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Channel Matters Blog > December 2012 > The art of channel management

The art of channel management

by Stan White
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If Sun Tzu, the often quoted ancient Chinese military general, strategist and philosopher, had been a sales leader running a multi-channel organization he most certainly would have made some key observations and analyzed best practices. What would he have to say about partner plans, incentives and strategies and about competitive victories and defeats?

As he looked across his organization and his strategic routes to market he might have noticed the challenges channel managers have getting their channel partners to commit and take action on their company's growth plans. How endless streams of money, incentives and Market Development Funds end up getting little if any traction from key resellers and distributors. How great meetings and presentations turn into half kept promises or, worse yet, excuses for poor execution and results. As a master of identifying what's working and what's not, he most certainly would have seen some channel successes and winning partner strategies. While channel successes would have included sales incentives and support plans, they would clearly have been seen as tactical. Strategy would have been driven by observation and understanding; the understanding that partners have their own plans and drivers. If what the partner wants to fix, accomplish or avoid, is not understood, factored in, and validated by the partner there is no partner strategy, just a hypothetical internal plan that when presented is most likely rejected or ignored.....Regardless of incentives to support it!

A key lesson would be; Partners do things for their own reasons. After seeing this Sun Tzu might have said:

"Strategy without incentives is the slowest route to victory. Incentives without strategy is the noise before defeat."

Too often the strategies and objectives presented to channel partners are lost in the noise from the pack of vendors vying for a partner's mindshare and resources. What the partner hears is what you want: what you want them to do and what you want them to invest. What they want to hear is how they can make money and why this is a compelling opportunity for them, not you!

This sounds easy and commonsensical, however, even companies that claim to be "partner centric" and "partner friendly" struggle with approaching partner planning from the partner's perspective to create plans that leverage strengths and deliver a mutual win. Listen closely to a CAM's partner plan presentation and you will hear things like "grow our market share and revenue" versus "grow the partner's customer base and share of wallet". To optimize a channel model you need to take channel relationships to the next level of shared vision and win-win goals; with these in place execution becomes a much simpler problem to manage. Collaboration, teamwork and communication become the cornerstones of winning together.

Why then is it so hard for organizations to do this correctly or consistently? When asked, many sales leaders and channel managers simply say that;
  1. Our people are not comfortable having these types of discussions.
  2. It's difficult to have these kind of discussions with the right people in the partner organization
  3. We just don't find the time. It's hard for our people to take the time to plan in a reactive world!

When I began my sales career I was exposed to a legendary sales icon who spoke to large groups of aspiring young sales professionals. He said something that has stuck with me throughout my career and always seemed to prove itself out. He said "Selling is a wonderful profession; it's not only the highest paying hard work in the world......it's also the lowest paying easy work!" Successful partner plans require hard work, effort and the involvement of channel partners. Once vendors have clarity on their own areas of opportunity and growth they need to focus on where they can help their partners grow. If alignment is impossible or the requirements or constraints are too overwhelming, then a change of plans is required if you are going to be successful reaching the end customer.

Sun Tzu knew what it took to be successful:

"The general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose."

Getting it right takes planning and focus; Sun Tzu was clear about this. To win major campaigns a leader needs to make many calculations. The leader who fails "makes but few calculations beforehand." So what does the channel sales leader have to calculate and analyze before drafting and executing their strategy? It starts with clarity on how and where you want to grow your business. Where do we place our bets?

Will growth come from existing customers and existing products? Or will it come from new customers and existing products? What about from new products to existing customers? Or, the most dangerous ground of all, from new products to new markets and customers? Regardless of which growth strategy is prioritized, many calculations need to happen to achieve success, profitability and partner interest.

Early in my channel career, I worked with a global leader in photography, cameras and lenses. They made a game changing strategic decision to enter a new market where they had neither existing products nor customers. The risk was high and the need to plan was very clear. It required a blisteringly clear 10 year strategic plan to go from 0% to 30-40% market share, and it required were many calculations. The planning paid off! The organization achieved tremendous success globally and achieved sales and profit growth for 26 of the last 27 years. The calculations made to achieve this result included assessment and considerations around:

  1. Market Mapping and routes to markets and end-customers
  2. Whole product, to determine what was needed to support and wrap around the product to make it more accessible or supportable for the target customers as well as what kind of partners would add value.
  3. The ideal number of partners and criteria for selection
  4. Partner enablement plans and requirements
  5. Sales and support programs needed
  6. Sales performance plans and metrics
  7. Internal support and alignment to execute the channel strategy without disruption
These types of calculations and assessments are examples of some proven channel management best practices. They were critical to the success of this particular 10 year plan and have proven invaluable for many organizations working with indirect sales channels.
With all this in place, one might believe that a company is positioned for success! Right? ........... Wrong!

So what's missing?

Partner Buy In! The creation and validation of shared vision and goals with partners!

The Partner's "will" to participate and execute is critical no matter how good or well thought out the channel plan is! While the partner may say they will "give your plan a go", their subsequent action or lack of action is an important leading indicator of how successful the plan will be. A poor plan perfectly executed is preferable to a perfect plan poorly executed. The partner has to be on board and committed!

Partners may clearly understand why you want them to help you achieve growth but they may not be clear on how it will benefit them enough to warrant the investment of time, money and effort required. There are probably many questions left unanswered in the mind of the channel partner after that 'great partner meeting' and it is up to the channel sales team to provide some answers...even if the questions are unspoken.

Let's consider an example of trying to influence a partner to sell new products to their existing customers. The partner's questions may be:
  1. How much demand exists for the product?
  2. Why would our customers purchase it?
  3. How much competition is there and why are you different?
  4. What market segments have you targeted and why?
  5. What do you want me to do and why?
  6. What is your market coverage strategy? (How many partners will you sign up and where are the direct sales force going to operate?)
  7. How committed is your management to the channel? (What happens if there is a conflict with direct sales?)
  8. How will this impact our current business?
  9. How developed is your channel program? (What do we get?)
  10. How do we make money what do we have to do to get the money? (How much do we get?)
Sun Tzu would likely agree that it is critical to know your partners as well as you know yourself. If you have worked through these calculations and questions from both your and the partner's points of view, you are in a much better position to establish shared vision and goals and articulate joint growth objectives that both you and the partner can commit to execute. Left unanswered, and with potentially conflicting business agenda's, no reasonable amount of incentives and support will optimize the plan and drive joint revenue or profitability. Sun Tzu would most likely point out that a drawn out campaign weakens you as a unit, the faster you find success the more successful you will be and the more insulated you become from competitive attack. However, it takes many calculations!

The Art of Channel Management requires strategic planning that is centered on your partner, to discover and position mutually understood joint growth objectives that are supported by mutual commitment to execute. It requires work to understand these opportunities and make the necessary calculations to position the opportunity and answer the partner's questions before they will invest. It is an exercise in joint planning. Have confidence to explore possible growth areas together, determine the best opportunities to work on together, answer key questions, validate the strategy and create joint ownership and execution!
Last modified on 6/30/2013 10:11:20 PM
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