Monday, March 29, 2004
Issue: Rewarding Influence Channels
by Bryan Johanson, VP Channel Ventures
For the last few weeks I've have the opportunity to interview many channel executives from various organizations on the direction of the channel, their strategy for the future and the implications for their programs. After completing one of these interviews, one channel executive posed the following question: "How do we continue to provide incentives to channel partners who are opting out of the traditional transactional part of the sale?"
"Recently, we've had several good partners who just decided that they were changing their business model and dumping their "reseller" label moving exclusively into a services and design spec business model. They were no longer going to actually sell products. They still design our product into the solution, they still recommend it and ultimately they are the reason we win the business, but they don't sell it. How do I reward and encourage them to continue to include our products in the solutions when our programs are 100% tied to revenue?" This is a great question.
She continues, "We know about these people only because they started as a reseller of our products. What about those organizations that are influencing the sale but have never resold our product? How do we find and influence them?"
Great program design will reward partners for their true value add, and that might not necessarily be based on their sales out stats.
by Bryan Johanson, VP Channel Ventures
For the last few weeks I've have the opportunity to interview many channel executives from various organizations on the direction of the channel, their strategy for the future and the implications for their programs. After completing one of these interviews, one channel executive posed the following question: "How do we continue to provide incentives to channel partners who are opting out of the traditional transactional part of the sale?"
"Recently, we've had several good partners who just decided that they were changing their business model and dumping their "reseller" label moving exclusively into a services and design spec business model. They were no longer going to actually sell products. They still design our product into the solution, they still recommend it and ultimately they are the reason we win the business, but they don't sell it. How do I reward and encourage them to continue to include our products in the solutions when our programs are 100% tied to revenue?" This is a great question.
She continues, "We know about these people only because they started as a reseller of our products. What about those organizations that are influencing the sale but have never resold our product? How do we find and influence them?"
Great program design will reward partners for their true value add, and that might not necessarily be based on their sales out stats.
Saturday, March 27, 2004
Channel Zone Column: Branding versus Product Positioning
Branding can be a big mistake for many channel partners.
Incentives and budgets targeted toward product positioning have a much better chance of delivering an ROI. What the channel really needs is a way to link onto the branding and market moving activities of its key vendors. Check the whole article out at Ziff Davis's ChannelZone. The column is titled Branding versus Product Positioning and explores how partners can be more effective with their scarce marketing dollars.
Although written for the channel provider, the points in my previous ChannelZone columns are just as applicable to the channel executive looking to increase channel sell through.
Managing Sales Force Productivity: Sales team performance and productivity obviously are critical to a channel’s success. However we find that different executives think about different metrics when the term is mentioned. Corporate officers think of ROI, sales per head and sales growth as synonymous with performance. Sales VPs and Channel VPs, on the other hand think of the close rate, deal size, margin, competitive wins, account penetration and the sales funnel.
The Top Ten Issues Facing Today's Reseller: Business performance, not products are what are important to your partners. Vendors that can link programs to these issues will get loyalty and committment form their channels.
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
Branding can be a big mistake for many channel partners.
Incentives and budgets targeted toward product positioning have a much better chance of delivering an ROI. What the channel really needs is a way to link onto the branding and market moving activities of its key vendors. Check the whole article out at Ziff Davis's ChannelZone. The column is titled Branding versus Product Positioning and explores how partners can be more effective with their scarce marketing dollars.
Although written for the channel provider, the points in my previous ChannelZone columns are just as applicable to the channel executive looking to increase channel sell through.
Managing Sales Force Productivity: Sales team performance and productivity obviously are critical to a channel’s success. However we find that different executives think about different metrics when the term is mentioned. Corporate officers think of ROI, sales per head and sales growth as synonymous with performance. Sales VPs and Channel VPs, on the other hand think of the close rate, deal size, margin, competitive wins, account penetration and the sales funnel.
The Top Ten Issues Facing Today's Reseller: Business performance, not products are what are important to your partners. Vendors that can link programs to these issues will get loyalty and committment form their channels.
