Channel Management Is Still a Thorn
How effectively an organization manages its sell-side channel partners can be directly translated into either a revenue boost or plunge. According to a recent report from the Aberdeen Group based on a survey conducted in conjunction with CRM
magazine, a few companies have mastered this management.
In fact the report, "Sell-Side Channel Management: Benchmarks and Best Practices," which surveyed more than 150 executives who oversee sell-side channel operations, finds more than 94 percent of respondents admitted to having at least one intermediary between their product and the end consumer. Only 6 percent were in the best-in-class category.
"One of the problems that a lot of companies have when they try to actually employ CRM is that a lot of CRM strategies, technologies, and applications presume that the customer is the consumer," says Chris Selland, Aberdeen's vice president of sell-side research. "The reality is that a very large percentage of companies don't necessarily sell directly to the end consumer of their product or service, so what companies really need to do is figure in what does ['my'] sell-side channel look like."
According to Selland, terms like partner relationship management (PRM) have emerged, but haven't taken off, primarily because companies concentrated on the technologies and not enough on the business issues. Additionally, "channel strategies and channels look very different, depending on what business you're in and how your customer relationships are," he says.
Selland says that in the 90s, when the use of the Internet became widespread, many companies presumed they could get rid of their channels because of the option to simply sell direct via their Web site. "You saw the automobile companies and a lot of other companies try to go around their channels because they said we're giving up margin to our channels, they're expensive to maintain, in some cases we have channel conflict, and we're competing with ourselves, so let's just go direct. But that didn't work, because what they found was, the customers valued the channels," he says.
The notion that Selland describes as "a little bit surprising and in some respects disappointing," however, was many companies' passive mind-set: We may not masterfully manage our channels, but as long as they are not worse than our competitors, it's acceptable. "When companies were investing in CRM in the nineties they were thinking, How can I drive revenue and get a jump on my competitor and be better than the competition? The past couple of years it's been more of, as long as we don't stink as much as the competitor we're OK," he says.
Selland says that sticking to the business strategy should be a high priority. "It's not about picking the right PRM package, it's about working through what the business issues are, then figuring out what you want to do about it, and then reinforcing the technology."
Multichannel Customers Are More Profitable, Analysts Say
What's the Difference Between CRM and PRM?