Attention & Authenticity

Richard Heene, the father of the six year old “Balloon Boy”, got what he wanted…attention. This whole week we have heard about Heene and his antics, but at what cost? It is easy to get attention. Reality TV and the internet have created the ability for anyone to get attention. As a marketer, one of our responsibilities is to generate awareness for our company, products, and services. But that is not our sole responsibility. We all carry the responsibility of authenticity, as well.

I believe that marketers are really storytellers. We develop campaigns that tell a specific story to a specific audience. Our goal is ultimately to get the audience to purchase what we are selling, but it all starts with a story. We talk about being the fastest, smartest, biggest, smallest, or easiest. Whatever our “-est”, we build stories that demonstrate why it has value to our customers. The hard part is not telling a story, but telling an authentic story. This, to me, is branding.

Making unrealistic or inauthentic claims will ultimately damage your brand, your reputation, your sales, and your business. In the past few weeks we have seen a number of announcements from major IT vendors regarding their channel programs. Oracle and Avaya quickly come to mind. Both of these companies are telling a “channel friendly” story. The problem is that, in the past, neither of these companies has demonstrated the behaviors consistent with their claims. While the new programs appear to be positive from a channel perspective, the jury (in this case, solution providers) is still out. They want to see if the stories are authentic. I don’t want to be negative on either Oracle or Avaya, because I believe they are moving in the right direction and certainly companies can become outstanding channel champions after a period of less channel commitment. HP comes to mind.

One of my tenets to effective channel management is “mutual commitment”. This is not something that can be accomplished with a single initiative. Establishing mutual commitment takes time and consistency. That consistency spans your entire organization. It is not enough for the channel leader and channel managers to demonstrate their commitment to the channel. The executive team, sales organization, service and operations, marketing, and customer care teams all need to be part of the commitment, as well. When you achieve this level of commitment, you will have an authentic story.

Cisco, as an example, tells an authentic channel story. For years, Cisco has demonstrated commitment to the channel and greatly benefits from their consistency. Even when they mess up (yes…it is true…sometimes even Cisco makes mistakes), the channel is much more willing to give them the benefit of the doubt. Those that have not demonstrated the consistency in their channel strategy and commitment will likely find a much less forgiving channel.

Channel leaders…tell your stories, but make sure that you are not “Pulling a Heene” for some short term gratification at the expense of your long term relationships.

Kill the SWAG

It is time to get rid of the SWAG. I don’t mean how the Urban Dictionary defines SWAG (“the way one carries their self”) or the “Stuff We All Get”, sometimes called “chotchkies”. What I mean is let’s get rid of the…

Silly Wild Ass Guess

With all of the information available to us, why is it that the SWAG has become common business lingo? I can’t imagine what compels a person to proclaim, “I have a SWAG” or “It’s just a SWAG” in front of their peers, subordinates, superiors, or even their customers. Yet, as I am sure you can attest, we hear this all the time. It is time to kill the SWAG!

I was reading through the 2009 Fortune 400 and it occurred to me that in virtually every situation the wealth created was due to hard work, persistence, timing, and/or brilliance. I seriously doubt that any successful business person made their wealth by guessing. Naturally, some were lucky or born with the right last name, but the actual wealth created was not the result of a SWAG. Their “swag” did not come from a S.W.A.G.

Our job as marketing leaders and managers is to present and implement the best solutions possible. We assess and mitigate risk. There is no such thing as a guarantee, so we tap our resources and make decisions. We do not guess or leave the result up to chance. Channel leaders make these decisions every day. Luckily we have so much information at our disposal that the need (or temptation) to guess is unnecessary.

Perhaps this post should have preceded the last two that I wrote about intuition, experience, and the heuristic method. We use processes and methods to help us gather, organize, and assess opportunities and risk. These processes apply to absolute, quantitative data, as well as instinct, intuition, gut-feel, and historical bias. The result is that we can present an idea or solution without the SWAG.

Who is with me? Let’s kill the SWAG!!!

Managing Uncertainty

It is not about intuition. It is about what you do with it.

I fear that my last blog post about heuristics missed the mark. I received a few comments that made me realize that perhaps I suggested that having intuition or experience was a necessary part of relationship marketing. Of course it is…and many helped point that out.

What I was trying to convey was that while “art & science” is required to build effective relationship marketing campaigns, it is more than just making assumptions, having intuition, or knowledge from past experiences. You must have a process (some refer to it as the heuristic method) in which to take your historical, and sometimes qualitative, data and apply it into something meaningful and tangible. The Peyton Manning example was an attempt to highlight the method, not the intuition. My guess is that Manning uses some kind of checklist as he surveys the defensive scheme in front of him. Maybe something like:

• Is it a blitz package?
• Where is the Strong Safety?
• Are they playing zone or man-to-man?
• What have they done in this situation before?
• Etc…

Manning takes this information, adds in the “scientific” data (down, distance, score…), and gets the answer he is looking for. His intuition and knowledge is put through a process and aids in determining the right execution strategy.

We have all done this at one point or another. Think about buying a house or choosing a university. Every time that I have purchased a house, my wife and I have created a list of “must-haves” and “nice-to-haves”. We then weight their individual importance and grade each home on each of the selection criteria. There are certainly some things that are absolutes like the price range or number of bedrooms. But there are also more subjective criteria like location, traffic patterns, quality of schools, or number of kids in the neighborhood. Based on our intuition and past experiences we can make a reasonable assessment of each of these less tangible criteria. The results are not perfect, but close enough because we trust our heuristic method.

Anyone that has developed and reviewed an RFP has likely used some kind of heuristic method.

Let’s take a look at Relationship Marketing. In most cases we have absolute data (revenue, profitability, growth, rate of growth, share of wallet, etc). This is data that cannot be disputed. We also have less tangible information. Our intuition may tell us that the relationship is still strong, even though the absolute data indicates otherwise…or visa-versa. The challenge is then twofold:

• Can we trust or intuition?
• How do we apply those heuristics into a process that will help us with managing that relationship?

The art of relationship marketing (heuristics) is applied to the science (loyalty scoring, or whatever measurement you use) to get as close to perfect as possible. This is what I mean by saying that the art and science are not mutually exclusive…they have to go together.

So, experience and intuition matter, but not nearly as much as what you do with it.

Relationship Marketing Heuristics

Wouldn’t it be great to be presented with or provided perfect information…all the time. You would be able to use this information to build perfect programs, engage in perfect conversations, build perfect solutions, have perfect relationships, and hire perfect employees. Your company, products, services, partners and customers would all be perfect. We are all taught to strive for perfection, and we should. After all that is the perfect goal…perfection.

Reality, however, is that perfection is unattainable. It is unattainable because the information presented to you has two fundamental flaws:

1) The information reflects a single point in time, so no matter when you get it, it is already out of date. Undoubtedly the information has changed…it is no longer perfect.
2) Much of the information we receive is based heuristic knowledge…that is, it is based on some level of intuition, rule of thumb, or guesstimate. It is not perfect because of human interpretation that is based, at least at some level, on historical bias.

Don’t worry…this is not bad news. In fact, it is one of the reasons that we, as marketers and relationship managers, have careers. Our job, whether working directly with consumers or indirectly through channels, is to use our skills to gather and interpret all of the information available to build the best possible programs, campaigns, communiqués, and relationships possible. They may not be perfect, but we are asked to get as close to perfection as possible.