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
Friday, March 26, 2004
Issue: Doing the Right Thing
Several years ago I read a line in the Wall Street Journal that I really liked. I forget the author’s name, but it went something like this: “The optimal course of action is usually fairly obvious. The difficult part is ignoring the sirens and vested constituencies calling for a different course of action.” Sometimes launching a new channel or product puts a vendor in a "catch 22" position. They cannot focus on launch marketing until whatever sales problem or crisis passes, but the marketing is the only thing that will fix the sales problem. Clients often know what they want to do, but fail to follow though. Projects not only have to identify the optimal course of action, but also have to motivate the vendor to take action. Sometimes this is the biggest part of the project.
Scott Karren, The Channel Pro
Several years ago I read a line in the Wall Street Journal that I really liked. I forget the author’s name, but it went something like this: “The optimal course of action is usually fairly obvious. The difficult part is ignoring the sirens and vested constituencies calling for a different course of action.” Sometimes launching a new channel or product puts a vendor in a "catch 22" position. They cannot focus on launch marketing until whatever sales problem or crisis passes, but the marketing is the only thing that will fix the sales problem. Clients often know what they want to do, but fail to follow though. Projects not only have to identify the optimal course of action, but also have to motivate the vendor to take action. Sometimes this is the biggest part of the project.
Scott Karren, The Channel Pro
Friday, March 19, 2004
ISSUE: Sales Positioning Often Left to Chance
Here's something to think about: How can you communicate message & brand to customers and partners if you can't even communicate it clearly to your own organization?
Try this experiment. See how many people in your organization can quickly and clearly articulate the branding and messaging you are supposedly communicating to the world.
Scott Karren, The Channel Pro
Here's something to think about: How can you communicate message & brand to customers and partners if you can't even communicate it clearly to your own organization?
Try this experiment. See how many people in your organization can quickly and clearly articulate the branding and messaging you are supposedly communicating to the world.
Scott Karren, The Channel Pro
Tuesday, March 16, 2004
ISSUE: Channel Loyalty up for Grabs
Yesterday I had a long discussion with Joe Debold, a channel consultant in greater NY, about the channel. After a 1 hour discussion of vendors, partners, trends, etc., we agreed that the vendors really have an opportunity to impact their channel right now. Below is a quick summary of our conversation and our agreement on the likely areas of impact for vendors.
The small business and medium business spaces are very hot right now. (See my post on Friday, Jan 30, 2004) Many leading hardware, software and service vendors are looking to expand into this space right now. Further, the traditional VAR/SI channel is a primary route to market to reach these key user targets.
However, many of these same VARs are having trouble with their businesses right now. It is not just the economy. That is improving. Rather it is a maturation of the Technology Life Cycle. Unlike the past where resellers made transitions from LANs to WANs to IP to Wi-Fi, there is no major technology driving the channel right now, leading to continued margin decreases and channel consolidation. Even emerging markets such as Russia and China will see considerable consolidation over the next few years.
So what is a vendor to do? Joe and I hypothesized that the biggest area of impact for vendors will be to impact the sales performance of the VAR. No easy task. If they liked being managed, many of these people would not be running their own businesses. So, while both the Vendor and the Channel believe that more productive and professional sales are required, there is no consensus on the next steps.
The motto of Executive Conversation is “It takes more to improve sales performance than training the account manager.” To be successful in the channel, vendors will have to do the following:
1) Change Their Programs: Existing programs are reactive and administrative in nature. The cutting edge program will explicitly target sales productivity as the prime objective of the partnership and align resources to help the VAR make the required leap in capability.
2) Define a Sales Process: We need a comprehensive process. A new way of managing sales in the channel. We need to take advantage of the tools available on the market such as CRP and ERP. Time to grow up and go after the market like the big boys.
3) Train the Account Managers: The ability of CAMs and TAMs to talk business issues is very low. Vendors will have to increase the competence not only of their own CAMs, but also of the account mangers of each of their covered accounts. Level one training such as Sandler Sales is not enough. To win business in the medium enterprise space, account reps will have to establish equal business stature (to use an Executive Conversation term) with executive at the user accounts.
4) Change the Conversation: Our Channel Performance Index (CPI) and Provider Comparative Analysis Process (PCAP) get the facts out on the table. One participant called me at 2:00 AM his time after receiving his report and told me how angry he was to find out that his sales productivity CPI was only half the normal. He had just finished yelling at his sales manager and was going to yell at him some more as soon as we got done talking. My column in ChannelZone last month, How to Get More Out of Your Strategic Vendors, has started some momentum with providers already.
