Thursday, February 26, 2004

ISSUE: The Difference Between a Forum and a Blog

I am convinced that a blog can be a more useful business tool. Unfortunately, it is not easy to get clients to understand how to use them. Blogs with an individual voice, while common, are still invisible within channel organizations. Even rarer is the multi-party business blog. When I mention the topic of blogs as a community building tool for communicating with channel partners, I get blank stares and rants about how forums do not work.

The difference between a forum and a blog is like the difference between a conversation in a bar and a discussion with a subject expert. I have participated in several forums about channels, channel programs, vendors, vertical markets and small businesses. Each starts off with the best intentions. But after a flurry of activity, it goes dead. Other drag on and on debating such great topics as whether small business can make strategic decisions. Threads get comments and the arguments start. Some comments are thoughtful, many are not. After a few weeks, and everyone has had their say, some more than once, the thread dies. Nothing happens. No one is convinced. No one changes their mind. Nothing is learned.

Contrast that with the blog. An individual with a specific area of expertise gains an audience because of his or her ability to explain a point of view. If they articulate their points well, they get read. Comments, e mail and real world experiences link the blogger to a community of others who have a shared interest in the topic. Instead of just arguing, opinions are formed, discussions are framed and decisions are made. Best of all, it is done in a non-corporate, human voice.

Channels consist of thousands of third-party participants. Beyond the traditional channel program, the channel ecosystem consists of tens of thousands of companies and individuals with shared business issues. Blogs cut through the noise because the blogger, unlike a forum moderator, is not merely there to make sure everyone plays nice. The blogger is there to state a position, gather feedback, synthesize results and explain implications. No CRM package, forum software or social network will connect with channel partners the way a blog can because a blog is a facilitator of opinion, not a collection of comments.

Scott Karren, The Channel Pro

Friday, February 20, 2004

The Top Ten Issues facing Today's Reseller

My latest Provider Perspective Column is up on the ZIff Davis ChannelZone site. In this weeks column, I detail the top issues facing the providers in todays market.

Also look at my previous columns:

How to Get More Out of Your Strategic Vendors: Channel programs fail to establish the kind of business relationships needed to move markets. Five steps that change the nature of how your account reps engage covered accounts.

Fueling the .NET Migration: Why are ISVs procrastinating the move to .NET. The answer can be summed up in one word: Money. Without capital, ISVs will not be eager to embrace new technologies. Where does the channel get its capital and how can vendors impact it.

Scott Karren, The Channel Pro

Wednesday, February 18, 2004

Article: A Systematic Approach to Entering the US Market
By Scott Karren, CEO Channel Ventures

The US market is an obvious opportunity for companies in EMEA (Europe, Middle East, Africa) and APAC (Asia Pacific). As the largest market for computer products, software and service, almost every company would like a productive US distribution channel. Unfortunately, many enter the market naively or without properly preparing.

Some companies are flooded with enquiries of would be distributors, other are ignored and fail to rise above the noise. Other companies successfully recruit partners but fail to achieve sell through. Still others take too long to develop sufficient coverage and allow competition to cherry pick the best territories. Early choices can set limiting precedence in support requirements, compensation and/or territory.

There are no short cuts to successful channel development. There is no simple cure for lack of market knowledge. Be prepared to invest both time and money to build a US presence. Consider the following six step approach to developing US distribution.

Market Assessment: Get the facts and understand the implications for your products. Starting with the size of the market, each company then must determine an objective, realistic available market. Delve deeper to discover the nature of the channel ecosystem, the existing providers, customer requirements, competitive presence, and underutilized players. Public data may be sufficient for initial planning, but custom market data (both quantitative and qualitative) is required for successful market entry.

Channel Strategy: Based on a thorough market assessment, consider the pros and cons of various channel deployments. Critical factors are user awareness, field presence, channel maturity, product demand, competitor responsiveness, cash flow, strengths and weaknesses. A clear strategy simply establishes a business model for achieving specific long-term goals.

Program Design: If strategy is the vision for a channel, program design in the plan. Programs allow you to collectively manage a portfolio of individual partners. State-of-the-art program design includes end user targeting, channel coverage, program positioning, partner communication, sales force requirements, channel support and budgets. The program should be clear to investors and partners as well as internal personnel.

Sales Force Development: Defining the role and duties of the sales force is more important that the exact number of account to me covered. The typical managed, tele-managed and unmanaged account model fails most vendors trying to enter the US. When you have little or no existing distribution, all accounts are covered accounts.