I have used this blog to discuss data analytics quite a bit over the past few months. Instead of rehashing the posts, you can check them out here:


Lessons from the WSOP
Belief, Truth and the Power of Observation
Ch…Ch…Changes
Pyramid vs. Diamond
Different Types of Channel Relationships
Strategic Targeting


Instead, I wanted to spend a little time discussing heuristics. Heuristics is an extremely important part of relationship marketing. Individuals with the ability to use their past experiences and intuition in conjunction with effective data analysis, are rare. But it is these qualities that are necessary to make insightful, creative, and unique decisions, especially in times of uncertainty. Heuristics is the ability to discover or learn through investigation. We use assumptions, intuition, past events, and “rules of thumb” to add to the quantitative data we have at our disposal. While we won’t have “perfect” information, we have enough to perform an informed analysis and execute.

We all use this process frequently. For example, I have posted a link to this blog on a number of LinkedIn Group sites. I joined many of these groups because of what I know about either the members of group or the purpose of the group. My decisions were not based on perfect information. In most cases, I have been pleased with the groups and the content they provide. In some cases, however, the groups have been “duds”. Likewise, those of you who clicked on the link and are now reading this, did so because of some assumption or intuition. Perhaps you enjoyed a previous post or maybe the topic was of particular interest. There was no guarantee that you would get what you wanted or expected, but you chose to check it out because of some historical context. This is how social media works, in general. We receive some content and use heuristics to decide to send it on within our trusted network. It is not perfect, but more times than not, those receiving the information will be pleased with what they receive. We do not wait for perfect information before we forward or retweet. Likewise, it is not random. We don’t send everything to everyone, because we know that not everyone would find the content interesting or of value.

Many people refer to marketing as a blend of art and science. I agree. The art is in one’s ability to apply their intuition, make accurate assumptions, and apply a methodology to build insightful and creative marketing solutions. The science is in the application of data analytics based on ALL of the information at our disposal. These two things (the art and the science) cannot be mutually exclusive. They are both required to build effective relationship marketing campaigns. Recently, someone asked whether channel data integrity is important. Naturally, my response was “absolutely”. But we have to make sure we see beyond the absolute numbers and apply a methodology for including the more qualitative information at our disposal. Remember, what we know may not be captured in a database somewhere. We need to be able to tap that knowledge and apply it to the quantitative data set to get as close to perfection as possible.

Warning: Sports analogy follows:

Peyton Manning is a master of heuristic methodology. Think about what he does on every play. First, he assimilates the facts…the indisputable facts presented to him. He knows the score, what down it is, how many yards he needs for a first down, and his personnel. He knows the weather, temperature, and wind direction. These are all facts. As he gets to the line of scrimmage, he starts his heuristic method. He knows the defensive tendencies, their formation, and the opposing teams coaching philosophies. While this is not absolute data, he can use it to make an informed decision. Based on what he knows and what he assumes from his intuition and historical knowledge, he can make a decision about what play to call. He processes all of this in a matter of seconds, makes a decision, calls the play, and executes. He is so adept at using all of the information that his team doesn’t even call plays in the huddle. Manning knows that he needs the data he gets by looking at the defensive alignment to be successful. You can’t get that information in the huddle. More times than not, Manning is correct and his execution is flawless. Is he perfect? No. Does he strive for perfection? Absolutely.

Channel Leadership - What You Said

First, I wanted to thank everyone for replying to my previous post. I received a good deal of input via LinkedIn groups, email, and conversations so I wanted to summarize what you said about the qualities of a great channel leader. Instead of a laundry list of responses, here is a summary with some added commentary:

VISION & THOUGHT LEADERSHIP
This was interesting to me not because I was surprised to see so many responses regarding vision and thought leadership, but because of the lack of responses related to tactical execution. You identified the more strategic qualities of a channel leader much more frequently than the qualities related to the ability to deliver on the vision.

CREDIBILITY
I was pleased to see this quality mentioned a few times. It is not uncommon for companies to have a rotating door of channel leadership. It seems, especially in larger organizations, that there is a fair amount of churn in the channel leadership ranks. Solution Providers typically adapt pretty well to the changes, but they want credible leadership – someone that truly understands the channel model and how to best partner with their channels.

CURIOSITY
This is perhaps related to “credibility”. You want a leader that has a natural curiosity to the business. I have often used the phrase, “relentless discomfort with the status quo” as a quality of a great channel leader. Curiosity is just that; a desire to learn and implement innovative solutions to the channel challenge.

COLLABORATIVE
I wanted to highlight this quality because nobody mentioned it in their responses. I believe that a great channel leader must be collaborative with both their internal and external constituencies. As we all know, executing and delivering on a channel vision requires the active participation of virtually every functional team. If the channel leader cannot or will not collaborate with sales, marketing, customer service, operations, engineering, finance, etc… they will find themselves with a poorly developed channel initiative. I believe this is a critical quality and I was surprised this wasn’t mentioned…am I missing the boat on this one?

INTEGRITY, TRANSPARENCY & AUTHENTICITY
These are absolutely the most critical qualities of a great channel leader in your eyes. Almost every single response had at least one of these mentioned. Interestingly, the cover story of the latest issue of Business Week is dedicated to Trust. I am sure that the recent corporate bailouts, unethical business behavior, and irresponsible compensation practices have contributed to integrity, transparency, and authenticity being the most important qualities of leadership. This is clearly not reserved for channel leadership, but rather for leadership in general. I also believe that with the increasing power of consumers and their ability to organize and communicate quickly and effectively, companies and leaders must engage in open conversations. If they are transparent and authentic, then trust can become a great asset and improve for their brand. Interesting article…you should check it out.

Thanks again…keep the ideas coming!

Your Next Channel Leader

If you were hiring for a channel leadership position (Director or VP level) what professional and personal qualities would you look for?

I am interested in the adjectives that best describe a channel leader, not the "generic" candidate requirements from a job description; for example:

· X number of years of industry specific experience
· X number of years of channel program management and development
· Proven ability to work across functional organizations
· Experience with content development (brochures, whitepapers, communiqués)
· Coordination and collaboration with sales organization
· Excellent presentation skills
· Proven ability to build new relationships at CXO levels

All of the requirements above relate to specific experiences and past performance. Don’t get me wrong…these are extremely important considerations and should absolutely be part of the selection criteria. What I am interested in, however, are the individual qualities that make a great channel leader.

What are the adjectives or descriptive phrases that best sum up the qualities of a great channel leader?

Let me know your thoughts and I will post the results in a subsequent post. I think we can all benefit…whether you are looking for new gig, looking to hire, or in the business of helping companies build their channel.

Lessons From The WSOP

I am not a poker player. Sure, I have played a few neighborhood games here and there…won some, lost some, but I certainly do not consider myself even an amateur player. When you are playing for nickels, dimes, and quarters it really doesn’t matter. I do like to watch the World Series of Poker, however. I am fascinated by the ability of the top players to assess and act on each situation so quickly. There is some luck, to be sure, but over the course of a tournament the best players usually win. It got me thinking about why they are so good at taking advantage of “lesser” players. Here is what I have come up with:

Data: The best players know the odds of winning every hand, all the time. It is very rare that you will see a poker professional make a mistake based on the data at their disposal. The information is available to everyone, but the best know what to do with the data and usually act accordingly.

