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.