Partner Recruitment: Locating fewer, qualified partners almost always trumps signing any reseller who agrees to sign your agreement. On average, it costs $2,500 to recruit an account. Additionally, providing support to non-productive accounts can double that investment. Instead of viewing recruitment as a binary event, manage it as a process. Level one recruitment occurs when the partner responds to the message, Level two when they sign a contract, level three when the buy product, level four when the sell product and level five when the sell through consistently.

Demand Creation: Although you selected partners desiring them to sell you into their existing accounts and installed base of customers, they are looking for you to create demand. Specialists are looking for new accounts and merchandisers are looking for traffic.

US channels are mature and have little tolerance for unprofessional channel management. Unrealistic expectations, strategy du jour, “me too” programs, “fog a mirror” recruitment criteria and unused marcom top the list of amateur mistakes.

Scott Karren, The Channel Pro

Wednesday, February 11, 2004

ARTICLE: Linking Corporate Strategy with Field Sales
By Scott Karren

For the last few years I have thought a lot about writing the definitive book on channels. Initially I had thought to write a single comprehensive tomb. However, as I began to outline the chapters, it has become clear that I need to create two related but separate books: one for the VP or director of worldwide channels about channel strategy and management and one for the regional VP, director or country manager about field sales and account coverage.

Clients hire Channel Ventures for many different projects, but most are subsets of these four broad categories: to create strategy, to develop (or refresh) programs, to launch products and to manage accounts.

Find Opportunities, Forecast Trends, Research Needs, Plan Budgets, Build Models, Segment Resellers, etc.

Develop Positioning, Revise Incentives, Package Benefits, Template Process, Set Discounts, Create Tools, etc.

Recruit Partners, Create Demand, Open New Channels, Run Promotions, Position Products, Pilot Initiatives, etc.

Train CAMs, Build Sales Teams, PCAP Profiles, Communicate Ideas, Facilitate Forums, Manage Accounts, etc.

Strategy and Programs are corporate issues about creating infrastructure, setting policies and allocating resources. Launch and Programs are field issues about implementation and market share and sales. One side is about leveraging process and the other is about consistently hitting a number. Neither works well is isolation.

As we document the best practices in the channel, we are working with current and former clients to explore critical channel issues. I will use the blog to clarify my thoughts, develop channel management models and connect with other channel professionals. Read about it here first, but don’t stop there.

Participate in the conversation. Mix it up with me. Debate my positions. Bounce ideas around. Tell me why you agree or disagree with my ideas. Show me more related links. Send me an e mail and join our informal community of channel professionals.

Scott Karren, The Channel Pro

Tuesday, February 10, 2004

ARTICLE: Channel Strategy Definitions
By Scott Karren, CEO, Channel Ventures

Channel Professionals often use the same words but with very different meanings. Additionally, words such as objective, mission, strategy, program, campaign, initiative, project, and promotion have overlapping meanings. Even worse, as you move out from the channel to other parts of the organization such as the marketing and product groups, it seems like a completely different language. For example, in channels we refer to a program as a collection of benefits available to members; Marcom people may call a promotion or contest a program. While I do not intend to write a comprehensive glossary of channel terms (at least not today,) defining some key terms is helpful in organizing thoughts about channel development.

Objective: This is a long-range, high-level goal, often qualitative in nature and frequently with a time frame of 2 to 3 years. In addition to unit sales and revenue quotas, the objective often is stated to include market share, account coverage and channel loyalty.

“Our product will be widely accepted among medium sized end users.”

Mission: A key step or milestone within an objective. Like the objective, the mission also is a high-level goal, but usually short to medium range in nature. Unlike the objective, the mission almost always is quantitative and clearly measurable.

“We will transition 500 ISVs to our platform within the next 12 months."

Strategy: The senior level, essential idea for accomplishing an objective. A good channel strategy has several attributes: it matches strengths with the competition’s weaknesses, it is consistent with company culture, it can be implemented, it is clear and simple to communicate and it is comprehensive. Most importantly, it has to work.

“We will cut channel headcount and costs to compete directly with Dell on price.”

Tactic: Specific activities that support the strategy, mission and objectives. Channel recruitment, training, programs, tools and events all can be effective tactics is appropriately aligned and managed.

“We will use Executive Conversation's 'EFS, Channels' to increase the acumen of our CAMs.”

Plan: The allocation of budget, headcount and resources to implement the strategy and accomplish the mission and objectives.

“We will invest $50M in our managed accounts over the next 2 years.”

Program: The vehicle to take a plan to the channel, a program is a contractual relationship between a vendor and the channel. Designed to reduce the costs of channel administration, a program is a collection of support, training and benefits available to qualified members. Programs are frequently tiered to support account coverage across broad, tele-managed and managed accounts. The best programs are based on provider business models, not vendor product lines.