Know Their Competition: There is a lot of talk about being able to “read” another player, but it is more than seeing a facial expression, tick, or change in behavior. The professionals look at betting patterns and changes in those patterns. They realize that the data available to them goes way beyond the calculated odds of winning a hand. They look at both the quantitative and qualitative information accumulated over a period of time and use it to beat their competition. These “tells” give them a distinct advantage over their competition.

Exploit & Mitigate: Kenny Rogers got it right when he sang, “You’ve got to know when to hold ‘em and when to fold ‘em.” With the accumulation of data (quantitative and qualitative), the best players will exploit their competition when the timing is right, but they will also mitigate their losses by getting out of a hand. It is as much fun to watch a player fold his/her hand just when it looks like they are heading for a big loss, as it is to watch them take advantage of a lesser opponent and take the pot.

They Have a System: The best players use a system. Some are very aggressive, while others are more conservative. Some will play a hand, while others decide to fold with identical cards. Some are very vocal, while others are quiet. Some are emotional, while others remain cool. There is not a right or wrong, but the top players all have a system that works for them. It is very rare that a good player will let his/her emotions dictate their play. When players “meltdown”, it is usually because they have abandoned their system.

They Manage Their Resources: Amateur players will very often lose sight of their resources, inevitable leading to a “bad beat” or a “bust”. Pro’s will very rarely make the same mistake. They lose hands. That is the nature of the game. They will not typically, however, overplay a hand. The result is that their resources last longer, offering them more opportunities…additional hands to play.

Ebbs & Flows: The previous point about managing resources is important because the top players understand the natural ebbs and flows of the game. Some players get hot, while others get cold. This is true for even the best players. By managing their resources, the professionals get to works through these patterns, accumulate more data, and act when the timing is right.

They Eliminate Biases: Because they are so adept at analyzing each situation, the professionals eliminate biases from their thought processes. Inevitably, each player will have to deal with someone they don’t like, or where there is some history. The best players will remove the historical bias and only focus on the present situation. They will absolutely use historical knowledge, but they will remove the “noise” from their analysis.

Now consider those companies that are great at managing channel relationships. Every one of them shares the same qualities of the best players. By the way, you can apply these same points to any superior sports team, company, charity, non-profit, or politician. I didn’t include “passion” in my list because I think that even amateurs can have passion. Certainly all of the best companies, sports teams, politicians, etc. all have passion for what they do.

Would love to hear your thoughts on this list and any other qualities that you would like to contribute.

E + A = P

Every once in a while we find ourselves surprised by a small nugget of wisdom that comes from the least expected sources. It might be an observation from a child, a suggestion from a new hire, or inspiration from a middle school soccer coach. The later is what happened to me just this past week. One of my kids plays soccer on his middle school team. This is a relatively small school (only 100 kids per grade) and the soccer team only has twelve players. Basically that means that most of the kids play the entire game, usually against much larger competitors in terms of physical size and number of players. Our boys are not particularly skilled and there is not a single standout player; you know, the kid that can take over a game singlehandedly. Our team is 5-3 half way through the season. Not bad.

After every game, our coach sends out a game recap. Usually these are fun, because each of the boys typically gets a mention about something they did well during the course of the game. After their most lopsided loss (7-3), the coach sent an email that took a decidedly different tone. He wanted to share with the team and us parents his E + A = P philosophy. He believes that regardless of how big or strong the opponent, our kids can win through a combination of Energy and Attitude.

Energy + Attitude = Performance

The team has not lost a single game since that email was sent. The boys are first to the ball, they play physical, and they can be relentless when the game is tight. Most impressive is the positive attitude and unselfish play of the entire team. There are no hidden agendas, if you will. High energy and a positive attitude have translated into an elevated level of performance.

I think that E + A = P translates nicely to relationship management. Without effort and the right attitude, it is extremely difficult (if not impossible) to maximize the benefit of a great relationship. Have you ever been part of a relationship that was so good that it seemed effortless, only to see them turn over time? Unfortunately, even the best relationships require effort…you have to continue to foster and grow the partnership. I have also seen great relationships turn sour when a new party is introduced into the association. Maybe this individual has their own agenda, a chip on their shoulder, or something to prove. Regardless of the reason, the attitude takes a different tone and the relationship suffers.

Here is the lesson. Even the smallest of companies can build strong relationships within their channel. The product, however, is not enough. It takes energy and attitude. Sometimes…not always, but sometimes…larger companies can get complacent with their channel relationships. I had one executive once tell me that he expected the channel to deliver “unaided” business. This is complacency and a perfect opportunity for another vendor to win the heart, mind, and soul of that partner simply by using this basic equation…E + A = P.

We have another game tonight…GO CHARGERS!!! With a some energy and attitude we should do just fine.

Belief, Truth, and the Power of Observation

Observation is what separates belief from truth.

It is unclear who invented the Scientific Method, although much of the credit is given to John Stuart Mill, a social, political, and scientific pioneer of the 1800’s. It is likely that the method had roots as far back as the year 1,000, but Mill is credited with formalizing the structure. Regardless of its origin, the Scientific Method has withstood the test of time, because its premise is based on the power of observation.

I am fortunate to have a seventh grader that has reintroduced me to the Scientific Method, but for those less fortunate to share in the joys of middle school homework, here is a brief re-introduction:

There are basically six steps to the method:

1. Ask a question about a phenomenon
2. Make observations about the phenomenon
3. Hypothesize an explanation
4. Predict a consequence of the phenomenon
5. Test the prediction (usually in some controlled environment)
6. Make a conclusion using data acquired

The beauty of the Scientific Method is that, if done properly, biases can removed from the process. Too often in the workplace, many of our actions are based on biases that could alter our decisions. If committed to the Scientific Method, we are able to base our actions on “truths” instead of “beliefs”. This can be extremely difficult to do, especially when our belief systems can be so profound. Have you ever had a “discussion” with someone whose political beliefs are different than your own? These are usually debates where the Scientific Method is missing. The result is typically an “agreement to disagree”…not the result you want when a business decision is on the line.

The relationships we have with our channel partners are often based on beliefs. Sometimes the relationships change and our judgment can be clouded because of an historical bias. This is often the case when a good relationship turns sour, or when a poor relationship becomes solid. We need some methodology to see through the bias so that we can we can make decisions based on current observations and data.

Channel management requires the investment of resources to build a more effective and profitable channel ecosystem. Every investment is critical, especially in today’s economic environment. Using analytics to measure relationship trends will provide data (observations) that will help guide those investment decisions. Do you have a method to identify and observe a phenomenon, question it, hypothesize an explanation, and test the theory? If not, then are you making biased channel investment decisions?

"Our Business Is Different!"

I wish I had a nickel for every time I heard someone proclaim, “Our business is different.” While my response is usually something like, “That’s great! How is it different?” my inner voice is thinking, “God, I hope so!” I hope so because the only way to survive is to be different. Hopefully that means that you are better in some way and not just different to be different. It used to be that businesses had to be different, but in a big way. What I mean is that if you were too small…too much of a niche…it was difficult to reach a large enough community of customers that shared your passion. This is no longer the case. The internet has created a very long tail, one in which even the most unique ideas and products have an opportunity to reach their audience. The result is that it is not better to be huge, it is better to be “different”.