Dell loves the fact that none of the vendors is stepping up to the BAR. Go ahead and cut costs. Dell will copy that move and take more market share. Go ahead and wait until someone else figures it out. Dell will drive your channel providers out of business in the mean time. Tackle this issues successfully and you change the industry as profoundly as Novell did with program segmentation, as Microsoft did with incentives and Cisco did with certification.
Scott Karren, The Channel Pro
Yesterday I had a long discussion with Joe Debold, a channel consultant in greater NY, about the channel. After a 1 hour discussion of vendors, partners, trends, etc., we agreed that the vendors really have an opportunity to impact their channel right now. Below is a quick summary of our conversation and our agreement on the likely areas of impact for vendors.
The small business and medium business spaces are very hot right now. (See my post on Friday, Jan 30, 2004) Many leading hardware, software and service vendors are looking to expand into this space right now. Further, the traditional VAR/SI channel is a primary route to market to reach these key user targets.
However, many of these same VARs are having trouble with their businesses right now. It is not just the economy. That is improving. Rather it is a maturation of the Technology Life Cycle. Unlike the past where resellers made transitions from LANs to WANs to IP to Wi-Fi, there is no major technology driving the channel right now, leading to continued margin decreases and channel consolidation. Even emerging markets such as Russia and China will see considerable consolidation over the next few years.
So what is a vendor to do? Joe and I hypothesized that the biggest area of impact for vendors will be to impact the sales performance of the VAR. No easy task. If they liked being managed, many of these people would not be running their own businesses. So, while both the Vendor and the Channel believe that more productive and professional sales are required, there is no consensus on the next steps.
The motto of Executive Conversation is “It takes more to improve sales performance than training the account manager.” To be successful in the channel, vendors will have to do the following:
1) Change Their Programs: Existing programs are reactive and administrative in nature. The cutting edge program will explicitly target sales productivity as the prime objective of the partnership and align resources to help the VAR make the required leap in capability.
2) Define a Sales Process: We need a comprehensive process. A new way of managing sales in the channel. We need to take advantage of the tools available on the market such as CRP and ERP. Time to grow up and go after the market like the big boys.
3) Train the Account Managers: The ability of CAMs and TAMs to talk business issues is very low. Vendors will have to increase the competence not only of their own CAMs, but also of the account mangers of each of their covered accounts. Level one training such as Sandler Sales is not enough. To win business in the medium enterprise space, account reps will have to establish equal business stature (to use an Executive Conversation term) with executive at the user accounts.
4) Change the Conversation: Our Channel Performance Index (CPI) and Provider Comparative Analysis Process (PCAP) get the facts out on the table. One participant called me at 2:00 AM his time after receiving his report and told me how angry he was to find out that his sales productivity CPI was only half the normal. He had just finished yelling at his sales manager and was going to yell at him some more as soon as we got done talking. My column in ChannelZone last month, How to Get More Out of Your Strategic Vendors, has started some momentum with providers already.
Dell loves the fact that none of the vendors is stepping up to the BAR. Go ahead and cut costs. Dell will copy that move and take more market share. Go ahead and wait until someone else figures it out. Dell will drive your channel providers out of business in the mean time. Tackle this issues successfully and you change the industry as profoundly as Novell did with program segmentation, as Microsoft did with incentives and Cisco did with certification.
Scott Karren, The Channel Pro
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
Wednesday, March 10, 2004
Issue: Sales Force Performance
Sales team performance and productivity obviously are critical to a channel’s success. However we find that different executives think about different metrics when the term is mentioned. Corporate officers think of ROI, sales per head and sales growth as synonymous with performance. Sales VPs and Channel VPs, on the other hand think of the close rate, deal size, margin, competitive wins, account penetration and the sales funnel. In short, performance for field sales is about hitting the number and performance in the company is about leveraging sales infrastructure.
As a professional channel executive, we have to deliver both types of performance. We have to manage field sales behavior for measurable results and account for our stewardship and deployment of corporate performance. Remember, field sales salaries, local incentives and training are three of the largest line items in corporate SG&A.
