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Channel Matters Blog > July 2011 > Channel Programs and The Product Life-Cycle

Channel Programs and The Product Life-Cycle

by Chris Marshall
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Is your partner program appropriate for your product’s stage in the market life-cycle? Is it incentivising your partners to do what your customers need to be able to buy a ‘whole’ product?

Programs should follow four product life-cycle phases:
1. Early Adoption:
  • Objective: build an ecosystem of partners, established in your target niche, that will help you dominate it
  • Target Partners: System Integrators and complementary ISVs
  • Program Aspects: flexible, bespoke manual processes; joint account engagement ('sell with'); incentives for case studies; significant MDF;
2 Early Majority - Mass Adoption:
  • Objective: Coverage: Rapid recruitment and enablement of as many partners as possible
  • Target Partners: Value-Added Resellers
  • Program Aspects: Low barriers to entry; competitive displacement incentives; strict rules and automated processes; prioritise 'ease of doing business', easy availability of simple information.

3 Late Majority - Conservatives:

  • Objective: Maximise profit
  • Target Partners: Retail/eTail/Catalog (SME); CDRs (Corporate Discount Reseller)
  • Program Aspects: MDF for 'shelf space', in-store promotions,

4. Trailing Adoption- Laggards:

  • Objective: Maximise service revenue
  • Target Partners: service partners
  • Program Aspects: Certification based on service capabilities

The challenge that most vendors face is that they have different products (or often the same one) at different stages of the cycle in different vertical and horizontal (Enterprise, SME etc) markets in different geographies, all covered by a single program. Many overcome this by creating product 'specialisations' with different benefits and requirements to match the product's maturity in the cycle. Push-back from the channel happens when products move into a new life-cycle stage and therefore need a new target partner type to handle that product. The previous partner type, lovingly supported during the previous phase, suddenly finds themselves under-cut by the new partner type and their investment in that product's specialisation is worthless.

This is why it is important to communicate any program changes early to partners and their Channel Managers, so they can jointly plan how to transition to a different specialisation that will continue to match their business model. For example, Systems Integrators who thrive on the high services pull-through demanded by a new product in early adoption, are not interested in the relatively lower service pull-though that a VAR will welcome as the product gets mass adoption. They will need a replacement new product line from the vendor if they are to remain loyal. Likewise the VAR who cannot compete with a CDR when the product becomes a shrink-wrapped off-the-shelf solution available from CDRs or eTailers. They will need the 'next big thing' that requires their trusted advice and configuration support.

 

Last modified on 6/30/2013 10:10:39 PM
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