Channel Connexions

Attention & Authenticity

2009-10-21T10:00:00.001-04:00

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

2009-10-09T10:53:00.002-04:00

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

2009-10-08T10:50:00.002-04:00

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

2009-10-05T12:53:00.005-04:00

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

2009-09-29T09:56:00.002-04:00

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

2009-09-23T09:48:00.003-04:00

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

2009-09-17T10:22:00.006-04:00

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

2009-09-15T09:39:00.002-04:00

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

2009-09-08T14:19:00.002-04:00

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!"

2009-09-02T11:14:00.001-04:00

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

2009-09-01T11:35:00.002-04:00

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

2009-08-24T09:16:00.003-04:00

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?

2009-08-21T08:22:00.003-04:00

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?

2009-08-19T09:29:00.003-04:00

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?

2009-08-17T12:52:00.002-04:00

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

2009-08-14T10:19:00.001-04:00

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

2009-08-13T11:25:00.000-04:00

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

2009-08-07T11:48:00.000-04:00

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

2009-08-05T15:18:00.000-04:00

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?

2009-08-04T10:58:00.000-04:00

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

2009-08-03T18:27:00.000-04:00

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

2009-08-01T09:39:00.000-04:00

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!!!

2009-07-30T16:14:00.000-04:00

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

2009-07-29T09:41:00.000-04:00

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

2009-07-28T14:24:00.000-04:00

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

2009-07-24T09:33:00.000-04:00

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

2009-07-21T12:20:00.000-04:00

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

2009-07-20T08:36:00.000-04:00

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?

2009-07-15T10:41:00.000-04:00

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

2009-07-14T10:27:00.000-04:00

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

2009-07-08T13:28:00.000-04:00

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

2009-07-06T11:23:00.001-04:00

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

2009-07-02T09:57:00.000-04:00

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

2009-06-30T10:33:00.000-04:00

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.

Channel Connexions Process

2009-06-29T15:00:00.000-04:00

As I have previously mentioned, I like systems. They help organize and enable consistency. Systems need to be flexible in order to adapt to different environments, so please keep that in mind as I introduce the Channel Connexions process.

At the heart of the process is a model that I have adapted from the SAS Institute. I like this model because it is very flexible and yet offers a clear path to effective channel program execution.

In upcoming posts, I will elaborate more on each of the components, but let me start by stating that it is incredibly important as a channel marketing professional to engage a wide constituency in the development and execution of an effective channel program. Sales, Marketing, Product Management, Finance, Operations, Service, and the Executive team all provide the necessary functional expertise required with a great channel program. Additionally, these constituents will be of great value during the launch and execution stages of the program.

In simple terms, the Channel Connexions Process is:

Planning: Alignment with the company strategy and individual functional teams
Target: Find your audience and adapt your message accordingly
Act: Effectively deliver your program
Learn: Measure and adjust your program for effectiveness

Customer and channel data is an important part of this process. Both qualitative and quantitative data should be used in each part of the process.

PLAN --> TARGET --> ACT --> LEARN

Connect, Collect, Revive

2009-06-29T12:09:00.000-04:00

I was just made aware of a new blog...and eventually a new company that has developed a marketing methodology that I think is worth taking a look at. Clearly they understand the need for an effective blend of marketing art & science to take advantage of the changing marketing landscape. While Channel Connexions specifically focuses on go-to-market challenges and channel execution, the ccr method offers a more holistic approach to marketing challenges. Keep an eye on these guys...

http://theccrmethod.wordpress.com/

State of Co-Marketing

2009-06-26T10:25:00.000-04:00

Unfortunately, it seems that a lot of creativity has disappeared from co-marketing programs over the past few years. Perhaps companies are reluctant to continue to invest in programs where the return on investment is difficult to measure during a tough economy. Whatever the reason, the lack of new collaborative ideas has caused two things:

Co-Marketing programs do not offer companies a competitive advantage. They are table stakes, but not game changers.
There is a great opportunity for a company to change the rules and reset the playing field.

The basic idea behind co-marketing is for the vendor and channel to jointly invest in programs that will create demand and increase sales for a particular solution. To accomplish this, vendors establish a funding mechanism, typically based on a percentage of revenue, that can be used by the channel partner to engage is demand generation programs. Since the vendor is funding the efforts, they typically reserve the right to approve or decline specific initiatives. Sometimes, there are pre-approved programs that can be used without pre-approval.

The Market Development Funds (MDF), as they are sometimes called, are managed and controlled by the vendor. With sometimes thousands of channel partners, the management of the funds can become quite complicated. As such, basic programs are typically developed and reused across multiple channels.

Typical co-marketing programs include (but are not limited to):

· Lead Generation (telemarketing or DMDR)
· Deal Registration
· Co-advertising
· Sales Training
· Collateral Development
· Customer Events (typically regional or local)
· Partner Events

It should be noted that, if executed effectively, there is nothing wrong with any of these activities. The main issue is that they do not provide any competitive differentiation for the vendor. It is reasonable to assume that your competition is engaged in the same activities with your channel partner.

The other consideration in regards to co-marketing is that they tend to be generic in their application. All partners, regardless of size, location, competency, relationship, loyalty, or purchase history, are granted access to the same types of programs at the same time. It would be inefficient to have a unique co-marketing program for each and every one of your channel partners. Or would it?

If you could improve your Return on Investment, provide higher quality leads, and engage customers with unique programs, it would be possible to rethink co-marketing programs. Not only can you provide a competitive advantage, but also create switching costs and loyalty from your channel partner(s).

Content Personalization

2009-06-18T13:29:00.000-04:00

I just purchased a new computer and started the task of moving information from the old to the new. One of the last things to do was to move my iTunes library over to my new computer.

Sidebar: I was expecting this to be a somewhat torturous task, but I was pleasantly surprised with the simplicity.

As a loaded iTunes, I realized why I am such a fan. It is not that the library is actually pretty good, but rather the manner in which Apple treats me as an individual. The Genius application analyzes my purchase history and presents me with recommendations on songs and artists that I might not have previously discovered. I love it. Sometimes the application misses the mark (especially if my kids have been downloading Miley Cyrus or Demi Lovato), but in general the recommendations are pretty good. Yesterday, I purchased seven new songs.