Try this. Google “pool clothes made from towels” and you will find Splash Funwear. Great product that is able to reach a big customer base. This is an example of how the long tail has made “different” vogue.

So, we have established that different is good. My pet peeve, however, is when I ask, “How is it different?” the response is, “Our business is based on relationships.” EVERY business is based on relationships. Let me repeat…EVERY business is based on relationships. This is not different and it is not a niche that you can market. Even the long tail of the internet will not make it so.

When you search the internet for “businesses based on relationships” you will get links to numerous books, articles, and consulting services, but not one unique company whose difference is that their business model is based on relationships.

Business relationships are fundamental…not unique. As such, you have to invest in the relationships that matter most. If you don’t, then you may find yourself in the unique position of being the company whose business is not based on relationships.

Every employee in your company is a Relationship Manager. The receptionist, the customer service technician, the CFO, the channel operations manager, and the Board of Directors…everyone is a Relationship Manager. In everyone’s job description there should be a goal of improving the relationships with the people in which you interact. There should be no exception.

Be unique. Be different. Your business depends on it. Realize, however, that relationships are fundamental and invest in ensuring that the relationships you foster will allow you to continue to be different.

When Relationships Change

Relationships ebb and flow. They are never static and, as such, need to be monitored and managed. The “highs” will inevitably give way to “lows”…and back to highs. Most of the swings are small and don’t necessarily mean that the relationship is changed forever. But even with the small shifts, opportunities present themselves to either mitigate the lows or exploit the highs. Frankly, I think that is what makes channel management fun. It is the opportunities to gain channel loyalty and strengthen relationships through the ebbs and flows that create the potential to grow the business.

Sometimes the shifts are more profound.

Remember last summer when Cisco was sued by Infra-Comm (a Silver designated Cisco VAR) for poaching a customer and giving the business to another reseller (AT&T Business). This was big shift…a fundamental change in the relationship between Cisco and Infra-Comm. Irreparable.

Then there are the waves of change that indicate a big relationship shift, but one in which the relationship can be salvaged with some savvy marketing and relationship management.

Over the past year, Red Hat has made investments in their channel. They have hired experienced channel leadership and started to roll out new channel programs that are creative and well conceived. Just today, they announced their Catalyst Program which is designed to provide the channel with an integrated open source solution. So instead of sourcing the individual piece parts of an open source solution, VARs can potentially use the Catalyst Program to provide a single, integrated solution to their customers. The program is designed to compete directly with Microsoft and Oracle. Cool.

The VAR Guy pointed out that right in the middle of the announcement today sit Tech Data and Synnex. Two Red Hat channel partners, both vying for a big chunk of the open source pie. Tech Data has partnered with HP, IBM, Fujitsu, Dell, and others to bring an open source ecosystem solution to the channel. Conspicuously absent from the discussion is Red Hat. Perhaps that is because Red Hat has partnered with Synnex to launch the Open Source Channel Alliance.

There is a lot of jockeying and it is certainly possible that a collaborative solution to the open source channel opportunity can be reached. It does, however, look like the relationship between Red Hat and Tech Data is in one of those relationship “lows”. The questions are, “Can the relationship survive?” “If not, what are the residual effects to the channel?” “What has happened to the balance of power in the Synnex/Red Hat relationship?”

This should be fun to watch…

Ch...Ch...Changes

I am frequently asked about the best way to measure the relationship between a vendor and their channel partners. It is not uncommon for companies to try to assess the relative strength or weakness of their channel relationships by looking at a single point in time. For instance, they may look at total revenue, margin, market share, share of wallet, or number of customers to gauge the value of the relationship(s). Relationships, however, are not static. Every relationship has ebbs and flows, which should dictate how you manage them at any given moment. To effectively market to your channel partners, you need to carefully consider the following:

CHANGE: This is perhaps the simplest calculation. Basically, you take two points in time (A and B) and look at what has changed during that elapsed period of time. Has revenue or profitability increased or decreased? Have we gained share of wallet? So while it is good to know your revenue at a single point in time, it is better to understand whether or not revenue has increased during a period of time.

VELOCITY: Velocity considers the rate of change. For example, let’s say that during a period of time, Partner X increased revenue from 100,000 to 150,000. Calculating the change would tell you that there was a $50,000 increase in sales. During the same period of time, Partner Y increased revenue from $25,000 to $75,000…also a $50,000 increase in sales. While both Partners increased sales by the same absolute amount ($50,000), the velocity was quite different.

ACCELERATION: Acceleration considers the rate of change in velocity. This metric offers an effective way to measure specific actions taken to affect velocity. For instance, let’s assume that a Partner relationship has turned sour and, as a result, there has been a decline in revenue over a period of time. In fact, over multiple periods of time, revenue has declined at an increasing rate. To mitigate the downward spiral, you implement an aggressive program designed to re-engage the Partner. By examining the rate of change in velocity, you can effectively measure the effects of the program.

The “scientific” and ongoing management of channel performance data is essential, because it will help formulate the most effective initiatives to either mitigate or exploit current opportunities. To me, the biggest challenge is to consider multiple variables simultaneously. In the above examples, we only considered one variable…revenue. While this is ok to illustrate the principles, it is not realistic, however, as there are many variables to consider. The “new” channel marketing model should be to effectively measure the change, velocity, and acceleration of multiple variables simultaneously and quickly implement effective campaigns to take advantage of what the data tells us.

If you want to know the strength of each of your channel partner relationships, you need more than a “picture” or single snapshot in time. You have to know and understanding how the relationship is changing, why it is changing, and how quickly it is changing. Companies that are able to gather and analyze this data will be in the advantageous position of building stronger and profitable relationships with their partners.

What's Up With The SMB?

Switching gears a bit form my most recent thoughts on social networking and the channel, I wanted to start a discussion on what is happening in the SMB market. A recent article on ChannelWeb discusses the very significant decline in SMB revenue for North American solution providers. You can read it here...

I found it interesting in that many of the channels reviewed in the article had different rationale for the decline (all double digits...some as high as 20+%). They referred to the exchange rate, geography, market segments, and lower margins. They talked about being "cautiously optimistic", "protracted road to recovery", "markets we serve have reached bottom", "aggressive price competition", and "all segments went down some". This is hardly good news for the channel serving the SMB.

I am curious if the precipitous decline in the SMB market is just a reflection of the economy, or if there is perhaps something else going on. Is there a new world order forming in the products and solutions serving the midmarket? What would it mean to the channel?

ChannelWeb has another article regarding the Top 10 Technologies High On The Minds of Midmarket CIOs. Granted, one article is about the SMB market and the other on the midmarket, but I do think there is some commonality. I won't go through all of the technologies, but rather point out that Virtualization, Business Intelligence, Security, Unified Communication, Collaboration, ERP, and CRM all lend themselves to cloud computing. Are these CIOs most interested in these solutions because of the economic benefits of hosted and managed solutions? Is this trend (if true) only a function of the economy? Will the trend reverse back once the economy makes a turn?

Again, what does all of this mean to the channel and the relationships they have with their customers and vendors?

