Taking Channel Performance to the Next Level

Optimizing the indirect sales channel is one of the most effective competitive weapons available in today's global marketplaces. Nowhere is this more true than in the high-tech arena. Resellers offer vendors substantial savings in inventory, capital costs, and employee expenses, while expanding market reach beyond the verticals, geographies, and segments that can be serviced by a direct sales model (e.g., small-to-medium size businesses--one of the fast growing market segments). However, despite attention and intention, high-tech vendors have not solved the fundamental issues that enable active participation from channel partners and increased revenue from the channel itself. These fundamentals include:

technology and processes based on best practices from the partner's perspective

the ability to replicate and adjust these best practices between a vendor and thousands of partner organizations

process integration that reaches deeper into the partner organization, down to the level of the individual sales rep

In 2002 industry analyst firm IDC proclaimed that for the first time in history, high-tech indirect sales delivered more than 50 percent of total revenue. Vendors have been scrambling to improve the management of this revenue stream ever since. But despite the millions of dollars invested in lead-generation initiatives, partner portals and training classes, sales tools, joint PR/marketing, and policy and procedure documents, indirect revenue often still remains a black hole, with little to no visibility or predictability. This simply isn't good enough when global leaders like Hitachi Data Systems, Nortel Networks, Sun Microsystems, Cisco Systems, and Microsoft--not to mention their smaller, more resource-constrained competitors--are increasingly turning to partners and resellers to help maximize growth. It is no longer enough for vendors in the high-tech industry to offer innovative products: They must be able to scale their sales and marketing processes quickly and efficiently to deliver these products to a larger portion of the market--or to more markets--than their competitors. To date high-tech companies have invested in CRM and even portal technologies to help better-manage partner relationships--ultimately realizing that these solutions have delivered neither faster, easier cross-company processes, nor the flexibility to adjust channel strategies based on changing market conditions. Many IT vendors have relied on data-centric PRM, but these systems are oriented towards addressing the information needs of the vendor management team, and have proven to be of little benefit to the partners, leading to minimal adoption rates and limited feedback. Successful technologies, processes, and methodologies need to reach deeper into the channel. Actively engaging the partners by providing the tools they need to effectively sell, and enabling them to provide accurate, real-world information back to vendors, creates the closed-loop system needed to optimize and leverage the indirect distribution channel. The good news is that a new breed of PRM technologies has arrived to do just that. These technologies are changing the way vendors collaborate with their partners by introducing a paradigm shift from partner administration to joint-partner sales management (e.g., by understanding that a major transaction is at proposal stage near the end of the quarter the sales channel managers can apply additional resources to close the business). As the vital role of the channel continues to grow, I expect we will see more and more enterprises empowering their partners through these technologies that benefit the individual partner sales rep at point of customer engagement--where and when it matters most. After all, the trend of indirect channel importance is only increasing: Gartner has projected that indirect sales will account for more than 65 percent of a high-tech vendor's annual revenue by 2010. Tomorrow's high-tech winners are the ones who take the steps today to make their indirect sales channel as powerful as their direct channel. About the Author Axel Schultze is the president and CEO of BlueRoads Corporation, a channel-management software company. BlueRoads provides channel management software and expertise that enable companies to market and sell more effectively through indirect channels. For more information visit www.blueroads.com. Related articles: Partner Adoption Is the Key to ROI for Channel Investments One Subtle Shift Begets a Major Change in Results PRM should be about helping make sales, not simply tracking them. PRM Puts RIM's Sales in Motion The company looked to strengthen its partnerships and increase the profitability of its distribution channels.