The use of purchase data and applied analytics has built loyalty with me...their customer. Part of loyalty is because I really do like the service, but perhaps a bigger part is the switching costs they have built. No other service can offer the insight into my tastes and present appealing options than iTunes.

Why shouldn't we do the same with our channel partners and enable them to do it with their customers? We should.

Channel Connexions

2009-06-16T12:05:00.000-04:00

Channel Connexions is an idea that I have been considering for quite some time. Having worked for companies that sell predominately through indirect channels, I have seen commonalities in effective channel management that truly span industry segments. Channel Connexions will be a blog that takes some of my thoughts on channel relationship management and builds a structure to enable companies to take advantage of some basic principles to improve not only the way in which we manage partner relationships, but also enable partners to be successful.

I have formed a consulting company to work with companies that want to build a best-in-class channel program based on these principles. Whether a small company just building their channel ecosystem, or a large, established corporation wanting to differentiate themselves within their partner community, the services that Channel Connexions offer will be of great benefit. In the near future I will launch a website to further elaborate on these services.

The blog will enable me to share some additional insights and hopefully engage a community in some dialog that will challenge the prevailing thoughts on effective channel management.

Connect the Dots

2008-11-20T14:46:00.000-05:00

Going along with my thoughts about COI (Communities of Interest) is a good summary from Seth Godin.

http://sethgodin.typepad.com/seths_blog/2008/11/how-to-make-mon.html

It is always impressive to be able to say that "I have 'x' number of members in my community", but that is not really the goal. I like the idea of smaller communities with passionate people. For instance, saying that there are thousands of contributors to Wikipedia is not as impressive as saying that there are a few people passionate about a lot of small subjects on Wikipedia. Think about how small the actual Wikipedia communities are. Each subject has its own community of maybe 2 or 3 people (in some cases more), but they are knowledgeable and care about their subject.

The question is how can you get the right people, no matter how many, to actively participate in your community to build or fix or change something?

win-win-win-win

2008-11-12T08:38:00.000-05:00

SaaS solutions are continuing to be more attractive as companies are faced with the challenge of continuing their operations with tightening budgets.

"Do more with less!"

Certain software solutions are critical to the ongoing management of the business, but can be cost prohibitive, especially in these tough times. This is even more the case with SMBs. SaaS solutions change the game, enabling businesses to deploy mission critical applications in a timely and cost effective manner. ERP and CRM solutions are great examples.

There is an inherent demand for these types of solutions, but a challenge for the SaaS vendors in building an effective channel to market. But with a focus on customer driven solutions, NetSuite is enabling the channel and providing them with the opportunity to build value-added integration and implementation services. NetSuite has partnered with HP to enable HPs channel partners to resell the NetSuite SaaS solution, creating a win-win-win-win scenario.

* NetSuite gains access to the vast HP reseller community
* HP drives demand for the NetSuite services, which enables HP to sell more servers into the data center
* VARs enhance their customer relationship by providing a cost effective solution specifically addressing an immediate need. They also are empowered to build new services around the SaaS solution.
* The customer can now implement a quality CRM solution at a lower cost and in a timely manner

A community of interest has been created. It will be interesting to see if NetSuite, HP, and their resellers engage their customers in a dialog to continue the innovation.

Do You Want Fries With That?

2008-11-10T17:19:00.001-05:00

I used to be an advocate of developing a channel structure that created a kind of franchise feel. My reasoning was that if you were a partner of mine, I wanted the end user to have a certain expectation about you. My analogy was McDonald's. No matter where you go across the globe, you can be reasonably sure that the fries will taste the same at any McDonald's franchise. There is a certain level of comfort in knowing that I will get the same quality of product and be able to eat in a similar environment in virtually any McDonald's restaurant.

This level of standardization is no longer valid when what the customer wants is a solution to their specific issue or problem. A generic product (no matter how good) becomes average when you, as the vendor, try to push that product to all customers. This works great in a fast food franchise, but not when your customer challenges vary literally by customer. The McDonald's fries example is one of a vendor driven solution being pushed on the market.

Today, we can change the model. Using collaboration tools, we can leverage our channels market expertise and customer knowledge to develop individual solutions for each of our mutual customers. The channel can help us define the customer need. They can provide the implementation and integration services to match that need and we can offer the product or suite of products to the solution. The fries will not always tasted the same, but that is precisely the point. Customers do not want a generic solution that is "good enough". They want a great solution to their specific problem.

Instead of bundling a bunch of generic widgets together and calling it Solution A, it is better to let the customer define the problem and work backwards from there. The benefit is that you will be offering more value and can price at a premium, the channel will be able to develop advanced services to drive their business and the customer problem is resolved.

The Election

2008-11-05T10:34:00.000-05:00

There are a lot of great things that happened with the presidential election yesterday, regardless of your political views. One of the great things that I am going to miss was being able to witness the "power of the story" in the campaigns. It was fascinating for me as a marketer to watch all of the candidates, from local and national campaigns, try to frame their stories. Obviously, some were more successful than others. What it came down to was "connections". The candidate that "connected" to their constituency won. Those that couldn't find the connection...lost.

Connections are about relationships and the successful campaigns build relationships through emotional connections with their audience. These didn't happen overnight, but rather through a sustained and deliberate process of storytelling. Many candidates who couldn't find the story to make the connections and build relationships were scrambling in the final weeks of the election cycle to find the right story. Too late. It takes time, perseverance, and authenticity to connect your story with your audience.

Think about your candidate(s) of choice, whether they were successful yesterday or not, and look at their story. Was it SIMPLE, COMPELLING, and RELEVANT? Most important, however, is "was it AUTHENTIC"? Maybe it is too soon to tell, but if their story lacks authenticity it will eventually fail to maintain the connections and relationships.

As a marketer, your job is very similar to that of a political campaign. you need to make connections and build relationships with your customers. You do this through the art of storytelling. Just like with successful political campaigns, your product/service/company story needs to be simple, compelling, relevant and authentic.

