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Channel Matters Blog > March 2013 > Reducing Channel Conflict Part Two

Reducing Channel Conflict Part Two

by Harold Sunata
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This is part two of a three part series on reducing channel conflict between direct and indirect sales teams. It might be helpful to read Part One first if you haven't already.

In Part One, we saw how proper compensation is a vital component in driving sales and the desired level of field alignment between direct and indirect sales teams. But compensation alone does not solve all channel conflict. If that were the case, all you would have to do is copy a successful comp plan, pass it out, and all your troubles would magically disappear.

In Part Two we look at how Partner Selection, Partner Enablement and Rules of Engagement can reduce channel conflict even further.
Even when sales teams are properly compensated, you can still run into channel conflict. Here are just a few examples:

  • Too many partners in a given territory can lead to constant battles between partners and direct teams (while too few partners will prevent you from reaching your revenue targets)
  • Direct and indirect sales teams erroneously assume and expect the other to take care of certain vital sales or marketing tasks, while doubling up and stepping on each other toes on others; this leads to conflict and lost sales
  • Partners or direct sales with inadequate training or resources may do their job incompletely, causing frustration and tension between them
  • Direct sales teams may block partner access to top customers, even if a partner is an expert in that customer's industry or solving that customer's specific needs

I'm sure you've seen these and many other examples throughout your career.

When faced with channel conflict, many attempt to solve these issues at the field engagement level, when sales teams are eyeball to eyeball, as conflicts bubble to the surface. And while it is always good to resolve conflict when it arises, the problem with this approach is that your direct and indirect sales teams are wasting valuable time and goodwill confronting each other, when they really should be in full sales mode, attacking competition and the market place.

The longer lasting, sustainable and scalable way is to address and prevent conflict before it occurs. Fortunately, there are concrete steps you can take to anticipate and reduce channel conflict well before the boxing gloves go on, while bolstering your overall channel performance at the same time:

  • Identify the right partnerships for each market in which you choose to participate
  • Establish clearly defined roles and responsibilities for vendors and partners
  • Educate and enable vendors and partners to fulfill their roles and responsibilities
  • Define rules of engagement that demand proper field behavior

Partner Selection, Roles and Responsibilities

The best place to begin partner selection and defining vendor and partner roles and responsibilities is at the very beginning of your company's overall strategy. It should start with market segmentation. Proper market segmentation identifies ideal markets based on factors such market size, product fit, market maturity, and competitive landscape. In any segmentation exercise, companies also need to look at all the elements that constitute a successful implementation of their solution (e.g., technical, industry or product knowledge, complimentary offerings, market coverage, sales skills, services, stock availability, financing, post-sales support etc.). This is referred to as the 'whole product'.

Proper market segmentation also identifies the best routes to market. It determines the optimal level of direct and indirect sales to reach the end-customers. It takes into account things such as the vendor and partner's expertise and influence in a market, their ability to provide all components of the whole product solution, their ability to adequately reach all customers. The importance of market coverage mapping and partner selection should not be understated. Proper or improper partner selection and routes to market can make or break even the best product offering. How successful would the iPhone be without proper partnering with wireless providers?

With proper market segmentation, companies can identify the specific roles and responsibilities for themselves and their partners in a given market. Direct organizations know how many resources and the kind of resources they need to put into place in each market, and how they are expected to engage with the channel. Channel organizations are best equipped to identify and recruit the best type of partners for each market (e.g., resellers, retailers, SIs, ISVs) and determine the right number of partners needed. They also have the right business justifications and expectations to take forward to their partners.

For example, if you are a hardware vendor, you may determine you need both resellers and software developers to complete your whole product solution for a given market. If you are a large vendor, you may have hundreds or even thousands of resellers, through both direct and two-tier distribution. You expect resellers to be highly engaged at the transaction level so your partnerships will be highly focused on the partner sales teams. For software developers, the best route to market may be through relatively few ISV partnerships that are likely to be focused at the corporate level, establishing your joint solution as a better, differentiated whole product solution for the market. You do this through certifying platforms and releases, incorporating new features, creating differentiated bundles or preconfigured systems, publishing benchmark, TCO, and customer success stories, engaging in joint marketing activities.

