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Channel Matters Blog > April 2013 > The Rapid Change of Channel Relationships

The Rapid Change of Channel Relationships

by David Perrett
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Technology and the cloud are changing the channel more rapidly than in the past. Combined with greater global competition, the need for strategic channel design that aligns your overall competitive strategy and performance objectives is imperative.

These changes must be weighed against three criteria: 
  1. How to best maintain relationships between your company and your channel partners.
  2. Channel roles and responsibilities
  3. Streamlining the delivery experience. 
In their MIT Sloan Management Review article entitled “Strategic Channel Design”, the authors talked about how to better manage these needs.

Maintaining relationships between your company and your channel partner – As more vendors come to market, especially those with a cloud based platform, the manufacture’s bargaining power will be diminished, thus threatening profitability.   Working closer with your channel partners by investing as well as assisting them with their own marketing programs will not only build loyalty, but can help focus your own efforts, and reduce cost.  The authors also said vendors need to be more open with their channel partners and share customer data that can give the channel partner insights to the customer’s needs and the best market opportunities. 

Channel roles and responsibilities – Customer’s expectations are rising.  As customers become more accustomed to more specialized solutions and greater services, having clear Roles and Responsibilities with the channel to not only ensure who has the responsibility of managing the client account, but also each party’s responsibility in solution delivery and maintenance.  This is especially true as cloud-based solutions proliferate.   

Streamlining the delivery experience – The vendor needs to determine if the activities are critical enough to be handled in-house, or can they be cost- effectively handed off to the channel partner.  By doing so, the vendor can focus less on the day to day needs of the customer, and more on enhancing their competitive position. This also gives the channel partner the ability to build those critical relationships with the customer that lead to greater loyalty, and filter back to the vendor. 

According to Strategic Channel Design, there are four channel requirements needed to ensure profitability:
  1. Effectiveness — How closely does the channel design address vendors and customers' stated and unstated requirements?
  2. Coverage — Can the partner and the customer find and appreciate the value in a firm's offering?
  3. Cost-efficiency — Can the vendor justify a tradeoff in cost to gain greater strategic effectiveness and coverage because of the multiplier effect that distribution has on increasing the impact of the other marketing variables?
  4. Long-run adaptability — Can the channel design handle possible new products and services and incorporate emergent routes to market?
At Channel Enablers, not only do we consult with vendors to help them find the most efficient models to reach the ideal customer maintain, setting up channel roles and responsibilities, and streamlining the delivery experience. We also can help train your Channel Account Managers (CAM) to recruit and manage the best partners, reduce time to market and maximize coverage and customer satisfaction, ensuring success not only for the vendor, but for their partners as well.  As Channel Enablers’ CEO Braham Shnider said so aptly, “(CAMS) do not control their channel partners or their sales opportunities as their channel partners will do things for their own reasons not because they have been told to do so by a channel manager who works for another company. Successful Channel Management is about influencing channel partners on how they develop, manage and optimize sales opportunities while also influencing and leading change initiatives and investments that drive indirect channel revenue”.

Reference

Strategic Channel Design by Erin Anderson, George S. Day, and  V. Kasturi Rangan. MIT Sloan Management Review.

Channel Management. Harder Than Direct Selling? By Dave Stein on Dave Stein’s blog. http://davesteinsblog.esresearch.com/
Last modified on 6/30/2013 10:11:28 PM
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