Conversations, Boxes, and Stories

Conversations are going to happen whether or not you choose to particpate in them. People (customers, analysts, investors, employees, etc.) are going to put you "in a box", whether you define that box or not. Stories will be told and they will spread, regardless of whether they are true. You have the opportunity to participate in conversations, define the box, and live the stories. Many companies choose the safer route.

Lets say you make a widget that provides the most utility for and offers the greatest benefit to elite athletes...those that take training very seriously. I want to participate in conversations with those athletes. I want to hear about their training experience and completely understand how and why they use my widget. I want them to bring more athletes into the conversations. I want to reach as many people in my niche as possible.

Likewise, I want to frame my widget as something for elite athletes. I want the qualifier. Sure it will put me in a smaller box than if I positioned my widget for all atheletes, but I want to serve my niche. Will I sell to any athelete? Of course, but I want to define my box before someone else starts to define it for me.

My story will be bigger than the widget. It will be one about the experience(s) of the elite athlete...their triumphs and successes. It will be about the care and expertise we offer each elite athlete as they strive to accomplish their goals. It will be much more than the widget.

Your channels will be part of the conversations, they will define your box, and they will be your storytellers. Expecting them to be only responsible for moving the widget from Point A to Point B is missing a bigger oppoortunity.

Indeed, they are part of your story, your box, and the conversation.

Channels By The Numbers

Here are some simple things to keep in mind when managing your channel relationships:

• There are FOUR relationship principles: Mutual Commitment, Mutual Growth, Mutual Profitability, and Brand.
• There are THREE steps in selling to and through your channels: Sell Yourself, Sell Your Company, Sell The Product (in that order).
• There are THREE "Cs" in channel communications: Content, Consistency, and Calendar.
• There are THREE types of channel programs: Education, Motivation, and Celebration.
• There are FOUR "Rs" in Co-marketing: Recruitment, Return, Retention, and Referral.
• There are THREE stages of a channel lifecycle: Up & Comers, Steady-Eddies, and Faders (each require a different marketing approach).

By managing your channel numbers, you can make your product "bigger than the widget".

Educate, Motivate, Celebrate

You can achieve channel success if you focus your activities on education, motivation, and celebration. I first heard these three things grouped together when I was involved in the planning and coordination of a sales conference. This particular conference brought together a global sales force of about 3,000 professionals to the MGM in Las Vegas. The question we had to answer was, "How do we make sure people choose our content over blackjack?" We decided to focus our agenda around education, motivation, and celebration.

Why stop at a sales conference? Shouldn't you constantly educate your sales channel on product positioning, sales techniques, and competitive solutions? Shouldn't you establish a suite of motivational programs that will drive revenue and increase channel satisfaction? Shouldn't you celebrate in your mutual successes and offer recognition to your best partners? Of course you should.

If you had a Leader of Channel Education, a Leader of Channel Motivation, and a Leader of Channel Celebration working together to build a channel community based on the four Channel Relationship Principles, you will have a comprehensive baseline for building a world class channel program.

In many companies you find that education, motivation, and celebration resources are spread throughout different organizations. You will need to harness these resources and get them working together so that education, motivation, and celebration are linked together in a consistent and logical manner. Look at your channel organization, it's hierarchy and structure, and determine if it offers the ability to educate, motivate, and celebrate your channel community. Maybe it is time for something a little different.

Designations & Certifications

Recently someone asked me about designations and certifications. Often times there is some confusion over the two and they get used interchangeably. These are actually two very different things, although usually related.

A channel designation represents the status of the channel. They might be a Gold Partner, Diamond Partner, Elite Partner, or some other nominclature. The purpose of the designation is to represent the channel to their customers. A channel with a Gold Partner designation means something different to the end user. It represents some kind of achievement, capability, or competency that they offer.

A certification is earned by an individual. It represents their level of competency (usually technical) for a specific product or service. A "certified public accountant" is an example of certification held by an individual; not by the firm in which they represent.

Often times channels are required to have a certain number of individual employee certifications to earn a designation level. For instance, to be a Gold Partner the channel may have to have 10 (or some other number) of employees that hold a certification. This is why the two are often related.

Successful companies create equity in their designation and certification brands. The equity makes both the individual and the channel more marketable, and ultimately enhances your brand and further strengthens your channel relationships.

The Importance of "-est"

Fastest, biggest, roundest, smallest, tallest, flatest....BEST.

Why settle for being anything else? It is really hard to compete for share of wallet if you cannot say that you are the "-est". Who wants to do business with the "fourth" or "fifteenth" in a category? Everyone wants to (or should demand to) partner with an "-est".

It is up to you what you should be "-est" in and define the market accordingly. If your channels and end users demand simplicity, then you need to be the "simplest".

It is not enough these days to say that while you are not the "-est" in any specific category, but rather something less than "-est" in a bunch of categories. At one point, this jack-of-all-trades approach might have worked. Things have changed however. Your channel partners and customers always have immediate access to the "-est". The emergence of open standards now makes it increasingly easy to connect all of the "-est's" together, even if they are from different companies across the globe. Integrators are great channels because they focus on securing all of the "-est's" for each of their clients through partnerships with companies that own the "-est" categories.