My guess is that the technology trends are a direct result of the economy, but that even with a turnaround the trend towards cloud computing will continue. Channels serving the midmarket and SMB market will need to adjust their strategies accordingly. Those that have performed well on the top line (at least relatively) have also experienced a significant negative decline in margins.

Let me know what you think....

Is All of This Talk About Social Media Real?

Yesterday I had a conversation with a like minded channel professional about social networking. There seems to be a pretty large number of company leaders that view social networking as business tool to be somewhat of a fad. It seems pretty clear to me that the data indicates that it is certainly not a fad. While there remains kinks to be worked out and business models to be developed, social networking is rapidly becoming an integral part of marketing and customer relationship management.

Just this morning I stumbled across blog post (and subsequent research) from the Gilwell Group that you should check out. This research not only addresses the premise in the previous paragraph, but it is also directly related to B2B channel management. I highly recommend that you check it out here. Take a look at the SlideShare presentation as well.

Where Does Social Media Fit?

As many have concluded before, the use of social media as a stand-alone strategy will not be as effective as the use of social media as part of an integrated effort. As I reflect on the role of social media on building better, more profitable channel relationships, I think that it plays an important role in the beginning and at the end of the process. A high level view of the process would look something like the graphic on the left.

Data is collected, organized, and analyzed at the beginning of the process. Data can be quantitative (ie. POS information) or qualitative. It is important for organizations to review and stay abreast of the discussions happening in the social media realm about your company. LinkedIn, Twitter, Facebook, and others are places where there is tremendous amount of discussions happening everyday about your company, your competition, and your industry. This can be invaluable and timely qualitative information that should included in the early stages of your channel marketing process.

Finally, once you have used the data to identify an opportunity, followed your development process diligently, and created your content, it is now your job to engage your partners. Using traditional communication vehicles like email, portals, and newsletters should be part of the communication mix, but these are typically pushed (intrusive) methodologies. Your ability to truly engage and have conversations with your audience will come in with more “synchronous” communication methods. Obviously, anytime that you can engage in person with your customer the better, however this can be time consuming and expensive. The use of social media will enable you to engage your partners more quickly and through your trusted network. Social media will also give the added benefit of exponential reach that a face-to-face discussion will not offer.

Social media should play an increasingly important role of both your channel marketing strategy and the tactical execution.

Lighting The Fuse

The key to effectively build a string of mini-explosions is to reach the individuals that have reach and influence beyond your own. Actually, it is more than just reach and influence. They also have to be willing, able, and motivated to share your message with others that they think will benefit from what you have to say. No problem, then. All you have to do is find those people that find your content so compelling that they are willing to share your information (sometimes at a risk to their personal and/or professional reputation) with other people in which they have some level of influence.

Piece of cake, right?

Not exactly.

These people are often called “Sneezers” because they help spread your content/message...creating the viral effects of social media. They are hard to identify and reach. Even if you could identify them, their attention would be very difficult to get as there would be significant competition.

The BIG question, then, is how do we reach and motivate these Sneezers and get them to help spread your content. First, and foremost, you have to have something they care about. For example, my Mom would not be a Sneezer for this post about social media, but if I was writing about cooking a Bundt cake, she would be a great Sneezer. So you have to target your content to the right communities of individuals. The key is to not be too narrow. Since you may not know who the Sneezer will be, you will have to cast a big net.

The next step is motivation. Why would a Sneezer feel compelled to share your content? This really comes down to being part of communities that share a common purpose. LinkedIn Groups are wonderful examples of these types of communities. I belong to some very large groups, as well as some pretty small groups. The smaller groups are more narrowly focused, but tend to be more passionate about the topic. The larger groups have a smaller percentage of active participants, but those that are active tend to have broader sphere of influence.

The graphic below shows how this would work. The mini-explosions occur within each community as a Sneezer reaches another community…one in which he/she has some influence. In turn, another Sneezer reaches another community. The process continues as long as the content has some value to the next community. The mini-explosions create the viral effect of social media because you have successful caught the attention of the Sneezer who is motivated to share.

Mini-Explosions

If social media is TNT (Trust, Network, Time), then perhaps it has the characteristics of dynamite. But dynamite is really one big explosion and social media has the effect of a bunch of small, or mini, explosions that ripple through your network. It can happen quickly, but the viral spread of information happens through a large number of small connections that reach more communities. The power of your message and communication will determine the number of explosions and how long the ripple effect will last. Done effectively, the exponential effects can be profound.

Consider the following:

You tweet 1000 followers

10% re-tweet to 1000 followers (100,000 have now received your message)

5% re-tweet again to 1000 followers (5,000,000 have now received your message)

Of course, you can change the variables and the number of mini-explosions, but the exponential effect remains. So, in the above example, one 140 character message reaches 5,000,000 individuals. Those that received the message were somewhat pre-qualified by the "trusting" nature of social media. Let's say that only 1% (5,000) buy a $500 product from you. You have just made $2,500,000. Again, you can adjust the variables, but the ROI can be significant.

This may be somewhat unrealistic, however, because there likely needs to be more marketing involved...initiatives with more hi-density content...and additional sales involvement. Again, I would contend, however, that the ROI is significantly larger than a traditional direct mail or telemarketing campaign, where the additional hi-density content and sales engagement will still be required.

Our goal, as channel marketers, is to create content that will maximize the number and size of the mini-explosions.

TNT

Still working on this idea, but I wanted to get some reaction to the thought. It seems that social media offers a unique blend of Trust, Network, and Time (TNT). Using micro-blogging as an example, one would have a trusted group of followers. Those followers would have their own trusted group, etc. This is where the network comes in. In theory, even with a small group of followers, you would have exponetial reach through your network. LinkedIn works the same way. Because of the asychronous nature of micro-blogging, time to communicate and engage is greatly reduced, especially when compared to traditional media.

Social Media = TNT

As a stand alone strategy, social media will offer the benefits of trust, network, and time. Unfortunately, this will not necessarily translate into sales and revenue. Other channel sales and marketing tools are required to bring the benefits of social media to a revenue producing strategy. It is absolutely necessary to have fully-integrated channel marketing plan. Because of the benefits of trust, network, and time that social media offers, it can/should be a critical executional element of the plan.

Social Media and Channel Marketing

I have started to draft a paper on the use and application of social media for channel marketing. While there is a lot of content available, most of it centers on the definition of social media and the various applications...answering questions like, "what is micro-blogging?". I am hoping to come up with a framework that can help explain and perhaps start to justify the use of social media for the purposes of channel engagement.

As has happened so many times, I was inspired by a recent post by Seth Godin where he has developed a simple model to explain various media by engagement level (asynchronous/synchronous) and density of information delivered (high bandwidth/low bandwidth). Please check out his post for additional context.

I borrowed his model and came up with the following:

You can now ask yourself, "what are our communication goals?" and "at what level of interaction or engagement is required to most effectively deliver our information?" If time is of the essence, then you might consider the use of email, blogs, or micro-blogging. If the amount, or density, of the content that needs to be delivered is great, then you might consider a content community (YouTube/flickr).

Calculating the cost/benefit is much more difficult. You will need to analyze your current process for delivering timely or content-rich information and determine if the use of social media will save time and money. You will need to consider concerns about lost productivity (or rationalize improved productivity) and security. I think most companies struggle with this and I certainly have yet to find the answer. I am open to ideas...