“Our ‘Specialists Program’ markets the brands of our most innovative partners.”

Initiative: Short-term goals for channel productivity. Frequently set around product launches, product awareness, program recruitment and program requirement compliance, initiatives have set metrics and time frames, usually less than a year. The initiative may be a formal, named project, a pilot project or an informal executive directive.

“During the launch period, each partner will participate in ‘Home Run’ ."

Campaign: Marcom activity to the channel or end-user. Less formal or comprehensive than a program, campaigns may still have membership requirements. To be effective, marcom must work directly with field sales management to align the message with partner business needs.

“Catch the wave! Be a Wi-Fi Implementer.”

Promotion: Targeted marcom event designed to drive sales. Unlike advertising, promotions answer the “Why now?” question.

“Sell fifty of our products by Christmas and win!”

More important than the words we use is the overall process we use to build and manage the channel. Without a clear channel development philosophy, none of these individual activities is really effective.

Scott Karren, The Channel Pro

Friday, February 06, 2004

ARTICLE: How to Manage Strategic Accounts

In my bi-weekly Channel Perspective column for Ziff Davis’s Channel Zone this week, How to Get More Out Of Your Strategic Vendors, I describe what resellers need to do to build more effective relationships. 1. Talk business issues with your rep. 2. Get the facts—Benchmark your business. 3. Use the rep’s time wisely. 4. Create specific joint initiatives. 5. Measure results and try again.

However, the vendor also has a responsibility to create stronger, more effective relationships. Beyond the traditional program, what should the vendor do to improve productivity across its managed accounts? Below are five correlated steps vendors need to take to transition from passive channel administration to active channel management.

Raise the acumen of the CAM. Hire a higher caliber CAM. Train the rest on business development. Practice holding executive discussions. Reherse specific iniatives. Objectively assess and grade individual CAM skill sets.

Get the facts. Use Channel Ventures’ Provider Comparative Analysis Tools (PCAT) to benchmark and highlight your channel’s real business issues. Data has a great effect on the level of conversation possible between a rep and the account.

Raise the bar on account management. To date, channel sales have not been held to the same standard as direct sales. Take a more strategic view about customer targeting, profiling, commitment and interaction. Develop new processes to support the new strategy.

Pilot and template new solutions to business issues. Channels and programs without new solutions wither and die. Hint. This has NOTHING to do with your road map and products. To get a return on your investment in channel infrastructure you have to get intimately involved with your providers businesses and their financial issues.

Increase accountability. New metrics must be created to accurately measure and reward the field for building sustainable channel sales. How good was their last executive engagement? What new channel business have they been able to document? Which of their individual initiatives can be standardized and included in the program? Despite the lack of real time POS, reps need to be given consistent feedback on their performance.

Professional channel management is the only process that allows a channel executive to regain a sense of control over his or her destiny.

Scott Karren, The Channel Pro

Thursday, February 05, 2004

Tactic: Revise Program to Deliver Sales If You Want Partner Loyalty

Vendors want to believe their products and programs are competitive. But channels quickly net the costs (and risk) to find and close customers for each vendor's solution versus competitors'. They are eternally loyal to real user demand, orders, real cost of sale advantage, and real margin opportunity.

Any partner worth their salt has been a member of 50-100 major partner programs. They have seen what vendors call leads, what passes for pre-sales support, training, SPIFs, rebates, and every other program component. Partners live by discerning correctly the lowest cost, highest margin opportunities, net any real cost of disloyalty.

Throughout the 1990's partner programs emphasized partner support appropriate to fulfilling buoyant market demand. In the face of adversity, a contracting or stagnant market, the building blocks of many vendor programs - - technical training & certification, marcom, MDF, headcount, support and logistics - - become less significant to partner loyalty than securing orders.

In the face of adversity, what partners really want from vendors' programs is pull-oriented business development:
- Reallocation of partner program investment from fulfillment support to demand creation
- Investments in partner business acumen to help them outpace competitors
- A vendor relationship model focused on capturing latent demand
- Channel account managers able to jointly close deals

Loyalty flows from ink on P.O.s.

Check out my the discussion about strategic program design on the Channel Ventures site for more thurough disscusion of the issue as well as strategic questions and an overview of the design process.

Channel program design is not mimicking or plagiarizing your competitors' offering. Successful, programs are operating plans that compellingly extend the channel strategy to the partner while reducing the existing sales and marketing expense. Program design projects consist of the following steps:
Strategy review, draft program development, program validation and final program design. Compelling value propositions are built around the market opportunity, not the certification requirements.

Scott Karren, The Channel Pro

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