Your goal should be to position yourself as an "-est" and get everyone talking about it. Make your competition react. Once they catch up, redefine the "-est" and tell the story again.

That would be the coolest.

Channel Community

A few years ago, I got interested in building Communities of Interest. This was back when the internet was really just a collection of publish and read sites. My thinking back then was build a secure site for like-minded people to share ideas. At the time this would be through an electronic bulletin board. The challenge was that people used the bulletin board, but conversations didn't happen. What I created was only one-way and not what I had envisioned.

The internet has changed and is evolving into a massive network of mini-communities where relationships are built and communities thrive. Facebook and MySpace are obvious examples of this, but so is Wikipedia. These are open communities where anyone can join and contribute to the discussion. Successful communities grow and prosper and become an important part of the lives of the members.

I think the time might be right for you to open your information/content up to your channel partners. Let them build your channel program(s) in an open, collaborative environment where debate happens freely and efficiently. Discuss your objectives and listen to what they need and you just might find that your community will build something different and remarkable.

I think the future are these kinds of collaborative communities where partners, suppliers, customers, and employees all contribute. The creative energy of these constituencies will produce not only a channel program, but passionate commitment from the contributors.

Merits of a Meritocracy

It is sometimes hard to implement a meritocracy. Maybe you have a great partner that has had an off year. You do not want to offend them, but they didn’t live up to the “merits” established to achieve a designation or incentive. Does it make sense to make the exception and “let them slide”? There are always good reasons for the exception. It is kind of like telling your daughter that she can have dessert if she eats all of her lima beans. Maybe she gets half way there and you allow her to have that piece of cake anyway.

My guess is that next time she will only eat half her beans again, expecting the exception.

You establish goals and criteria for a reason and hopefully you have based the incentive costs on the basis of achieving a specific goal. Exceptions will likely do more harm than good.

One of the traps that companies fall into is establishing an incentive based on a promise. The channel commits to $1,000,000 in revenue and you grant a discount level based on that commitment. What happens if they only achieve 90% of the goal? You have basically two choices. You can make the exception foregoing thousands of lost dollars, or you can ask for the discount difference back from your partner. Neither is an extremely attractive scenario.

I prefer to base incentive on performance in lieu of commitment. Once your partner has achieved a certain goal, they will reap the benefit…but not until the goal is met. This establishes a meritocracy that is equal amongst all partners and eliminates the awkward meeting at the end of the year.

It is important to be flexible, but not at the expense of your core principles that may have a bigger impact on your entire channel community.

Inside & Out

When you are building, or renewing, your channel plans, it is important to look at the business from all sides. Too often companies look exclusively at the customer (channel) facing organization as the sole consideration. The challenge that will eventually present itself is that if you do not have the internal infrastructure to support your channel story, you will not be able to effectively sustain your strategy.

If your channel story is “bigger than the widget”, then your focus is on the entire channel experience. This will include your pricing models, channel programs, incentives, technical support and service, training, and communications platform(s). This infrastructure is needed to support your story. At the end of the day, it really is more than the widget. Likewise, if you solely focus on building the infrastructure, without the input and guidance from your channel facing sales and service teams, you run the risk of missing important considerations. Bad marketing programs are usually developed by someone who builds them from behind a desk. You need external input.

This is where internal partnerships are so important. Sales, marketing, IT, accounting, finance, operations, and service are essential in the development of an effective and thriving channel business. Your channel leader must be able to work across the organization to build support and execution.

Effective Channel Chiefs

Great article about channel chiefs and the role they play in building successful relationships...

http://www.crn.com/it-channel/206801255

How committed is your organization to the channel? More importantly, how committed is the channel chief to the channel?

Measuring Relevance

Relevance is one of those marketing terms like "awareness" or "consideration" that is difficult to measure effectively. I like to use share of wallet as a measurement for relevance, because it is easy to measure and provides you with actionable insight.

I was once talking to a senior executive that was very excited about the fact that their largest channel partner had grown 10% with them over the previous calendar year. Certainly this sounds impressive, but what if the partners overall business grew by 15% or 20%? This company would have lost share, and therefore relevance with this particular partner. Gains (or losses) in partner share of wallet give better insight into your relative position with a specific channel partner and is a much better gauge of success than revenue growth.

It is also better to measure your share of wallet in segments. In other words, measure apples against apples and oranges against oranges. It is much more insightful to know where you have specifically increased your share of wallet based on product type or solutions set versus taking a holistic view of the entire business.

I believe that relevance (share of wallet) is directly tied to your profitability from a channel partner. Let’s say, for example, that you have 50% share of wallet and that the next closest competitor has a 10% share of wallet. It is much more likely that you will get first shot at the “better” deals. It makes sense because you are more relevant and probably have the better relationship (although this is not always the case). Conversely, if you have a very small share of wallet, you will not be the channel partner’s first consideration for the best opportunities.

I suggest setting and measuring share of wallet goals. Focus on winning a bigger piece of the pie. Growth and profitability will follow.