I am also very interested and excited to get more detail about GoogleWave. Potentially, this is the application that will get us close to the top-right of the grid.

Is this Extraordinary?

I will always applaud the efforts of vendors that truly try to engage their partner community. With that said, I came across an article on ChannelWeb regarding the efforts of Proxim Wireless to engage and support their channel partners through the difficult economic climate. Again...every company should be working to support their partners and the fact that Proxim is communicating their channel support plans should be recognized.

But take a closer look at the steps they are taking:

• Reducing the revenue requirements to maintain designation levels.
• Providing a deal registration solution.
• Implementing a partner portal.

One has to wonder why there is even a revenue requirement for designation achievement. Wouldn't it be better to keep the designation levels as they are, but introduce a growth incentive that will truly improve the channel(s) bottom line? Even better, remove revenue from the requirements and focus on what customers really care about...capability, competency, and service. Deal registration is good...but hardly extraordinary. Proxim should have a deal registration program, but it is a "me-too" effort. Likewise with the partner portal...have they really not had a secure site for their partner until now? eNewsletters...marketing programs...co-marketing...company information...not the most revolutionary set of initiatives.

I applaud Proxim for their efforts and continued investment in their channel infrastructure. I am critical only because their efforts are not extraordinary. Channel partners will likely be glad to have a portal and deal registration program (as long as conflict is closely managed), but I don't see them jumping for joy or believing these will help them weather the economic storm. They will be glad to see the lower revenue requirements. Many will simply just not have to work as hard to maintain their level. There is really no incentive with the revenue requirement reduction.

Seth Godin recently had post regarding "Bear Shaving". Isn't this just Bear Shaving? Is Proxim really addressing their root cause issue or are they putting perfume on a pig and spinning it in the media?

Aligning Your Channel Plans

There is a lot to accomplish when managing a robust channel ecosystem. The interesting part of being a channel leader (at least for me) is that you have to work across a broad set of both internal and external constituencies. It is our job to make sure that we are implementing a suite of initiatives that satisfy the needs of all. This is not easy to accomplish, especially if you do not have a plan. I have previously discussed on this blog (and in greater detail on the Channel Connexions website) the process to use when developing and managing programs. But where do you start? How do you know which efforts are the right ones…the programs that will meet the needs of both your internal and external partners?

I think there is a simple, yet effective, way to identify opportunities by using an assessment process. It is really quite simple:

Over the next week or so, I will provide some additional details into each of the stages of this process. The 90-Day Process is really a guideline, but as you will see as we dive deeper into the processes, there are a fair number of considerations, none of which should be ignored.

I know that I spend a lot of time talking about channel management processes. I do this because it is important. Too often people assume that processes inhibit creativity and slow down implementation. This does not necessarily have to be the case. An effective process will ensure diligence and a focus on delivering results that matter to your company, as well as the various contingencies that rely on your success.

Extraordinary Effort

It costs a lot to be extraordinary. There is an investment in relationship management in terms of time, energy, software, programs, technology, and commitment. The question is, "Does the investment pay off?" It will depend on the view you take. There will likely not be a short term return on the investment. Relationships take a long time to develop. As such, it is not uncommon for us to take Easy Street and do our jobs like they were done in the past or maybe copy and enhance a competitive program. It is the simple way to justify your role and function. Just be a little bit better than the person before you.

Extraordinary is different. It is different because people that do extraordinary things don't do it for themselves, they do it for others. Great athletes work harder to win for their teams and communities. Doctors invest in new techniques and practices to help cure diseases and illnesses they don't have. Successful entrepreneurs find better ways to serve customers. None of these extraordinary people do it to justify their role or position. Don't get me wrong, there is likely a benefit to each of these people and sometimes that investment can be quite lucrative, but their core focus is on others.

A friend of mine recently went to Monticello, VA. He was telling me how great his trip was, but one thing he said was really interesting. A large percentage of our Founding Fathers died broke. These were clearly not people interested in serving their financial interests. They wanted a better place to live...a better society...and sacrificed what would have surely been an easier path to riches. Did they benefit in the long run? Sure. Their focus, however, was doing something for someone else.

As we try to find better ways to build relationships with our channel partners and customers, shouldn't our efforts be extraordinary? In speaking with different companies, I often hear of the need to "really ramp up our channel efforts". So they recruit and hire talent...those with similar channel experience and industry expertise. There is nothing wrong with this, but in most cases these companies and their partners will get a different flavor of the same thing. Companies and their partners should expect more. They should expect something extraordinary.

ChannelWeb (CRN) has recognized 30 vendors as channel contenders...those that have the opportunity to challenge the incumbent segment leaders. To accomplish this, these organizations will have to be extraordinary in the way that they manage their channel relationships. Their products and solutions are not enough to slay Goliath. They will need innovation and a consistent focus on building long lasting partner relationships.

Congratulations to these companies...hopefully they will be extraordinary!

Celebrate Good Times...Come On!!!

We ask a lot from our channel partners and they demand a lot from us. It can be a challenge for each of us, but the benefit we receive from working together to get that additional contract or satisfied customer is worth the effort. I think it is ok, in fact necessary, to celebrate our mutual successes. Here are some ideas about how to celebrate with your channel partners:

The Big Incentive: Often there is a “big” reward for a channel partner achieving a certain goal. Some examples:

Growth: Many companies choose to offer a Growth Incentive for partners achieving an annual revenue target. The most common is the growth rebate where a vendor offers a percentage rebate for a channel partner reaching a specific revenue target. Let’s say a vendor challenges a partner to grow revenue 20% year-over-year. In exchange for the growth, the vendor offers a 10% rebate on that growth. The resulting 2% goes straight to the channel bottom line. In some cases, this can be quite substantial. Please note that some industries (ie. Insurance) frown on these types of contingent payouts, while other industries are more accepting.

Recognition Trip: Companies may choose an exciting location for an annual celebration with top partners. While considered by some to be a “boondoggle”, these events can be quite productive. While it is nice to get away and enjoy a nice destination, I recommend that you take this time, with your captive audience, to engage in a learning opportunity. It is a perfect opportunity for executive teams to discuss the status of the market, new business opportunities, and potential issues to address.

The Sales Incentive: The Big Incentives are nice, but they are typically only beneficial to the most senior levels of the organization. For example, few channels will distribute the gains from a growth incentive to their sales teams, preferring to take profit instead. As such, it is important to recognize the outstanding individual efforts of your extended sales force. There are countless ways to accomplish this with gift cards, redeemable points, and cash. Remember, these are the folks that make it happen for your every day.

Public Recognition: I mentioned in my previous post about the Hierarchy of Motivations, that channel partners have a social need that you need to address. Recognizing extraordinary accomplishments in service excellence, innovation, and program execution in a public forum is a great way to celebrate your channel partnerships. A small token (like a plaque) coupled with a press release satisfies the social need and demonstrates your commitment to the partnership, for example.

The Little Things: These are really the biggest things because they matter most. A well written and sincere Thank You note is almost a thing of the past, and yet is perhaps the best way to recognize your partner. Everybody likes to be recognized for the long hours, hard work, and commitment we put into a project or relationship. It is shameful to not share your appreciation. You can also send a quick email to “the boss” letting him/her know how much you appreciate the efforts of an individual or team. Don't forget the little things.