The SaaS Channel

2008-10-30T09:09:00.000-04:00

There are many small companies building Software-as-a-Service solutions targeting specific applications and vertical markets. There are way too many to list, but you can assume that if there is a software applications out there, somebody is building a SaaS solution. There are a lot of driving factors for the increased emergence of SaaS, but that is not the point of this post. What I want to discuss is how SaaS solutions require a different channel approach than a tradional hardware or software solution.

SaaS companies typically experience an early period of tremendous growth, especially with today's economic climate. Many companies are willing to go to a managed service model with the expectation that they can get equal functionality and QoS, while reducing administrative and operational costs. The challenge that SaaS providers confront is that at some point they will need scale to maintain their growth expectations. Without the capital to build a large, direct sales force, they will need to look at indirect sources.

VARs, solution providers, distributors, and the like have a very defined profit model, one that includes recurring service and support revenues. They expect customer ownership and the ability to up sell and cross sell solutions. They expect revenues from upgrades and service contracts. They expect a transfer of product ownership. They expect manufacturer discounts and incentive programs. All of this changes with a SaaS business model.

It is incumbant on the SaaS provider to find a new model (and perhaps new channels) that creates a profit equation for the channel. Some have tried a sales agency model, others look for OEM channels. These are all great and can work, but there seems to be an opportunity to fundamentally change the model. The smaller, more nimble SaaS startups are in the unique position to be able to try new channel models...experiment, if you will.

I think that the emphasis will eventually change from channel "push" to channel "pull". If companies can create a demand equation...one where there is a community demanding a particualr solution...resellers will find a way to add value. It will come in the form of consulting and integration expertise. It will come in pre-sales engineering and business support. It will be different, but it will come.

These communities will also help in the ongoing development of your software solutions. They will help identify your next feature set. Whether you use an agile development approach or a more traditional approach, this community will have a vested interest in the evolution of your product.

It is good to build a channel that will help facilitate demand, but you cannot ignore the pull side of the equation. Communities of interest is one option to consider.

Why Join Your Community?

2008-10-28T10:35:00.000-04:00

As I often do, when I have an idea for a project or new business, I bounce the idea off of my wife. I think I do this because it helps me find holes in my argument when I verbalize it. I also think that my wife gives me a great perspective on what might be the "gotcha's" in my idea(s). As I have mentioned previously, I have become increasingly interested in building communities of interest, especially to help build better and more profitable channel relationships. I had an idea and went to my confidante for her opinion. Her first question was, "why would anyone care?" Hmmm...perhaps my elevator pitch needs some work. But I took her question and did some thinking.

Building a community has to be about passion. Having 100,000 members of your community does not necessarily guarantee that it will be a success. Wouldn't you rather have 1,000 (or 100) community members that are passionate about the goals of the community? I would. I want the individuals that will participate in the discussion, share thought provoking insights, and challenge the status quo. I want them to tell me how to build my channel programs, how to increase loyalty, and how to grow my business. I want them to see beyond their own self-interests and look at building strength across the big picture. I want passion.

To attract these people, those passionate about a community, you need two things. You need a great story and you need to be willing to let the community take over.

A great story is essential. I think that great stories all share three common characteristics. They are simple, compelling, and relevant. You want your story to be understood so that it can be shared and spread. If you over complicate the story, people will be less willing to tell their friends and other like-minded individuals. Next, it needs to be compelling...interesting. Is your story unique? Does it tap into a need or emotion that has previously been ignored? Finally, your story need to be relevant. It needs to matter to the community members. There needs to be some "profit" in it for all members. I think if you are missing any one of these elements, you will have a story that will not spread and will not have a passionate constituency. Build your story and your audience will find you.

Perhaps the most difficult thing to do is to give control to your community. Wikipedia has done this and the results speak for themselves. Companies tend to have a more difficult time with this concept. They want to get involved. They want to challenge the path the community might be headed. It is important to let the community grow. You have attracted intelligent, passionate thought leaders and you need to give them the degrees of freedom to participate.

You can build a community of interest for your channel, but first you need a story that is simple, compelling and relevant. This will answer the, "why join?" question. Then you need to let the community take its course.

Sharing To Build Something

2008-10-22T09:19:00.000-04:00

If you haven't read Wikinomics, I suggest that you do. It is quite thought provoking and especially interesting to those that want to build something. It might be building a product, a service, a new channel to market, a new market segment, or a new process. I especially like the idea of building a new process...a new way to bring something to market. How can you do this in a way that will change the game.

Sharing may be the answer. If you were to take a look at companies or industries where there is a reluctance to share. A fear of losing assets. A fear of losing market control. A desire to hold onto and control an entire development process. An industry that has a set way of bring products to market, regardless of the inefficencies and stifling of creativity. If you can find these, you will find an opportunity to build something completely unique. You can, and will, challenge the status quo.

Napster was the pioneer that brought the sharing of music to the market. There were others, but Napster was the brand that really started the avalanche. The established music industry had a process. They owned the intellectual property. They fought vigorously to maintain control and won in the courts. The reality, though, is that they lost. Their consumers had a better way to distribute music...they had a better way of sharing. The music industry is forever changed. The status quo has been altered.

How many bloggers have tried to write a book and submitted it into the publishing process only to find it inefficient and controlled by a select few? How many frustrated authors are there that write quality material, but just can't reach their audience because the process is inhibiting? What if this changed? What if a company like lulu.com created a marketplace for these frustrated writers and gave them the ability to write, publish, and distribute their work? The process would be affected and probably for the better.

What if a company, recognizing the need for businesses to open up to their consumers, built an infrastructure for these companies to create their own communities. These communities could be used for product development, channel enablement, and the foundation for viral marketing. Xeequa is one such company.

There are countless other industries that will eventually be forever altered because of the ability of consumers, developers and innovators to share their respective expertise to create something new and better. The key is to find one that you can affect and have the guts to make it happen.

