5 Steps To Shape a Healthy Channel
Alignment, segmentation and clarity of vision are watchwords for any partner program.
June 15, 2015
Organizations around the world are looking for ways to increase employee cooperation and productivity and gain a competitive edge. As a result, improving collaboration in the workplace has become a top priority. My prediction? Five years from now, the leading players in the IT channel will be a diverse set of highly skilled experts. They’ll be highly consultative and deeply ingrained in their customers’ day-to-day businesses, from end to end.
Here are some best practices that channel leaders can implement today as they seek to shape their channel programs for success in the future:
1. First, ensure the overall role and purpose of the channel is aligned with your organization’s corporate strategy and overarching strategic goals.
A critical first step in shaping a healthy channel is to clearly define how the channel will contribute to the success of your business. This involves clearly mapping all potential benefits of a channel strategy – such as accelerated sales growth, expanded market reach or simplified purchase processes – with your strategic priorities.
Key components of the corporate strategy that will shape these answers include the strength of your differentiation and end-customer value proposition, key market segments and the total addressable market within each segment, the portion of each segment you have access to, and how this varies across each segment. Other strategic factors that will drive an optimal channel strategy include how and why customers make technology and vendor decisions, and how customers consume their IT products and services: on-premises deployment vs. managed services vs. cloud or some hybrid of all three.
2. Segment your market, segment your channel strategy. Strategic opportunities, competitive position and consequent priorities will vary across customer segments. An optimized channel strategy for large enterprise customers may be very different from what works for midmarket or smaller customers. Important variations will also occur across industry verticals and solution categories.
It is important that you understand differences in competitive position, customer purchase process and preferred deployment model (such as cloud versus on-premises) so that you can incorporate these factors into a segmented channel strategy.
3. Develop a clear understanding of your business value proposition. Your ideal partner may carry competitive or alternative solutions, or may require substantial incentives to adopt your solution. Is it worth chasing the deal? To decide, you need to clearly define your organization’s unique value proposition to these partners. Understand how they will engage customers to determine what they need to be successful selling your solutions, and how they will make money doing so. Consider the benefits for management – the owner or shareholders – as well as for field and sales representatives.
You should also consider the cost of launching a program and doing business, including certification, demonstrations, training and overall enablement. Most importantly, be prepared to define your partner’s expected return on this investment. Key components of this analysis include competitive win rates and consequent business growth, expected gross margin performance and overall profitability, customer satisfaction and its potential impact on churn, the cost of partner enablement (including minimum headcount, training and certification), and the potential economic impact on other solutions in your portfolio.
4. Develop a sales and broader organizational approach that supports, enables and then fully leverages your channel strategy. Building or maintaining a sales organization that competes directly with the channel, or at best fails to leverage the capabilities you have developed, will impact partner mindshare and lead to reduced sales productivity. Examine the role of inside versus outside sales support, channel account managers versus channel sales representatives, product or solution specialists, territory-aligned versus account-aligned organizations and the role of high-touch sales personnel for larger enterprise accounts.
Critical to this success is establishing clear rules of engagement between the vendor and partner sales teams, governing all phases of an end-customer engagement from an initial lead to product/solution life cycle support. Other organizational areas that bear watching in terms of alignment include corporate marketing, lead generation, joint marketing funds, channel marketing, business development, operations and logistics, and services (vendor branded versus partner branded).
5. Design and evolve a channel program that supports all of the above priorities. That program is the framework that supports your relationship with your channel community. The program generally defines the requirements, investments and rewards that partners receive. The best programs provide very high levels of transparency and clarity. Partner-relationship management tools can help everyone recognize where they stand at any point in the quarter or year versus their requirements and business objectives.
The best programs also drive high levels of joint accountability. A critical element of this is a joint business-planning process, which provides an important method for performance management through documentation and tracking of all joint business objectives, planned activities and critical investments.
The best programs also fully align individual reseller incentives with the company’s strategic priorities. Clear, transparent incentives based on merit and performance-versus-plan provide the strongest alignment between channel performance and the organization’s strategic goals.
Last, the best channel programs are simple: Requirements and incentives are clear, common and fair across product and service segments, partner categories and geographies. Simple, well-designed and consistently implemented channel programs that deliver high levels of transparency and accountability, and align individual incentives with strategic priorities, can have a profoundly positive impact on speed of decision making, sales cycles, growth and overall business velocity.
These are just a few best practices for organizations to keep in mind as they continually mold and shape their channel programs. Taking advantage of these tips along with other common best practices will ensure your organization’s channel program is able to thrive in the years to come.
Mark Arman is Polycom’s vice president of worldwide channel sales. In this role, he is responsible for Polycom‘s global channel strategy with the goal of increasing customer success through partner loyalty and profitability.
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