These are just a few ideas and frankly, the more creative you can get with your "Celebration Programs" the better.

Hierarchy of Motivations - Channel Actualization

Sorry for the somewhat academic sounding title, but channel motivation is something very few companies truly incorporate into their plans. The expectation seems to be for channel marketing to develop marketing “programs” that will motivate the channel and the channel sales teams to sell more stuff. Not a bad goal and certainly selling more stuff is a good thing. Creating a truly motivated channel, however, requires more than a few incentive programs. Maslow created the Hierarchy of Needs to demonstrate that in order to get to “self-actualization” the individual must pass through a series of stages. Apparently you cannot just decide one day to be self-actualized. Who knew?

It got me thinking about channel motivation and wondering if a channel relationship can just become “actualized” or if there were stages that the relationship must go through to reach Nirvana. Not being a trained psychologist, I thought of the two motivations we often see in the workplace; the carrot and the stick. Certainly, Donald Trump has used this approach for his reality show, The Apprentice. I think there is more, though. What truly motivates a channel partner is not too different than what motivates an individual:

Survival: Channels (like people) will do what it takes to survive. This often leads to a “path of least resistance” behavior. Channels will behave in a way that helps them survive. This why effective lead generation and deal registration programs are embraced by the channel. Incentive programs and channel ramp initiatives will also help satisfy the “survival” motivation.

Social Need: This is an emotional need. Channel partners want to be recognized in their communities and business circles as successful and thriving business practices. Their success is directly related to the perception of their customers and partners. Channels have a social motivation. Channel designation programs, for example, offer a recognition brand for their excellence. The reason many companies offer a tiered designation structure is to motivate their partners to invest in the relationship and gain the next level of designation.

Need to be Valued: As I have mentioned previously, channel partners want to be engaged and involved. They want their input on product and solution development, marketing programs, and service level agreements to be heard and valued by the vendor. The community of Linux developers and contributors to Wikipedia are emotionally connected to these products and services because they feel valued. Companies that embrace this “need to be valued” motivation through engagement programs (similar to the trends in channel education), will benefit by creating an emotional connection with their partners; ultimately creating switching costs.

Channel-Actualization: The Utopian channel relationship is one in which there is mutual commitment, mutual growth, mutual profitability, and brand between the channel and the vendor. As Maslow would describe it…the relationship is everything that is can be. Of course, this is a state where there is perfect communication, action, and results.

The Channel Hierarchy of Motivations would look something like this:



The goal in building channel motivation campaigns should be to reach the top by building a suite of programs and initiatives designed to move your partners up the hierarchy. Focusing exclusively on the lower stages is table stakes as this is where your competitors are also focusing their efforts.

Disclaimer: I apologize for the psycho-babble in this post. Perhaps it sounds a bit “too fluffy”, but I do think that you have to go beyond incentive programs and lead generation to truly motivate your partner community. Would welcome your thoughts…

Engaged Channel Education

Educators are successful when they engage their students.

Politicians win elections when they engage their constituents.

Companies profit when they engage their customers.

The discipline of channel education should be focused on engagement. If we, as channel marketers, are able to better engage our channel partners in our educational programs, we will be successful. Certainly, products and services with better quality and more market demand will have a leg up on their competitors. But all things being equal, companies that better engage their channels will gain mindshare, commitment, and loyalty.

The most exciting aspect of building an engaged channel education program is that technology is enabling new approaches, which in turn is changing the landscape. Organizations that embrace these new "engagement" tools will benefit. While traditional channel education methods are still prevalent, these newer methodologies are rapidly becoming the standard.

The "old/traditional" educational methods all share two common traits; they are "pushed" on the audience, and the content is one size fits all. Perhaps one can argue that webinars and brown bag sessions are more interactive and not necessarily just "pushed", but they do not allow for joint content development and customization. As such, there is a limitation on the engagement value of these tactics. True engagement occurs with the active participation of the student, not just during the delivery of the content, but in the content development, as well.

I am not suggesting that we should abandon the traditional approach as there is still value in many of these approaches. What I do recommend is that we implement the engaged methodologies. The balance is definitely shifting as our customers (students) demand the value of participation.

Educate, Motivate and Celebrate

I have blogged about this before (http://channelconnexions.blogspot.com/2008/05/educate-motivate-celebrate.html), but I felt that a little more detail is in order.

Channel Marketing is in the business of educating, motivating, and celebrating. Some describe the function a bit differently (Attract, Enable, and Drive, for example), but I think if you can be innovative and disciplined in your approach to channel education, channel motivation, and channel celebration, you can create differentiation in your relationships. The important thing to recognize is the need for INNOVATION and DISCIPLINE.

Too often, I see channel marketing that still uses the same programs and tools over and over. Not only does this fail to motivate your partners, it does not create any competitive advantage or switching costs. The most successful channel marketing initiatives are new and create and build buzz. It is very difficult to compete with the Cisco's and Microsoft's of the world, especially in their ability to engage the channel. Copying their programs absolutely will not get it done. Try new ways to educate, motivate, and celebrate.

While it is critical that you innovate, you should not do it at the expense of discipline. You need a strategy and a process and you need to stick with them.

If you don't have a strategy...any campaign will get you there!

Whether you use a process similar to the one I have used (http://channelconnexions.blogspot.com/2009/07/connexions-process.html) or you have your own, it is very important to stick with it. The discipline won't guarantee success, but a lack of discipline will likely end in failure.

Over the next few days I will offer up some thoughts on each of education, motivation, and celebration.

Pyramid vs. Diamond

Channel designation structures often follow a pyramid structure like the picture on the left. It makes sense that at the highest level of the structure there is more exclusivity...only the best of the best sit at the top of the pyramid. In this case, the Platinum partners make up only about 10% of the total channel population. Next is the Gold designation and finally, almost 60% of the designated partners fall into the Silver level. Companies that are just building their channel ecosystem should follow this structure, especially if they have limited geographic coverage. Unfortunately, too many companies stop here...with the pyramid. I think there is a better way.

One of the goals of channel management should be to move lower designated partners up the pyramid to higher designations. Isn't it better if your Silver partners increase their level of competency and capabilities to the Gold level. Of course it is...they become more invested and loyal as they move up the designation hierarchy and are better able to serve your mutual customers. If that is the case, however, and you want to maintain the pyramid structure, you will need to be constantly recruiting new partners at the lower levels. Again, this is fine if you are just building your channel ecosystem, but what about for an established channel structure? More recruitment means more channels, which very likely will cause channel conflict, over distribution, price erosion, and decreased channel satisfaction. Not good.

I think that over time the structure has to change to more of a diamond shape. The highest levels maintain their exclusivity, but there becomes a smaller number of designated partners at the lowest level because you are helping them move into the middle (Gold) tier. There is no need to over distribute and continue to recruit partners. The form simply takes the shape of a diamond. At this point, recruitment is reserved for replacing poor performance partners enabling you to manage channel conflict.

How you manage your structure will depend on where you are with your channel coverage model and the optimal number of partners you need to be successful. Don't get stuck in the pyramid, when a diamond may be all you need.