As I mentioned last week, channels and sales are often not managed strategically, but treated as mercenaries. It is not good enough to “train and deploy” the sales force and hope for performance improvements. It is insufficient to manage sales where 80% of the revenue comes from 20% of the reps. To effect change in sales team performance requires changing sales management and specific sales rep behavior.
Although written for the channel provider, the points in my latest ChannelZone column, Managing Sales Force Productivity, are just as applicable to the channel executive looking to increase sales team performance. My past ChannelZone columns below also are relevant to sales performance:
The Top Ten Issues Facing Today's Reseller: Business performance, not products are what are important to your partners. Vendors that can link programs to these issues will get loyalty and committment form their channels.
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
Sales team performance and productivity obviously are critical to a channel’s success. However we find that different executives think about different metrics when the term is mentioned. Corporate officers think of ROI, sales per head and sales growth as synonymous with performance. Sales VPs and Channel VPs, on the other hand think of the close rate, deal size, margin, competitive wins, account penetration and the sales funnel. In short, performance for field sales is about hitting the number and performance in the company is about leveraging sales infrastructure.
As a professional channel executive, we have to deliver both types of performance. We have to manage field sales behavior for measurable results and account for our stewardship and deployment of corporate performance. Remember, field sales salaries, local incentives and training are three of the largest line items in corporate SG&A.
As I mentioned last week, channels and sales are often not managed strategically, but treated as mercenaries. It is not good enough to “train and deploy” the sales force and hope for performance improvements. It is insufficient to manage sales where 80% of the revenue comes from 20% of the reps. To effect change in sales team performance requires changing sales management and specific sales rep behavior.
Although written for the channel provider, the points in my latest ChannelZone column, Managing Sales Force Productivity, are just as applicable to the channel executive looking to increase sales team performance. My past ChannelZone columns below also are relevant to sales performance:
The Top Ten Issues Facing Today's Reseller: Business performance, not products are what are important to your partners. Vendors that can link programs to these issues will get loyalty and committment form their channels.
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
Thursday, March 04, 2004
Issue: Channels Often Not Viewed as Strategic
I keep asking myself why channels are not more strategic. Even in companies that have the preponderance of sales from channels, the Channel VPs often are not part of the executive committee. Worse yet, they are seen as less valuable than direct sales. This leads to populating the channel organization with direct sales rejects, junior account managers and 2nd tier marcom personnel.
It is not unusual for junior people to be given responsibility for channels despite their lack of experience with that channel. Worse than their lack of experience, is their lack of standing within the corporate management chain. Think about it. If you delegated the job to a peon, it must be because nothing they do can have a real impact on business. This is the start of a vicious cycle. They then develop lackluster programs and “me too” value propositions that fail to impact partner behavior, sales performance occurs in spite of the program and proves that the job is not important.
The real tragedy is that it dies not have to be this way. Sales force management and productivity are key to a company’s growth and profitability. Channels, when professionally managed can create barriers to competition, market coverage and consistent sales volumes.
The key to breaking out of the “channel reject cycle” is to demand accountability from the channel organizations. Set the bar higher and staff the organization to hit the mark.
Scott Karren, The Channel Pro
I keep asking myself why channels are not more strategic. Even in companies that have the preponderance of sales from channels, the Channel VPs often are not part of the executive committee. Worse yet, they are seen as less valuable than direct sales. This leads to populating the channel organization with direct sales rejects, junior account managers and 2nd tier marcom personnel.
It is not unusual for junior people to be given responsibility for channels despite their lack of experience with that channel. Worse than their lack of experience, is their lack of standing within the corporate management chain. Think about it. If you delegated the job to a peon, it must be because nothing they do can have a real impact on business. This is the start of a vicious cycle. They then develop lackluster programs and “me too” value propositions that fail to impact partner behavior, sales performance occurs in spite of the program and proves that the job is not important.
The real tragedy is that it dies not have to be this way. Sales force management and productivity are key to a company’s growth and profitability. Channels, when professionally managed can create barriers to competition, market coverage and consistent sales volumes.
The key to breaking out of the “channel reject cycle” is to demand accountability from the channel organizations. Set the bar higher and staff the organization to hit the mark.
Scott Karren, The Channel Pro
