Wednesday, August 03, 2005

Channel Trends: The Value of Channels

In general, channels are still valued.

They are growing in both the number of partners and the amount of revenue generated from partners. However, they are NOT the only route to market. Direct sales efforts to enterprise and strategic customers also are critical elements of a complete go-to-market strategy.

For many technology companies, their channels have matured from the evangelistic early phase programs to more financially driven volume programs. In the mature program, the value of each partner is determined primarily by the revenue they bring in and the cost to generate that revenue. Non producing partners are ruthlessly eliminated even if they have intangible benefits to the vendor. In a mature channel, net delivered revenue contribution is king.

State of the art right now for many tech vendors is a low touch, high volume program supported by tele reps and robust web sites. Channel management for these vendors will evolve into web managed communities.

Strategic partners will still be supported with outbound field sales reps with skill sets similar to great direct or enterprise sales reps. However, in addition to these traditional skills, they will also have to understand all the channel and partner issues.

Scott Karren,
The Channel Pro

Scott, please comment on what role, if any, technical alliance, supplier partners, etc, play in a “complete” go-to-market strategy? Clearly they are “non-producing” partners, but it seems short-sighted not to also factor (leverage) them into the equation even if they require a different set of success metrics.
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