The roles and responsibilities of reseller or ISV sales teams, and the way they engage with direct sales teams, are likely to be vastly different. Resellers are expected and paid to take the lead in identifying and closing opportunities. They are expected to have the product knowledge and skills to promote your hardware solution. They often engage with your direct team in joint territory and account reviews and joint sales efforts on customer opportunities when advantageous.

ISV sales teams behave far differently. They should not be expected to promote or sell your hardware solution. Their sales team should acknowledge your solution as a supported platform, even recommend it if circumstances warrant it. But don't depend on that! Your sales team needs to stay engaged with every joint customer each step of the way, working with your ISV team, even if the direct team introduced the opportunity to the ISV. The flip side also holds true. If the customer is evaluating several ISV solutions, your hardware team is not obligated to promote one software solution over the other. Their goal is to win the hardware business, with the software solution that provides the best fit for the customer. This doesn't mean that ISV and hardware teams should not engage with each other. They should when it can help both open new opportunities and close more deals. But neither team should expect the other to complete the whole product sale. With clarity on these roles and responsibilities, there should be less misaligned expectations and conflict between both the hardware vendor and the different types of partners.

Companies need to consider routes to market as a key factor in market segmentation. Selecting the right partners with proper roles and responsibilities up front largely removes ambiguity on territories, marketing, sales, implementation and post-sales responsibilities, serving as a basis to greatly reduce channel conflicts before they occur.

Educating and Enabling

Even if you have the best segmentation work done with clearly defined roles and responsibilities, this alone will not guarantee success. Unless you are good at using the "Vulcan mind meld", you need a way to help educate and enable people on their roles and responsibilities.

That's where a good enablement program comes in. Your education and enablement program should not only explain vendor and partner roles and responsibilities, it should:

  • Specifically define and document each role
  • Identify and reach the person(s) responsible for each role
  • Provide the person(s) responsible for the role with knowledge, skills and resources to fulfill their roles
  • Motivate each person to embrace their roles and responsibilities

By clearly defining each role, there is no misunderstanding. For example, "customer awareness" may be a role assigned to a partner or vendor. To reduce any misunderstanding you should define customer awareness as specific activities such as advertising, lead generation and telemarketing campaigns, trade show participation, producing brochures etc. Sales activities may include prospecting, initial qualification, product demos, contract negotiations and financing.

Once these roles are defined and agreed to, they should also be documented. They should be an integral part of the overall partner plan.

Identifying the persons responsible for each role is just as important. If a partner is responsible for customer awareness, who within the partner organization has that responsibility? Marketing? Sales? Who within marketing? Who within sales? You can see where this leads.

It is also critical that enablement be done not only for partners but for direct teams as well. How often are new channel programs rolled out and direct teams have little or no idea on what the program is, how it affects them, how they are to engage, what role they have to play? In many companies, channels account for 50% or more of their sales, which for large companies represent tens of billions in worldwide sales. If channel success depends on synergy with direct teams, direct teams must be just as properly educated and enabled as their partner counterparts on their roles and how to leverage new channel programs and work with channel partners. Missing this step could be leaving billions in sales on the table.

How to reach each person is another matter. A good enablement program must use a number of methods, such as presentations, in-person training, webcasts, e-learning programs, and social media to not only reach, but reinforce knowledge and skills.

People engage in the proper activities when they feel they have the skills and resources to succeed. If a partner is responsible for a sales role, the vendor's responsibility may be to provide the partner sales team with proper product training, sales methodology, demonstration environment and scripts needed in a successful sales engagement. The vendor may also need to provide the proper operational training and tools on preparing quotes, responding to proposals, contract administration.