Different Types of Channel Relationships

There are two different relationships that require your attention. OK...there are more than that, but two major categories of relationships that every channel leader must constantly consider.

The first is the relationship between you (and your channel partner) and your end user. The second is between you and your channel partner. How you manage and market within these relationships is very different and requires very different approaches.

In the first case, companies typically establish a designation structure...usually with multiple tiers. For the sake of argument, let's say they use precious metals (platinum, gold, silver). The end user can choose their solution provider and understand that the vendor/manufacturer has recognized the channel based on some sort of achievement. In theory, a Platinum partner has achieved a greater standing with the vendor/manufacturer than a Silver partner, and therefore, offers some additional value to the end user.

Channel managers will work to build a channel ecosystem based on these designations. It is not uncommon for their to be a greater number of Silver partners than Gold partner, and, likewise, a greater number of Gold partners than Platinum partners. The result is a pyramid of designations:

(more on this strategy later...there might be a better way to think of the Pyramid)

The second category of relationships that require the attention of the channel leader is between you and your channel community. I don't think that same designation structure is useful in this category because it really says nothing about loyalty and the change in relationship over time. As such, you might have an extremely loyal Gold partner whose relationship is getting stronger over time versus a Platinum partner whose relationship (for whatever reason) is fading. How you market to these channel partners should be very different and really has very little to do with their external designation brand.

Channel Managers should consider another way to classify their partner community when managing this category of relationship. It should be based on loyalty, and more importantly, on the change of loyalty over time. The relationship map would look like this:

Very different than the traditional pyramid structure used in managing relationships with the end user. The basic concept is that how you sell and market to a Fader should be very different than how you sell and market to an Up & Comer...regardless of their external designation.

Most companies tend to focus on the pyramid and do not have the infrastructure and data to effectively manage "the curve".

Is Channel Marketing Changing?

I hold the opinion that channel marketing (as a function) has become stale, with very little innovation over the past few years. This is why I started Channel Connexions. Recently I stumbled across the following from TreeHouse that I thought was interesting.

I have previously mentioned that I believe one of the roles of channel marketing is the "education, motivation, and celebration" of the channel. TreeHouse uses different nomenclature, but basically agrees. Can the use of social media be used as a means to educate, motivate, and celebrate your channel ecosystem? I think so.

More on the opportunities to change channel marketing in subsequent posts...stay tuned!

Connexions Process

Here it is all together. If you are interested in more information you can contact me at jeff@channelconnexions.com or visit http://www.channelconnexions.com/.

I like this process because it is a system that is flexible and applicable to many different situations.

Learning

The last step in the Channel Connexions Process is "learning", which is really based on the measurements used to gauge the relative success of each channel campaign. I think it is important to understand that the ways in which marketing measured is changing. It used to be that we used "Awareness, Consideration, and Purchase" as the success measurements in a marketing campaign. The approach is fine with a mass marketing campaign, but with a true, targeted 1:1 relationship management initiative, we should be focused on customer attraction, retention, extension, and loyalty. This holds true from a channel perspective, as well.

Today, it is fairly common practice to use SEO measurments and targeted advertising to "attract" new business. Retention (engagement) and extension require newer metrics and involve the examination of data over a period of time. For example, revenue growth is good know, but it is more useful to understand the change in revenue growth velocity. This information offers additional insight into each customer/channel, and enables you to make better decision about future marketing campaigns. By managing channel attraction, engagement, and extension, you will increase channel loyalty and accelerate the positive rate of change in loyalty.

ACT

It is pretty evident that mass marketing is rapidly being replaced by more targeted communications. As discussed in the previous blog post, the application of "active" data analytics is enabling companies to focus their messaging to a very well defined community. There are many benefits to this, not the least of which is a better ROI on your marketing spend. This is extremely important especially when dealing with a large channel ecosystem which potentially thousands of indirect sales representatives.

While some of your channel partners might be exclusively sell your products or services, it is more likely that will multi-source from a number of vendors. Your challenge is to position your portfolio effectively as the lead solution. To accomplish this you will need to win the mindshare battle. Mass marketing (spray & pray) will not provide you with the mindshare needed.

The hierarchy in the image is a great way to look at your communication strategy. Your goal should be to establish a unique relationship with each of your channel partners and, even, each of the channel sales representatives. By engaging each of them in interactive conversations with your channel marketing programs you can build an emotional connection with the individuals. This, in turn, creates loyalty and switching costs, well beyond what can be accomplished with mass marketing.

While this is difficult and will take time to develop, the emergence of new technologies is making Stage 5 communications much more realistic, even for smaller organizations. Social networking is enabling new business relationship management applications and variable data management techniques for email and print-on-demand solutions are more readily available.

The channel management reality is that you have to be better and more creative in your channel marketing strategy. A "me-too" approach will not adequately differentiate you from your competitors and make winning mindshare very challenging. Channel executives should be willing to push the envelop with a focus on building relationships through unique communication strategies.

Strategic Targeting

Now that you, and the rest of the leadership team, have identified strategic goals and objectives, it is up to you (as the channel leader) to identify the best channel opportunities to contribute to the achievement of those goals. Market segmentation is a natural place to start. I think that most companies - even very large and sophisticated organizations - start with demographic data. It might be geography, SIC codes, or some other demographic classification. This is a fine place to start, but your analysis shouldn't stop there.

Demographic data is passive, and therefore a poor predictor of future behavior. Just because you are a white male living in Illinois, doesn't provide any indication that you will buy a new router, does it? Your goal should be to use "active" data like historical transaction records that will provide a much more accurate predictive model and enable you to target and customize your marketing campaigns.

While the population may be smaller, the yield should be much greater.

After all, it is the yield that you are after.

Strategic Planning

Strategic Planning seems like a logical place to start, but it is too often limited to just a few key stakeholders, and often does not consider the full suite of available data.

Channel Connexions looks at strategic planning as a holistic cycle that starts with the application of market analytics. By continuously examining the data (quantitative and qualitative), you will be able to proactively identify new opportunities.

I think the most common mistake that channel marketing managers make is that once an opportunity is identified there is an immediate push to develop a campaign and execute. While the intent is correct, there are other considerations. Ensuring that back-end business processes are in place to support the campaign is extremely important. Can we track and measure the campaign? How will we deliver training and customer/channel communications? There are countless other considerations, but establishing the business processes is an important next step.

Considering and selecting the appropriate financial performance goals is extremely important. Your goals can revenue growth, profitability, product/service attachment, share of wallet gains, or some other measurement. Make sure you select the right goal and have the business process to measure.

As you review your business process needs, it is likely that you will identify technology needs to support your campaign. For example, call center queues may need to be established or you might need a variable data management system for your multi-channel needs. This should be coordinated and established before the campaign launch.

After all of these considerations, you will now be ready to launch and manage your campaign. A strong channel marketing team is required to coordinate the strategic planning process and provide continuous oversight and management of the program(s). It should be noted that it is common for multiple campaigns to be in different stages of the planning process at any one time. Adherence to the process will help with the overall coordination of the efforts.

As you may have guessed, the effective planning of channel marketing requires the active participation of many different functional teams including Sales, Marketing, Finance, Product Management, Service, Operations, and the Executive team. You must be willing and able to engage each of these functional teams and build a collaborative effort to execute effectively.