Conversations, Boxes, and Stories

2008-05-29T13:36:00.000-04:00

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

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

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

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

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

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

Channels By The Numbers

2008-05-27T09:37:00.000-04:00

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

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

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

Educate, Motivate, Celebrate

2008-05-20T09:34:00.000-04:00

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

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

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

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

Designations & Certifications

2008-05-16T16:35:00.000-04:00

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

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

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

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

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

The Importance of "-est"

2008-05-14T09:04:00.000-04:00

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

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

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

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

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

That would be the coolest.

Channel Community

2008-05-13T09:34:00.000-04:00

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

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

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

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

Merits of a Meritocracy

2008-05-12T17:03:00.000-04:00

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

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

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

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

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

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

Inside & Out

2008-05-05T10:53:00.000-04:00

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

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

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

Effective Channel Chiefs

2008-05-02T17:11:00.000-04:00

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

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

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

Measuring Relevance

2008-05-01T14:17:00.000-04:00

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

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

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

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

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

Relevance

2008-04-30T09:16:00.000-04:00

Everybody wants to be relevant.

Every organization needs to be relevant.

People don’t often think of the competitive nature of charitable organizations. They fight every day for donations against other equally deserving charities. The way to get to the donations is by becoming relevant; not only at a macro level, but more importantly at a micro level. By making it personal, you establish relevance. People are more disposed to support charities that serve a personal need. It might be cancer, poverty, AIDS, or the mentally challenged. All of these are deserving of support, but people will more than likely contribute to a cause that has touched them personally.

Every organization fights for relevance, because that is how you achieve mutual commitment, mutual growth, mutual profitability, and brand.

When you sell through independent channels, you have to focus on relevance. Your channel organization should be built on the premise that you want to constantly increase your relevance to not only your entire channel community, but to each of the individual partners, as well. It why you have to be bigger than the widget and it is why your communications plan needs to be better than your competitors.

As you increase relevance you create need and, in turn, that need builds switching costs. Your channel relationships develop roots and competitive barriers. Ask yourself, “How relevant am I to each and every one of my channel partners?” If the answer is not as positive as you would like, consider what you have to do to increase your relevance.

Content, Consistency, and Calendar

2008-04-29T09:46:00.000-04:00

I like to think of things in small groupings. It makes it easier to remember, but I also think it makes it easier to communicate and evangelize. For example, there are four relationship principles (mutual commitment, mutual growth, mutual profitability, and brand), there are the four Rs of co-marketing (recruitment, return, retention, and referral), and now I want to introduce the three Cs of channel communication:

* Content
* Consistency
* Calendar

We live in a noisy world. Mass media advertisements on TV and radio, email, spam, blogs, RSS feeds, and social networking all contribute to the noise. What has changed is that the audience has the power. There are so many options from which to choose that your customers select what gets through…at least most of the time.

Channels are no different. There is so much information coming in, that they put a very discerning eye on what they view or hear. As a channel leader you have to get past the noise. You have to get to your audience, but you have to do it with permission. This is why spam does not work. There is no permission.

If you have quality content, you can get through. Remember, though, that quality is in the eye of the receiver, not the sender. I might post something on this site that I think is insightful or humorous, but if you don’t agree, it is irrelevant. I believe in personalization and variable content applications, because it will help make your content relevant for each individual recipient.

It is not enough to do something once. One base hit does not a Hall of Fame career make. If you are going to invest in a communications platform for your channels, it must be sustained. If you have quality content that is relevant, it will catch on. It might take some time, but it will stick and likely spread over time. Content without consistency is frustrating.

Let your channel audience know what is coming. Set an agenda or a calendar. If you are doing webinars, give them the “showtimes” in advance. Let your audience set future events. If your partners know and expect that your quality newsletter, teleconference, or webinar is on the first Monday of each month, you just might be able to build anticipation.

With scheduled, consistent, and high quality content, you can build an effective communications platform that will help you get through the noise.

Hey…remember me?

2008-04-28T10:48:00.000-04:00

One of the biggest challenges facing a channel organization is your ability to effectively reach your channel audience in a consistent manner. Consider a company that has 2,000 channel partners spanning all 50 states. They have 30 “relationship managers” all centrally located (no branch offices). This sounds like an extreme example, but my guess is that this describes many midsized companies.

We should all agree that face-to-face interaction is the best. There is really no substitute for meeting with your partner on a regular basis. The challenge is that with 30 relationship managers, each would be responsible for 67 channel partners on average. It is time and cost prohibitive to have face-to-face meetings as often as necessary to build more meaningful relationships.

Thank goodness for technology. Many companies are using technology to enable other, less costly, vehicles to communicate with their channel partners. You need to overcome the fact that there are indeed many companies already doing webinars, newsletters, and blogs. Somehow, you need to stand out. You need to be different, but equally effective. You need to challenge the status quo.

Recently, I was faced with this same challenge. We chose to use personalization to differentiate ourselves. Our goal is to make each of our channels feel special. Receiving a standard corporate email wasn’t going to accomplish that goal. Instead, we chose to send each individual their own newsletter, personalized from their relationship manager. As we learn more about these channels, we will employ variable content capabilities, so that every newsletter is different.

The nice thing about face-to-face interaction is that it is uniquely personal. I believe that if you cannot meet directly with your partner as often as you would like, you should not forego the personal aspect of your communication. It is a little thing that makes a big difference.

Channel Management as a “System”

2008-04-25T12:11:00.000-04:00

I love systems. I love them because if you have a good one it can sustain your operation for a very long time. I first realized this through sports. Great sports dynasty’s all have systems. Throughout history there are countless examples of this:

* The San Francisco 49ers of the 80’s and 90’s. Their West Coast Offense was a system that dominated the NFL for over a decade.

* Duke Basketball: Their system is so refined that it impacts their recruiting. They don’t necessarily go for the best athletes, but rather they choose players that fit their system. They do this better than anyone else.

* New York Yankees: They have had a number of systems, but most recently they have leveraged their financial strength to attract top talent. On the opposite side of the spectrum is the Oakland Athletics that use a system of scouting intelligence to fill their roster with a very small payroll.

