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Shake Hands with Your Partners
Distributor networks are often a critical part of a company's sales strategy, but these partners are rarely included in CRM initiatives. Should they be?
For the rest of the May 2000 issue of CRM magazine please click here
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Early adopters of Web-based solutions for channels have been reporting significant successes over the past year.

In discussions about sales strategy with hundreds of Chief Sales Officers (CSOs) during the past year, the importance of selling through alternate distribution channels almost always comes up. Many companies realize that without effective channel sales, they may find it impossible to adequately service their market. As one CSO put it, "Today it is not a question of what channel, it's every channel!"

Yet while companies talk about how important selling through a distributor network is, often this critical part of the sales strategy is left out of customer relationship management (CRM) plans. In our recent review of 202 sales reengineering initiatives, only 19.6 percent of the firms surveyed included channel sales in their CRM implementations.

The question "Why not include channel partners in CRM projects?" normally elicits two answers: It is too expensive and it is too hard. Yet early adopters of Web-based solutions for channels have been reporting significant successes over the past year. To find out why these projects were initiated and uncover the key factors in their success, Bob Thompson, president of Front Line Solutions, recently conducted a benchmark study. His firm, along with WvH Marketing & Advertising and OnTarget, researched how 33 companies were successfully leveraging technology to support their channel partners.

Thompson recently shared the results of the study with me, and in this month's column I want to pass on some of his insights to you.

It's All In Your Mindset
When Thompson and I met, the first thing he wanted me to understand was the mindset you must have for projects that involve channel partners. "The companies we talked to have a clear understanding that when it comes to selling through channels, their sales in are a result of their partner's sales out," Bob explained to me. "So, they realize they have to look at this initiative from the channel's point of view. We have been using the term Partner Relationship Management to separate these initiatives from traditional CRM, to help open companies' thinking to consider things from the channel's perspective as well as their own."

Front Line Solutions' survey initially asked participants what their PRM initiatives' goals were. In the attached graph you see that responses represent a combination of mutually beneficial objectives. While increasing sales revenues is a key goal for these projects, they don't stop there. Additional objectives such as streamlining processes, improving communications and improving service were also important issues participants focused on.

Front Line Solutions then went on to delve into the critical factors that helped make these PRM projects successful. When Thompson asked the project teams to overview the smartest things they did, six elements surfaced that were common across the best implementations.

  • Executive Sponsorship:
    Several respondents pointed to the support they received from senior management teams as a major reason for their ultimate success. With executive sponsorship came high expectations, which caused all team members to put out extra effort. In addition, having an executive champion made it much easier for the teams to get the adequate level of resources--time, people and money--to do the project right the first time.
  • Cross-Functional Team:
    Developing a comprehensive PRM program typically involves the cooperation of multiple areas within a company: marketing, sales, support, finance, manufacturing and distribution. The best projects tend to realize this up front and put together a cross-functional team from the start. This way they identify any "turf war" issues and solicit buy-in from all the areas of the company early on.
  • stakeholder Buy-in:
    Ultimately, the fate of your PRM initiative is out of your hands and in the hands of your channel partners. Because of this, successful projects focus on getting buy-in from the ultimate end users. These projects solicit advice and feedback from channel representatives, and ensure that the project plan clearly answers the question "What's in it for me?" from the partner's point of view.
  • Business Needs Drive IT:
    There are many PRM applications available today that solve a variety of problems. The teams surveyed recommended that companies let clear business needs drive IT choices, versus starting with a piece of technology and then going in search of a problem. Several firms reported they didn't do enough up front process analysis. In hindsight, they recommended that companies take the time to really understand how the sales process works (or doesn't work) today from the company's perspective, the partner's perspective and the ultimate end-user customer's perspective. Once you discover holes in the sales process, you will be in a much better position to make smart IT choices.
  • Right Vendor Selection:
    Armed with a clear understanding of the problems they are trying to solve, successful project teams point to the importance of picking the right vendor. Several of the teams surveyed observed that just because a vendor has a great CRM solution does not mean that vendor can meet your PRM needs as well. Channel partners tend to push back if they have to invest a lot of effort in learning how to use PRM systems. Simplicity and ease of use are much more critical in PRM than in CRM applications. Also, channel partners tend to want to cooperate, but only up to a point. Therefore, PRM systems need to provide them with the ability to share only the information they want you to have about their accounts.
  • Pilot and Phased Implementation:
    The final suggestion that Front Line Solutions received was that doing a phased implementation is essential. While your ultimate PRM system may be very robust, if you try to roll out too many functions at one time, your channel partners may not be able to assimilate all the capabilities you have provided. Also, for each phase of the project, survey respondents recommended that you pilot the system to ensure that the functionality and user interface pass the "real world experience" test and to make sure that the system will scale.

After reviewing the successes that companies are achieving though their PRM efforts, Bob Thompson is convinced that 2000 will be the breakthrough year for these initiatives. Templates for success are emerging, PRM-focused systems are available commercially and partners themselves are ready to embrace tools that help them work with their customers more effectively. Thompson noted that while in the late 90s PRM projects were a competitive edge, they are now becoming a matter of competitive survival.

For more information on the Front Line Solutions study, contact Bob Thompson at www.frontlinehq.com

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