Saturday, July 31, 2004

Management:  How do you deliver bad news?  

Another Longhorn delay? Word has been leaking out about another possible slip in the schedule for the release of the next version of Windows, codenamed Longhorn.

A major OS beta can take 18 months or more. With Longhorn as complex as it is, this beta could be a long one. If the beta slips to the last half of 2005 or later, the next version of Windows may not be released till 2007, 2008, or even 2009.

If true, what does another delay in the Longhorn schedule mean to Microsoft's channel? Is their channel prepared? What does another Longhorn delay mean to you? What does it mean to Microsoft? How should Microsoft communicate this type of news?

One way to handle bad news is to level with people outside the company as soon as possible, and prepare them to deal with it. Most companies need to work on this kind of transparency. Microsoft has made progress on this front through employee blogging. With bloggers like Robert Scoble a company can mitigate the pain associated with bad news, by delivering it as early and painlessly as possible. We actually found out about this possible new delay through Scoble. What does it mean to you when you get important news directly instead of getting it from second hand sources? Blogging is making a difference at Microsoft.

The Channel Pro has previously noted Scoble's good communication work on several different occaisons. And of course, these things don't work if they don't get support from the top. Communication to the channel should be a strategic opportunity and not an afterthought.

So, what's your plan? How good is your communication?

Bill Weir Channel Ventures


Monday, July 26, 2004

Strategy:  Web Account Management Critical for SMB Coverage

There is a well known correlation between end-user account size and the size of the reseller supporting it.  That is, small channel providers tend to service small accounts.  That means that except for established retail products, you need the small VAR/SI to reach the SMB marketplace. 

By extending the functionality of tradition account management, you can improve your sales and marketshare in the broad channel.  At Channel Ventures, we have been developing a WAMS (Web Account Management System) to help vendors manage their unmanaged accounts.  We began by examining the various roles played by a CAM (Channel Account Manager) -- e.g. recruitment, mindshare, promotion, support, allocation -- and developed systems to extend the benefit to the unmanaged mass of resellers in a typical channel. 

The big learning was that this is not about data, but about interaction.  Instead of being data centric, this is relationship centric. 

How will you bring 80% of the CAMs impact to the majority of your channel that has no account manager?

Scott Karren, The Channel Pro


Sunday, July 25, 2004

Issue:  Fallout from the Loss of a Design Win
Evinrude/Bombardier lost North Sound Cruising Center as a design win. Because of the flexibility of a single channel provider, Honda will be the standard offer for all Motorcat30s imported from Poland to the Northwest.  Not content with just the design win, the Honda dealer is doing everything he can to make sure the competitive ETECs stay out of his new account. 

The owner of Honda's channel provider, Bay Marine, said "We will provide such a great bid and service that NSCC will completely forget about ETEC."  Contrast this with Evinrude's 3 month lack of responsiveness and arrogant "our way or the highway" attitude.  Evinrude lost a sure-deal sale, lost the design win, and are now the underdog in a competitive bid situation. 

The moral of the story?  Even a superior technology cannot compete with solid channel service. 

What is the capability for design wins in your channel?

Scott Karren, The Channel Pro


Saturday, July 24, 2004

Initiative: Empowering the Channel for Wireless

What would it take to make a real statement about wireless?

I am impatient for wireless to be more widely accessible.  As I have said, I have had wireless (80211) in my home since the mid-nineties.  For example, the hotel we held our conference in last week in Shanghai still did not have wireless.  Give me a break.  For me, not having wireless connectivity in the hotel is as bad as not having beds. 

Intel has been leading the charge, but many holes still exist in the market.  Intel has some big wins, but it is time to take it to the next level.  How about working to make Beijing a fully wireless city in time for the 2008 Olympics.  If you can unwire a real city, a city of 12 million, into the leading example of technical implementation, Intel can prove wireless is for everyone.

Unwiring Beijing will take more than technology.  Most of that exists already.  It will take an ecosystem.  A channel in other words.  infrastructure, regulatory change, last mile service providers, integrators, all are required to make it work.  Both mainstream players, like China Mobile, and grass roots organizations line BWIN (Beijing Wireless Information Network) will have a role to play. 