* The Triangle Offense of the Chicago Bulls in the 90’s. Sure they had Michael Jordan, but the system is now working for the Lakers.

There are many others, but this got me thinking about business and business philosophies that use systems to drive success. General Electric, Cisco, Google, and Microsoft (to name a few) are examples of big companies that have maintained their success by adhering to their philosophy over very long periods of time. Then look at Motorola, Nortel, Sun Microsystems, and Yahoo!. Each of these companies were industry behemoths that abandoned their “system” and have fallen from grace.

The important thing about “systems” is that they have to be flexible. You have to maintain the basic philosophy, but adapt to changes. Joe Montana was very different than Steve Young, but both had great success in the same system.

I believe that as a channel leader you need to build a “system”; one that is sustainable and flexible. If you are constantly tinkering with your model or changing your channel philosophy you will lose your channel partners. It is important to adjust, just don’t lose your system in the process.

Bigger Than The Widget

2008-04-25T09:19:00.000-04:00

There are three steps required to sell into a channel. I am oversimplifying, but I think that if you follow these steps you will find success. These are linear, so you cannot do Step 2, before Step 1.

STEP 1: Sell Yourself
STEP 2: Sell Your Company
STEP 3: Sell Your Product

This is very logical if you work backwards and ask yourself a few questions. Would you buy a product from a company that you didn’t trust or believe in? Would you buy from a company that had a reputation for poor service or one that didn’t have a compelling value offer? Let’s say the company was one you respected and they had a competitive product, but the sales person was unresponsive or not keenly aware of the industry and your challenges? It is really hard for a bad salesperson working for a bad company to sell a great product.

When you build your channel business think about the people that you need to represent you and your company. Get the best channel sales people. You must then arm them with a story…a real story, not just some marketing fluff. A story about the experience the channel will have when they work with you. Back that up with an infrastructure that supports your story. Make sure your operations and service teams are in place. Make sure your marketing programs reinforce the story and make sure your executive team is your top evangelists. Make your product bigger than the widget. Create switching costs through your sales excellence and channel support infrastructure. De-commoditize your product.

It is just simply not enough to have a great widget, because the product is really much more.

Grassroots or Mahogany Row

2008-04-23T09:37:00.000-04:00

Channel management is not a marketing function. Sure there are marketing components, but there are also operational, financial, sales, and other considerations as well. I find that channel organizations tend to reside under Sales or Marketing…which is fine. It has to sit somewhere after all.

The issue is that because your business…your entire business…is dependent on your go-to-market model, you have to have alignment in the way in which you manage your channels. It is not enough to simply build a channel program, assign quota to a few sales representatives, and expect extraordinary returns. There is a cultural element that needs to be taken into account.

Senior management (Mahogany Row) needs to be on board with your plan and evangelize the vision, both internally and externally. Likewise, the team of people needed to effectively implement the plan need to not only be on board, but also enthusiastically share in the success. Many people will point to the sales teams and decide that their support is all that is really required. It is certainly important, but if you do not have the finance, accounting, marketing, and operations teams in full support, you’re probability of success will be greatly reduced.

Part of your job as a channel leader is to represent each of your channels individually and all of your channels holistically to your internal audience. It is always exciting to get the endorsement of the bigwigs on the top floor, but don’t discount your need to build cross functional teams with the people that make the day-to-day successes.

Channel Partner vs. Fulfillment Partner

2008-04-21T12:40:00.000-04:00

Many companies have a direct and an indirect sales model, which will inevitably create some channel conflict. I am not suggesting that you have to choose one or the other, but rather that when you have both you will have to be aware of and mange channel conflict. This becomes a business issue…not a marketing issue or a channel issue. It is a fundamental and strategic position that you have to address as a company.

While at a technology company, our direct sales leader preferred to use the channel as a “fulfillment partner”. His view was that his team would get the deal and hand it off to the channel for fulfillment. In a perfect world, we would also provide the service. The fulfillment partner would get distributor pricing and whatever margin the deal was sold at. Hmmm.

The same direct sales leader suggested that the channel should be used for “unaided business” only. He described this as business that “just happens”. I, for one, have never seen business that “just happens”, but would love to find it. Unaided business is now one of my favorite oxymorons.

The reality is that the channel wants to have a thriving business, as well. You will be hard pressed to find a channel partner that will be willing to just fulfill an order for you. You will be equally hard pressed to find a channel that will accept responsibility for unaided business. Besides, if there was such a thing as unaided business, why wouldn’t the vendor do that direct and get the entire margin?

The BIG question that a company needs to answer is one of customer relationship ownership. Does the channel own the relationship or do you? Is there a way for both you and the channel to have a relationship with the customer? Sure there is, especially now. If you choose to have both a direct and indirect go-to-market model, you must set boundaries and procedures and follow them. Perhaps a Channel Bill of Rights as part of your channel program is required? Whatever your strategy, you must adhere to the fundamental principles of mutual commitment, mutual growth, mutual profitability, and brand.

So What?

2008-04-18T17:23:00.000-04:00

Never stop asking yourself, “So what?” If your marketing material says something like the following…

* Dual Fast Ethernet Router with 2 WAN Interface Card (WIC) Slots and 1 NM Slot
* Memory upgrade for both Flash and DRAM: (32-MB Flash and 128-MB DRAM)
* WIC-1ADSL

…you should ask yourself, “So what?” I don’t know what any of the above means, but I am sure it is important. However, it doesn’t tell a story. Does all of this mean that the router is the fastest? Is this router the most reliable? It is a mistake to assume your audience can make the leap, no matter how obvious it is to you.

The iPhone is a great product and has all of the bells and whistles, but the story being told is one of lifestyle, not features. It promises that if you have an iPhone, you are in some way cool. They have answered the “so what?”

When you work with a channel you have to help them with the story…with the “so what?” If you don’t, your product will get jumbled in with all of the other routers, cell phones, and USB headsets. Why is yours better and why should anyone care?

