more established company the support and administration become overriding concerns. In the long-term, support in selling is the most important to channel partners.
Communication: How you interact with the channel will determine your mindshare and their loyalty. Field account coverage, inside sales and Marcom are the vehicles used to detail the channel. How many CAMs do you need? What is their job description? How will they be measured and held accountable for results? Questions such as these are critical in creating a program. Anyone can throw a set of benefits together, call it a program and post its description on their web site. How you communicate with the channel will determine not only whether they are aware of your program, but whether they believe it.
Budget: The program has to be affordable and deliver the expected ROI. Just because Porche builds great cars does not mean it is right for everyone who wants one. It is a fact of life that competitors sometimes have many advantages such as money, momentum, brand, etc. Programs are an extension of your business model. Build a program that you can afford and support the providers who join as extensions of your sales force.
There are many other things to think about in developing and launching a program, but most fall under the categories listed above. We have used this method for channel program development for many years when creating, refreshing and building channels for market leaders such as IBM, Microsoft, Cisco and Pacific Bell.
Scott Karren, The Channel Pro
When starting a channel program, there are many things to keep in mind. Channels are more sales management than sales. This has a big impact on everything you do; the kind of Channel Account Manager (CAM) you need, the complexity of the sale, pre and post sales support, demand creation and sell through. When we design programs, we look at the following areas: objectives, target, benefits, communication and budget. Each of these areas has multiple sub-elements and each company has to develop a strategy that is unique to its strengths and weaknesses.
Objectives: You have to be clear what you are trying to accomplish with a channel program. Simple answers such as “More feet on the street” are not sufficient. Some companies build channels for user support, some for competitive geographic coverage, some to address user buying preferences, some to stuff product, etc. Unless you are clear about what you want from a channel, chances are you will end up with a mixed bag of resellers and sub-optimal results.
Target: You have to be very sure of the type of account you are looking for. There are at least 60,000 traditional product resellers in the US alone. Double that number if you include ISVs. Triple it if you include non-traditional partners who influence but do not sell products. As mentioned above, channels is about sales management, if you do not really understand the skills, objectives and reach of the participants in the ecosystem, you cannot expect to reach them with a program. Even recruitment turns out to be a waste of time and money if targeting is not done properly.
Benefits: Programs are designed to accomplish three things: entice providers into joining your program, support the channel in their efforts to sell your products, and reduce the costs of administering benefits to members. For a small start up company, the enticement or reason for joining is probably the most important because without members, you have no channel. For a larger or more established company the support and administration become overriding concerns. In the long-term, support in selling is the most important to channel partners.
Communication: How you interact with the channel will determine your mindshare and their loyalty. Field account coverage, inside sales and Marcom are the vehicles used to detail the channel. How many CAMs do you need? What is their job description? How will they be measured and held accountable for results? Questions such as these are critical in creating a program. Anyone can throw a set of benefits together, call it a program and post its description on their web site. How you communicate with the channel will determine not only whether they are aware of your program, but whether they believe it.
Budget: The program has to be affordable and deliver the expected ROI. Just because Porche builds great cars does not mean it is right for everyone who wants one. It is a fact of life that competitors sometimes have many advantages such as money, momentum, brand, etc. Programs are an extension of your business model. Build a program that you can afford and support the providers who join as extensions of your sales force.
There are many other things to think about in developing and launching a program, but most fall under the categories listed above. We have used this method for channel program development for many years when creating, refreshing and building channels for market leaders such as IBM, Microsoft, Cisco and Pacific Bell.
Scott Karren, The Channel Pro