But to make it happen, we need to get started now.

Scott Karren, The Channel Pro


Friday, July 23, 2004

Clarity on Objectives More Important Than Program Elements

Yesterday a Director of Channels whose team just completed their strategic plan for channels told me his priority was "figuring out what to cut from the program to pay for all the new things they wanted to do."  This is an indication that they still do not know what is important to them and that the strategic plan is more of a wish list than a roadmap.

Once you are clear on exactly what you want out of your employees and channels, it is a fairly strait forward project to build a program that delivers those results. 

In other words, if you are NOT clear on the objectives, your channel will be chaotic regardless of what your program promises.

Scott Karren, The Channel Pro


Thursday, July 22, 2004

Issue:  Channel Flexibiltiy Drives Market Share

How do you break the rules to stimulate market share?

We all know that programs get stale.  Just like big companies that lose the flexibiltiy that made them successful in the first place, programs often take on a life of their own that may have little to do with current market conditions. 

The keys to successful rule breaking are as follows:
  1. Build programs around objectives rather than rules
  2. Train the field on the objectives and customer needs
  3. Leave implementation open to local adaption 
By defination, breakthrough performance requires that you ignore today's rules. 

Scott Karren, The Channel Pro


Wednesday, July 21, 2004

Tactic:  Ten Things You Can Do To Support Design Wins

Here are some ideas for improving your channel design:
  1. Rebate for 1st Product Installation
  2. Provisional Authorizations
  3. Testing and Integration
  4. Pilot Customer Lead
  5. Beta Facilitation
  6. Special Sourcing
  7. Flexibility on Rules
  8. Alliance Matchmaking
  9. Timeliness and Escalation
  10. Courteous and Professional Interaction
Just having the best product is not enough.  Without help on getting the product to market the channel commitment to your product is left to chance. 

Scott Karren, The Channel Pro

Issue:  The Importance of the Design Win

When a channel provider builds a product, opens a new department, or acquires a new class of customer, it is the most important time to have excellent pre-sales support and inteaction.  Because it is new, this is the time when the customer is most open to change.  It also is the time when you can have an impact not only on the specific transaction, but on the business model.  During the launch of a new product, it is easy to demonstrate business value add by eliminating one or more of the uncertainties that plague new ventures.

To a vendor, these opportunities often look like more trouble than they are worth.  You have an unproven provider offering untested solutions to customers in new and often unsettling ways.  "Why can't they just do it like the rest of the providers?" or "Why do they have to be different?" are the sentiments I hear from vendors and their reps. 

Let me give a real world example.  In a fit of what my wife calls unfounded optimism, I started a new company, North Sound Cruising Center to import Yachts from Poland.  This has been a great case study in launching a product and building a channel company.  In addition to finalizing the business model in real time, we also have to establish vendor relationships for power, insurance, electronics, support, , financing, etc.  I wasted 2 and 1/2 months of time trying to get Johnson/Bombardier to work with me on the design win for engines.  After multiple delays and causing me to miss my grand opening event on the 4th of July, they say they would love for me to buy retail from an existing dealer (like the one who tried to sell me Yamaha engines.)  Looks like Honda will get the deal instead, not because Honda did anything to get it, but because one of their channel partners is flexible enough to work with me. 

My newness was precisely what was hard for Bombardier.  I did not fit well in their programs.  "What do you mean you plan to outsource service and support?" they cried?  "None of our other dealers operates that way."  Similarly, your prospective channel customer my not fit in with your existing program. Yet is is this very newness that is their strength and their value to you. 

New means Incremental. 

The new provider, product or service is an attempt to serve an unmet market need.  Below are the five key benefits of a design win to your channel organization.
  1. Branding:  The design win product or prototype will be the one shown to prospective customers
  2. Promotion:  Marketing and sales activities will focus on the new product and its components
  3. Process:  Support procedures and habits are created during the first product sale
  4. Momentum:  Competitors have to prove they are BETTER, not just as good as
  5. Impact:  Value-add is easily linked to specific business issues

The business owner will remember who helped him get to market.  How your program supports the provider during this critical time will set the tone of the entire relationship. 