Never Would Have Guessed

2008-04-18T14:27:00.000-04:00

Much of your channel marketing will be in the form of storytelling. Seth Godin’s “All Marketers Are Liars” is a great read and stresses the importance of storytelling. I think the real challenge is that you have to have more than one story. Your story will be different depending on your specific audience. What you say to an existing, loyal customer will likely be very different than what you say to a reluctant prospect.

Since your channels all are different in at least few ways, you will need to adjust your story appropriately. For example, an “Up & Comer” will require a very different marketing approach than a “Fader”. But it goes beyond that. Geography, size, history, and culture will have a say in the matter. Business performance and company goals will also need to be considered. Don’t assume that you have a one-size fits all story that everyone will readily accept. Trust me…you don’t.

I once surveyed a group of small resellers across the country. One question we asked was, “What keeps you up at night?” We expected to hear about competition or hiring and retaining a competent workforce or customer retention. Sure all of these were important, but the #1 concern on their mind was “making payroll”. Surprising, but refreshingly simplistic. The story we were telling about product features and price points wasn’t directly addressing their top concern. By adjusting the conversation to one of cash flow, we were able to better position ourselves within those channels.

Knowing your channels, their motivations, needs, and drivers will enable you to create authentic stories for each of your partners.

Channel Lifecycle Curve

2008-04-16T09:48:00.000-04:00

Not every channel will be in the same lifecycle stage. Depending on how you choose to look at your channel community, you should be able to plot each of your channels on a bell curve. Most recently, working with Relationship Marketing in Des Moines, IA, we built a tool that enables us to look at our channel community across approximately 15 variables. We have chosen to plot them on the bell curve as “Up & Comers”, “Steady-Eddies”, and “Faders”.

The types of programs and investments we make are directly tied to where the specific channel sits in the lifecycle. For instance, an “Up & Comer” would require a very different investment strategy than a “Fader”, with whom we may choose to divest our relationship.

Analytics are very important in this process. It is not enough to subjectively try to place each channel on the curve. You will find too much bias and an inaccurate assessment. Also, using the quantitative analysis will enable you to track the movement of each partner over time. This is another way to track and gauge your success.

Co-Marketing Made Simple

2008-04-15T10:15:00.000-04:00

I have seen many Co-marketing programs with many different components, requirements, rules, and procedures. These programs, sometimes called “Co-op” or “Marketing Distribution Funds (MDF)", have become tablestakes in many industries. At a previous employer the co-marketing program became extremely complicated and frustrating for the channel partners. I don’t think that they need to be complicated and that by focusing on the Four R’s, you can build a compelling co-marketing program with your channels. The Four R’s are:

Recruitment
Return
Retention
Referral

While your channel relationships should be based on the four Relationship Principles, your tactical co-marketing goals should be structured to drive results with the Four R’s.

Recruitment is the goal supporting of your channels need to expand their customer base. Lead generation is almost universally included in co-marketing programs, but not always as effective as perceived. You must help drive demand for your products and services for the benefit of your channel partners.

The now new customer must Return. They have to have a great experience with the product and your channel partner. It is not enough to get the customer in the door through your recruitment efforts…you must get them to want to return.

You have recruited a new customer; they have had a great experience and have returned. Now you want to build life-time value with the customer. It is not enough for them to come back once. You want them as a loyal customer that looks to your channel as their first option. Retention is paramount to achieve sustained profitability.

Customers are your best sales force. Referrals will drive not only more business, but better business. Customers that volunteer support for you and your channel are incredibly valuable. You must support this community and enable them to tell your story in the market.

Simplify your co-marketing program by adhering to the Four R’s and you will drive new customers to eventually be your storytellers. Your message will become viral and you will forever have a committed channel partner community.

How Good Are You?

2008-04-11T16:49:00.000-04:00

When I was in business school there were many discussions about benchmarking. The idea was that you took a look at the best company in your industry and used them as the basis for achieving a level of excellence. If Company A provided the best customer service in your industry, then they would be the benchmark for customer service.

Sorry Professor’s, but you got it wrong.

Let’s say you work in insurance and one of your agents is at a cocktail party with some friends and the topic turns to customer service. Are you confident that, when asked, your agent will say that your company provides the best customer service? Or will they have another answer, like Barnes & Noble, or Google, or the carwash down the street? Today, benchmarks go way beyond your particular industry. Your competition is everywhere. If you want your story to be told and spread, you compete with everybody.

Customers have all the power. They know that they can get any product at any time. You simply have to be better. This is especially true when managing your channel relationships. They have choices, so your story (which includes the WHOLE experience) must be extraordinary and beyond what is “expected” in your industry, because they will compare you to everyone.

What Would You Spend?

2008-04-10T14:44:00.000-04:00

Let’s say you had 1000 channels in your community, but that the top 10% were the most valuable. These are the one’s that follow the Four Relationship Principles: Mutual Commitment, Mutual Growth, Mutual Profitability, and Brand. These are the partners with whom you want to build your business around and the one’s in which you want build your share of wallet. Inevitably, you will need to decide the affordability of your channel relationship program(s) and make tough choices about the elements that stay and the elements that go.

Recently, Starbucks closed all of their stores (everyone of them) for three hours. They did this for training. When you do some reverse math, I estimate the total cost of the training to exceed $24 million. Seems like a lot for barista training. But, again using some best guestimates, it is really only about $100 per employee. When you consider that the training gets passed along to customers in the form of improved service, the investment is less than $1 per customer. Is it worth it?

If your Top 100 is the best of the best, then your investment in those relationships is paramount. It is not some tangential marketing program, but rather an integral part of your business strategy. Is $10,000 per partner too much? What about $50,000?

I think that if you frame your investment decision around the investment per channel, you will be able to find the investment required to build your channel relationships. While the correct answer is, “I will invest whatever it takes”, the reality is that you will need to convince someone to give you a bucket of money. The overall spend may look large, but on a per channel basis, the investment will seem reasonable.

Now that you have your money…you better be able to measure your results.

Value vs. Volume

2008-04-09T12:36:00.000-04:00

Has your partner ever asked how they can get a bigger discount or higher commission? My guess is that most respond with something related to their sales volume. Maybe the partner has to reach a certain volume to get a price break or a larger commission. Does this make sense? The answer is probably “yes” and “no”…although, I am leaning towards “no”.

