• October 6, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

It's Time to Change Channels

Most of the work being done in channel sales today still centers on efficiency goals, not on driving revenue. Channel chiefs say that between 70 percent and 80 percent of their time is devoted to such mundane tasks as rebuilding the partner database and portals, recruitment, and delivering satisfaction surveys, according a joint study by research firm SiriusDecisions and partner management vendor BlueRoads. The study, "Need for Fundamental Channel Change: Focusing Resources in 2009 for Channel Effectiveness," suggests those activities are the path of least resistance, and that they will never make money.

Indeed, the repetition of these inward-focused tasks, aimed at reducing costs and automating partner relationships, is at the heart of the high turnover rate in channel management positions. Most channel chiefs stay in their jobs for a year, and sometimes less, says Charles Watson, senior vice president of marketing and sales for BlueRoads. "The channel can't prove it's driving incremental business, and has a very unpredictable view of revenue, often plus or minus 50 percent," he adds. "They're focused on old-school cost-reduction projects that aren't revenue-focused and have no executive buy-in required. That's a pretty 1.0 approach to CRM and [sales force automation]."

This is unfortunate, because partner channels play a valuable -- often indispensable -- role in a company's business model. According to the survey, partners have increased overall company revenue during the past 12 months in 61.1 percent of cases, with 36.1 percent of respondents reporting at least a 10 percent bump.

Even though pipeline estimates from partners can vary 50 percent from actual, fixing that discrepancy isn't the top priority for many channel organizations. 23 percent of respondents said that recruiting more partners in existing markets is the number-one goal for their channel organizations during the next one to two years. "Imagine the vice president of direct sales saying that this was his plan for 2009," Watson says.

"One of the things that really stood out for me," says Megan Heuer, research director for SiriusDecisions, "was that most of the people who participated rated themselves fair to good in job performance -- 18 percent claimed to be excellent -- but their top goal in most cases was to repeat failed initiatives; it just doesn't add up.

Channel account managers shouldn't despair utterly, though; there is still time to institute programs to have a positive effect in 2009. It won't even cost extra, as long as businesses divert the money being spent on efficiency into sales effectiveness initiatives such as lead management, deal registration, and reporting. "Companies can prioritize differently, spending the same money in different and more-effective ways," Heuer says. "Reinvest some funds toward evaluating points in the sales cycle where partners need help, and delivering the assistance they need."

"This is a good subject for [BlueRoads and SiriusDecisions] to dig into -- channel chiefs are under a lot of pressure," says William Band, a principal analyst at Forrester Research who was briefed on the study. "Existing solutions available to channel chiefs revolve around automation of recruiting and training -- they're focused on the easy things. They must focus on managing opportunities and influencing the correct behaviors in the channel, which is harder."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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