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Channel Matters Blog > March 2015 > Channel Management: Are You Too Predictable?

Channel Management: Are You Too Predictable?

by Murray Grimston
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A good friend of mine is involved in a messy divorce, and he is now in a dark place — the end of the settlement negotiation. Unfortunately, the negotiation is taking longer than his most pessimistic expectation, and each day that passes without a settlement costs him more and more. His legal representative is charging him at 6-minute intervals, and the demands from his soon to be ex-spouse keep increasing.
 
My friend has what we in the channel business call a "strong PPB". The acronym stands for Predictable Partner Behaviors, and it simply means that one side in a partner relationship can reliably and consistently predict the actions of the other. 
 
In my friend's case, he's an incredibly nice guy and wants an amicable settlement. When his partner makes a request (a.k.a. demand) my friend’s first inclination is to consider how he can agree. He does this out of consideration for their past relationship, because he's empathetic, and he wants to be fair and reasonable. He hopes that making a financial concession will lead him to a final agreement faster.
 
His partner, however, has no such intentions. To his partner, my friend's behavior has become predictable: “ I already have a good deal, but if I ask for more, and he agrees, it is an even better deal…and he usually agrees."
 
Implications of a Strong PPB in Business
A client of mine, a major motor vehicle importer, also demonstrates a strong PPB with their franchised car dealership network. Being a Japanese vehicle supplier, their financial year ends March 31st. It is no coincidence that the quarter ending March 31st is always their biggest. The incentives and discounting required can be calculated and executive decisions are made around the question: “How badly do we want to hit this sales number?”
 
Another client of mine runs a channel business. He wants to meet his targeted sales numbers, but he also needs to meet the revenue predictions the global organization has given the share market. (That would be the stock market for my friends in the US.) As a global company, they are under constant pressure to meet these numbers and will pull whatever levers they can to help meet expectations. “What opportunities in our channel pipeline can we move forward, and what will it take for them to take the stock now?” Not surprisingly, most of their sales are shipped in the last two weeks of every quarter.
 
The Shriveling Plastic Water Bottle
I was sitting with a strong contact of mine inside the client with the quarterly challenge born of share market expectations, discussing pipeline management. He introduced me to a new pipeline shape I've come to call the "shriveling plastic water bottle".
 
Observe what happens to empty plastic water bottles on an airplane as you come in to land. The pressure of the cabin causes it to shrivel noticeably. Both of the clients I described typically have pipelines bloated with deals ready to close. However, because they are so predictable, they have trained partners to wait until the end of the year, knowing their supplier will offer concessions. When you manage a pipeline on the basis of what you can reach in and bring forward to close at the end of the quarter, it is like that shriveling plastic water bottle. And like the shriveled water bottle, the pipeline that you start out with next year isn't a pretty site.
 
“The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”- Albert Einstein
 
When we don’t take time out to think, we become reactive. That's exactly what happens to many of us as the end of the year looms. There is so much to do in the last quarter, month or weeks that we don't feel as if we have time to think. We just react.
 
More than ever this is the time to think about what's really happening in your channel and the process of managing of relationships and channel partners. Understand your partner's perceptions and view of the world. Look beyond what they want you to hear. When they say, "We can win this deal if we offer another 10%," don't stop at "we can win this deal." Ask questions about why another 10% is needed. Why haven't we closed it already? What value is the customer looking for that we haven't established?
 
I recommend that my clients get past who is right and who is wrong when responding to channel requests/demands. Like my friend going through a divorce, you won't come up with a satisfactory answer in the heat of the moment. Instead, you need to collaborate with your partner on the future. Changing your PPB is difficult. You need to have the courage to think differently and challenge your partners to do the same. I would love to help you with that!
 
 
Last modified on 3/31/2015 11:01:09 AM
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