Since your channel represents your company and your products in the market, they are in essence representing your brand. The experience they receive will be directly transferred to your brand. If the customer has an excellent experience and receives great service from your partner, it will have a positive effect on your brand. Unfortunately, the opposite is also true. If a partner doesn’t return service calls, or doesn’t live up to the Service Level Agreement, or is not fully trained on the product, your brand will suffer.

What, then, is the best way to structure your financial incentives? Should it be based on volume of business that partner does with you? Does the end user care? Or, should it be based on the “value” that partner offers the end user? Should it be more about the end user experience or more about the transactions between you and the channel?

Value is more important than volume. Can you structure your incentives around channel competency and service capability? Yes, you can. Is it harder than building price breaks based on volume? Yes, it is. Is it worth the extra effort? Yes, it is.

Brand – Principle IV

2008-04-08T09:47:00.000-04:00

Every relationship has a label – a brand. It might be “best friend”, “fishing buddy”, “confidant”, “lover”, “mentor”, or numerous other labels that give meaning to a relationship. These brands make it easy for us to explain our relationship and for others to appreciate it.

Channel designations are an important “brand” component to channel relationships. Many companies choose to use precious metals (platinum, gold, silver) and others use gems (diamond, ruby, sapphire). There are countless labels that can be used, but the branding that goes behind the nomenclature is extremely important because it lends credibility and an endorsement of the partner to the end user.

The designation represents that one party in the relationship has achieved a certain status and that the achievement represents value to the end user. When an end user is sourcing a product they want to work with a channel that has demonstrated some commitment to the product and worked to achieve a level of competence in support of the product. The designation enables them to market and differentiate themselves from their competitors.

Would you rather buy from a Platinum Partner versus another that did not carry an equal designation?

The company providing the designation must establish a tiered structure of requirements and then provide marketing support behind the designations they offer. It is important that a significant amount of equity is built for the designation, or channel relationship, brand.

Achieving a Microsoft or Cisco designation has value for the reseller and creates a competitive advantage for them in the market. The designation equity is also extremely important to Microsoft and Cisco because the reseller will invest thousands of dollars into achieving the designation, thus creating switching costs for the vendor.

How you structure the designation program in terms of requirements and benefits will be discussed later, but a focus on end user value is critical. The days of volume based designations are over, because they offer very little to the end user…the brand becomes meaningless.

Relentless Discomfort With The Status Quo

2008-04-07T14:55:00.000-04:00

Ahhh…election season and the inevitable chorus of “change” is bellowing from the camps of each presidential hopeful. Even our sitting President said that if he were running again, he would base his campaign on change. So why are we so willing to demand change from our elected officials, but reluctant to embrace change at work, or at home?

Two reasons come to mind. The first relates to the level of personal investment involved in driving change. When we elect a President based on a mandate of change, our job is basically done. There is only so much we can do to be actively involved in changing healthcare policy, economic policy, or homeland security. We trust our elected officials to hold true to their campaign promises. We really do not get involved again until elections roll around four years later. Conversely, at work (or home) we are expected to be actively involved in implementing the new ideas, or new process, or new technology. This can be disruptive and there is no guarantee that it will be effective. Besides, we think, how bad are things anyway? Do we really need a change?

That brings me to my second reason for reluctance. Change carries a somewhat negative connotation in the workplace. I prefer to use “renewal” instead of “change”. You change when things are bad, but you renew to do better. In fact, I would argue that even the best of the best go through periods of renewal. Tiger Woods and Jack Welch would not have reached the top levels of success without constantly renewing their approach to golf and business, respectively. The best of the best do not rest on their laurels – they look for better and more efficient ways to achieve success.

I heard a phrase a few years ago that stuck with me: “Relentless discomfort with the status quo.” I wish I could remember where I first heard it so I could give proper credit where it is due, but regardless, it is a great expression of renewal. The best are never really satisfied, never comfortable with the status quo. Our country’s founding fathers, Albert Einstein, Martin Luther King Jr., Henry Ford, and even the person that invented the “sippy cup” all realized that the status quo wasn’t good enough. They knew that through their discomfort they could find a better way.

Changing the status quo comes with plenty of risk and many will pressure you to keep things as they are. Usually the pursuit is worth it and sometimes the payoff is enormous. Every industry is competitive and working to tip the balance in your favor by challenging the status quo can be what separates you from the pack. Are you willing to take the risk?

Mutual Profitability – Principle III

2008-04-07T14:47:00.000-04:00

This is the probably the easiest Principle to “get”. We always hear about a win-win situation during negotiations, but this is a little different. A negotiation or a contract is just one thing. It is not a relationship. Many would argue, in fact, that trying to find a “win-win” scenario is not always the best thing to do during a negotiation. Regardless, a relationship is more than one thing…it is a lot of one-things strung together. In a relationship, mutual profitability is essential.

One sided relationships never work…at least over the long haul. Both parties must be getting something out of the relationship. It might be financial profit, an association with another company, hard work, great service, or a great product, but any lasting relationship will have something for both sides.

Like with growth, it is in your best interest to help your partner gain mutual profitability (however they define it). Ultimately you will gain from their profitability, as well. Likewise, you should expect, even demand, that you are getting what you need from the relationship. It doesn’t matter is you are the supplier or the buyer, you should not waiver from your commitment to profitability over the long-term. Do you really want a partner that is not committed to your profitability?

When you have partners that are truly invested in each other, there is the opportunity to celebrate successes and support each other in the market. Through mutual profitability comes excitement and opportunity.

Do you want a horse? How about two horses?

2008-04-04T15:35:00.000-04:00

On my phone LCD the name of a product GM appeared. Must be important if he is calling me directly.

“Hey Al, what can I do for you?” I asked helpfully.

“I need a program to get rid of some inventory.”

“What kind of program?”

“The kind that gets rid of inventory.”

“Why do we have so much inventory?”

“Because we couldn’t sell it.”