Scott Karren, The Channel Pro


Tuesday, July 20, 2004

Issue:  Manage Reps to Manage Channel Image

We all know how much a rep can do to connect with a customer, explain product relevance and drive a sale.  The flexibility provided by human interaction can do so much that static print media and web sites cannot.  Yet if reps are not managed correctly, that same flexibility can damage sales.

In fact, we often look at the effectiveness of reps as a leading indicator of a company's entire channel effort.  Regardless of what is offered on paper, if the rep is not engaging with current and prospective customers in a value-added fashion, they are doing more harm than good. And in the channel, value-add means connecting on a business level; knowing what is important to the channel provider and connecting program and product benefits explicitly to the providers business. 

This is not some vague, academic exercise.  Provider's business needs are specific and measurable.  Whether it is launching a product, opening a store, eliminating unproductive support hours or delivering on an SLA (Service Level Agreement), the providers profitability and future business all hinge on the components in a solution. Additionally, if the provider does not feel that his efforts or business is respected, why should they include any specific product in their solution.

What is the gap between what you have tasked your reps with and how they are perceived in the market?  After all, it is more important what your customers think they get from a rep than what you think you are delivering. 

Scott Karren,  The Channel Pro



Friday, July 09, 2004

Strategy: Using Web to Raise Commodity Margins

Who would have thought that the Automotive industry would have so much to teach channel executives in Hi-Tech. First a great Forbes article on The Lexus Dealer Channel and now another great article on Mazda from Business 2.0.

Mazda is a great case study of a vendor going beyond lip service to impact dealer profitability. Common wisdom was that the internet made more knowledgeable customers thereby increasing competition on price and lowering margins. Mazda redesigned its showrooms to feature the internet and it trained its sales force to talk to customers about the data they found. This accomplishes several important things for the channel:

1. Keeps the customer in the showroom
2. Changes the conversation away from price to user needs
3. Increases margins by enabling add on service contract sales
4. Makes the experience more enjoyable
5. Makes the channel more willing to invest in infrastructure

How are you using the "destroying" trends (such as instant price shopping on the net) to grow a new and healthier business?

The best way to build loyalty is to build in profitability into your programs and channels.
Scott Karren, The Channel Pro

Issue: No Vendor "Owns" Its Channel

Many vendors get to feeling proprietary about their channels. While this is natural, especially in regard to competition, it is out of place in the open marketplace of VARs and Integrators. By definition, the VAR is integrating products from multiple vendors into its solution. Yet vendors still try to filter and control access to their channels.

I remember when we were building a channel for Pacific Bell whose connectivity was critical to network hardware and software vendors. Some such Cisco embraced us and actively helped Pacific Bell recruit its members into the new RBOC provider program while others such as Novell not only refused to cooperate, but actively tried to stop our contact with the channel. No surprise which one did better in the channel.

What some myopic vendors fail to realize is that this idea of proprietary channels not only is bound to fail (read The Cluetrain Manifesto), but also reduces the power of their own channel. If it is going to happen anyway, you may as well be part of the answer rather than an obstacle.

One of the best things a vendor can do for its partners it to help it build a stronger, more robust product and service offering. What are the strengths and weaknesses in your channels offering? What new product or service could they add? How could rapid adoption of a tangent or complimentary product impact sales of your products like PacBell's did for Cisco?

Scott Karren, The Channel Pro


Thursday, July 08, 2004

Issue: Microsoft is Creating a "Buddy System"

Microsoft has been reaching out to partners with a new initiative that matches up employees with ISV's. The program has been quietly going for a while, but now it's getting publicity. Mary Jo Foley has written about it on Microsoft Watch.

I've seen it in action myself in various Microsoft groups. You can see the "He Ain't Kooky. He's My Buddy." posters around campus, and everyone is being drafted into the campaign. It's part of a bigger effort to reach out to customers and partners that's been going on for some time, like the internal blogging by Robert Scoble and more than 1000 current Microsoft bloggers.

Is it a good idea? It's a great idea! Is it for real? Yes, senior management is serious about it, and the program is being implemented. What results will it bear? Only time will tell, but any company that wants to be competitive needs to be exploring creative solutions like this to strengthen their channels.

Posted by Bill Weir, Channel Ventures


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