Finally, the best enablement programs will go nowhere without proper motivation. If the target participants do not have the motivation to engage in enablement, they will simply ignore it or multitask their way through the program. Up front, the enablement program should clearly spell out the benefits and the consequences of the enablement to the participants. For example, a sales enablement program should outline and be driven by how it will help sales and pre-sales people sell more, sell faster, with more repeatable business. If you read Part 1 of this series, you know I am a believer in the carrot and the stick. If deemed important enough, enablement should be considered mandatory, with tracking reported back to management.

Rules of Engagement

Because conflict, especially at the field level, can be so destructive on both specific transactions and with overall field engagement strategy, planning to avoid conflict deserves special attention. A vital weapon in the arsenal is clearly defined rules of engagement.

Rules of engagement should be a formal way to define how vendors and partners should engage with customers in various sales situations. You may have an informal set of guidelines that you've used to address some of these scenarios, but like traffic rules, if left informal, sooner rather than later, chaos and disaster ensues.

The best way to avoid any confusion and hazard is to establish and publish defined rules of engagement. Rules of engagement should:

  • Consider all typical sales scenarios
  • Define how your company should respond to a specific situation
  • Define how partners should respond to a specific situation
  • Define the consequences for both vendors and partners who do not respond appropriately to the situation
  • Define how disputes are escalated, arbitrated and who makes the final decision

One rule of engagement might cover how direct and indirect sales teams interact when a partner registers a lead. The rules of engagement should spell out things like which sales team should lead sales effort, when leads might be exclusive or can be reassigned, sharing of information between the partners or with others etc. Consequences should be spelled out when rules are not followed and how disputes can be escalated.

At a higher level, a rule of engagement might be to define a geography for a regional reseller, what they are expected to do within that geography and what happens when an opportunity presents itself outside their geography.

At the market segmentation level, rules of engagement might define how partners and direct sales will engage. For example, if the market segment is financial services, it may be determined that direct teams will cover companies larger than $10 billion, SIs are expected to cover companies from $1 to $10 billion, and regional partners are expected to cover the market below $1 billion.

One final thing to consider is who is responsible for developing rules of engagement. While this should be a collaborative process with partners, rules of engagement should ultimately be the responsibility of the vendor. After all, it is the vendor's program and the rules of engagement should reflect the way a vendor goes to market with their channel. This doesn't mean that rules of engagement should be one-sided in favor of the vendor, it simply means the rules should shape behavior from both direct and partner sales which fairly treats both sides and in a way that meets the vendor's overall channel strategy and objectives.

Summary

We've seen that besides compensation, there are other factors that can and will cause or mitigate conflict between partnerships. The long-lasting and scalable way to address this conflict is to establish the right partnerships with the right roles and responsibilities, properly educate and enable both vendor and partners on their roles and responsibilities, and document clear rules of engagement that vendors and partners must follow.

Following these steps gives you a trustworthy way to anticipate and eliminate conflict as well as an agreed to way to resolve conflict, enabling both direct and indirect teams to spend more of their time and effort on complimentary and profitable activities.

The final part of this series on channel conflict addresses the role company alignment should play, not only in reducing channel conflict, but in maximizing overall channel performance.



This is part two of a three part series on reducing channel conflict between direct and indirect sales teams.  It might be helpful to read Part One first if you haven’t already.

 

In Part One, we saw how proper compensation is a vital component in driving sales and the desired level of field alignment between direct and indirect sales teams.  But compensation alone does not solve all channel conflict.  If that were the case, all you would have to do is copy a successful comp plan, pass it out, and all your troubles would magically disappear. 

 

In Part Two we look at how Partner Selection, Partner Enablement and Rules of Engagement can reduce channel conflict even further.


Last modified on 4/14/2014 9:26:50 AM
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Comments
Dennis Burton
Being strategic in partner selection and defining the rules of engagement were very helpful tips. Thank you.
3/3/2014 9:57:33 AM