“So, you think a marketing program will get rid of it?”

This was a very real conversation that I had with someone that I respect tremendously, but he always wanted to push his product through the channel at all costs. The problem that he had was that he had a product with no demand (hence the excess inventory). A marketing program (or Ginzu knife special) was not going to solve his problem. What he needed was a better product that fit the needs of his customers.

If somebody offered to sell me a horse, I would say no. Why? Because I don’t want a horse. If he then said that he would give me two horses for the price of one, I would still say no. I simply do not want a horse, no matter what deal you offer. It is an issue with demand, not price. Besides, if it was a price issue, why not just lower the price?

Sometimes we expect our channels to make up for our own problems. Shifting a demand related problem to the channel only stuffs the channel and pushes the issue further down the chain. It will not only not solve your problem, but quite possibly create longer lasting and bigger problems with your relationship.

Mutual Growth – Principle II

2008-04-04T12:45:00.001-04:00

Ben Franklin once wrote, “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”

Growth within your channel community can come in a variety of different ways. Certainly revenue growth is important, but so are increases in technical certifications, expansion of the portfolio mix, shorter lead times, and other operational efficiencies. Each of your partners will have different capabilities, cover unique markets, and have their own needs. Your growth initiatives should be designed and customized for each of your channel partners.

There is, of course, a selfish element to driving channel growth. Simply put, it is in your best interest to support the growth of each your channels, because that is how you will meet and exceed your objectives.

Growth will also drive gains in your channel share of wallet, making you increasingly more important to that particular partner. Growth will create switching costs (think about the training investment required for technical certifications) making your position with the channel more indispensable.

Relationships rooted with this principle will thrive; those content with the status quo will become stale and eventually deteriorate.

Say What?

2008-04-03T12:12:00.000-04:00

A few years ago my son was selected to be on a “competitive” soccer team. He was eight. This is one where the parents were very involved…maybe too involved. The coach asked us parents to stay away from practice for the first couple of weeks so that they could establish some rapport with the kids. One evening I showed up to pick up my son and the coach had them all gathered around in the center of the field giving a somewhat animated speech (or lecture). I couldn’t hear what was being said, but there were 30 eight year old boys staring at this guy like he was Knute Rockne.

On the way home I asked what the coach was saying and my son said, “It was nothing.” Now I know it wasn’t “nothing” so I pressed him a bit and finally he said, “Well I didn’t really get it. He said we needed to put stuffing in our shoes.”

So far this team had tapped me for uniforms, warm up jerseys, coach’s fees, and about six hours a week. I wanted to know more.

“He said that last years team won the state championship and that we needed to work hard to be as good as they were. He said that we needed to stuff our shoes.”

Huh?

I sat on this for awhile until I finally got it…

“Did he say that you had big shoes to fill?”

“Yeah, that was it!”

Remember your audience. Effective communication is critical, but needs to be tailored and customized for your audience.

Some people say that if they ask me what time it is, don’t tell me how the watch works. Fine, but some people want to know how or why…make sure you know what they really want.

I am happy to report that there were no reported blisters or broken toes.

Mutual Commitment - Principle I

2008-04-03T11:49:00.001-04:00

“For better or worse.”

For most of us these are the four words that define mutual commitment in a relationship…especially if you are married. It represents the unconditional commitment to the relationship regardless of the circumstance or situation. It means that come Hell or high water, I will be by your side fighting to the bitter end. When the commitment is broken, so is the relationship. When one party is no longer willing to be by your side, for better or worse, then you no longer have a good relationship.

As I have probably mentioned earlier, there is no such thing as a perfect relationship. If we, however, are trying to build and grow our relationships to become as close to Utopian as possible, then it is reasonable to say that one of the basic relationship principles is Mutual Commitment.

There are many ways that Mutual Commitment gets represented in a channel relationship. It can range from exclusivity or preferred vendor status to access to product trials to co-marketing. The point is that both companies become invested in each other beyond financial terms. They have an emotional and sometimes passionate relationship with each other. To some extent their brands and brand equity are connected…there is an association and link between the two companies.

There is a lot that goes into getting to this point in a relationship. There will be dates, doubts, and perhaps some diversions. Investment of time, money, and resources is necessary, but the payoff can be tremendous.

As you consider how to build your channel you should consider this level of commitment as a goal and invest in plans to move you in that direction. An individual will not make this happen on behalf of an entire organization; rather the entire organization must be committed to make it happen.

Relationship Principles

2008-04-02T14:07:00.000-04:00

A co-worker/friend of mine and I were at a large telecommunications company a few years back and had the challenge of re-working the channel program. Rest assured this was a huge task littered with internal political battles, a company accounting scandel, and an antequated program as a starting point. What to do?

We spent a lot of time discussing relationships. My wife asked me at one point what I was working on and I proudly said, "Relationships!". She asked, "What the hell do you know about relationships?" OK...fair point. My colleague and I did, however, come up with four basic prinicples that guide effective relationships...whether business or personal. These are:

Mutual Commitment
Mutual Growth
Mutual Profitability
Brand

I'll expand on each of these later, but the adherence to these prinicples will guide you on how you build your channel program and develop long lasting relationships with your partners. Interestingly, after I left the telecommunications company I went into a niche insurance market with the goal of building better relationships with independent insurance agents (our channel). Applying these same prinicples worked. It is my belief that they transcend industries.

I will let Oprah, Dr. Phil, and the rest of the daytime pundits argue about finding the perfect relationship (not possible, btw). Instead I encourage everyone to focus on these four basic principles as a way to build "better" relationships.

Why Channel Relationships?

2008-04-02T13:50:00.000-04:00

Because it matters most. Because if you want to be successful in getting your products and services sold through indirect channels you need to understand the dynamics of the relationship more than you need to understand discount schedules, technical attributes of your product, or marketing programs. These are tablestakes...but how you manage and build your relationships will ultimately determine your success.

This blog will be dedicated to offering examples, borrowing success stories, and offering anecdotes about channels and the relationships that matter.

If you find this blog and want to share, argue, disagree, or simply wax poetic...go for it.