As CRM practitioners, we often take time to poll users about our services and products. But few people invest in CRM for their company's channel partners -- those partners distributing and selling their wares. Often, this can be where you'll find the greatest gains. The key isn't a big technology roll-out. Rather, success hinges on asking the right questions of your channel partners, listening to the answers, and making adjustments. Unfortunately, over half of all high-tech vendors report they are concerned over lack of alignment with channel partners, according to the Sales Executive Council's 2005 study.
There is lack of communication across the channel, as well as failure to collect and analyze the right data, lack of business alignment, and a tendency for vendors to focus on just the top performing partners.
We can fix these common missteps and create a shared destiny with partners by better engaging and aligning them around common business goals.
Opportunity #1: Look Beyond Best Partners
It's easy to focus on the best channel partners. But vendors should watch for emerging partners that can provide significant growth. Emerging partners include small and midsize businesses as well as your competitors' best partners. Even a small shift within this segment can result in tremendous gains for you. We call this, "retaining the best and engaging the rest."
Take, for instance, a major electronic equipment manufacturer that wanted to expand its market share by improving the performance of its midsize dealers. We learned that in the past, this vendor had rewarded only the highest-volume dealers.
The vendor started offering all dealers an opportunity to earn rewards for incremental performance. Dealers were placed in performance tiers based on volume and assigned growth objectives. Bonuses were offered to dealers who agreed to move up to the next higher tier. The result? Overall dealer purchases increased 15 percent in a flat market, and the midsize dealers grew at 30 percent. Best of all, the vendor identified the dealers with greatest potential to sell more.
Opportunity #2: Collect and Analyze the Right Data
How many times have we seen channel research ranking vendors? You find out that your competition is rated a nine and you are rated a six. The problem is that no one truly understands what it means to be a six -- or what to do about it. Why not change the way you do voice-of-the-partner (VOP) research by asking them what they want from you as a vendor? You're more than likely to learn something truly valuable, like you're losing favor due to a competitor that's offering new inventory terms.
You also can extend the research and look at the partners' company culture and customer demographic -- much as we do when targeting end user demographics -- to make sure partners are a good fit.
Consider this example of one large office equipment manufacturer. The vendor faced three years of market stagnation, so growth had to come from competitor market share.
First, in traditional CRM practice they asked end customers to define the value and competitive positioning, which was shared with all partners. Next, the vendor asked partners what they needed. Then the vendor adjusted its offering accordingly. Those needs were pretty simple, really: enhanced training on account targeting and acquisition, strategic selling, and presentation skills. To make sure the requested items were utilized, the vendor added noncash incentives for those partner reps completing training and increasing sales. And finally, the company expanded its partner market development funds (MDF) to include lead generation programs.
The results? In the first year following the program change, partner rep training participation increased 41 percent and client sales increased nine percent in a market that declined by 14 percent.
Opportunity #3: Communicate Across the Channel
What's the one piece of advice for people in a relationship? Communicate, communicate, communicate.
Although you'd like to think otherwise, the truth is your best partners often aren't completely engaged in your programs. One of the primary reasons for this disengagement may be your reps. Partners don't want someone to update sales forecasts; they want allies who understand their business. Partners want vendors to more fully understand their organization's goals and aspirations and be willing to collaborate.
Help emerging partners define and inspire their own success. Communicate by packaging and sharing, by segment, the best practices that have worked for your best partners. Include tips on sales development, lead generation, and attachment strategies for hardware and services. Emerging partners will begin to view your relationship as strategic and important to their future business success.
Opportunity #4: Incentives to Keep Partners on Track
In order to drive real behavioral changes with both best and emerging partners, you need to offer incentives and recognition programs that are attainable and meaningful to them. Our recommendation is a tiered rewards system -- because one size does not fit all.
One approach is a points-based accumulation that creates a virtual bank account for each partner. It provides the motivation needed to bump channel partners up to the next tier of performance, by encouraging them to work a little harder. Of course, growth expectations must be attainable. Consider allowing points to be redeemable for nontraditional MDF activities like noncash incentives for the partner salesforce, learning activities that increase sales skills, partner employee recognition activities and special customer events -- all designed to help you increase your value to partners by helping them develop their business and strengthen their customer relationships.
A Shared Destiny Realized
When vendors apply some basic CRM concepts to channel strategies and remain committed, great things happen!
About the author
Michael T. Spellecy (email@example.com) is vice president and managing consultant in the sales effectiveness practice at Maritz. More information about channel alignment can be found at www.maritz.com.
Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration on a topic related to customer relationship management, please email viewpoints@destinationCRM.com.