Kill the SWAG

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

Silly Wild Ass Guess

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

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

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

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

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

Relationship Marketing Heuristics

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

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

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

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

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


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


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

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

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

Warning: Sports analogy follows:

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

Channel Leadership - What You Said

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

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

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

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

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

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

Thanks again…keep the ideas coming!

Lessons From The WSOP

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

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

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

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

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

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

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

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

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

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

E + A = P

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

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

Energy + Attitude = Performance

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

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

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

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

Belief, Truth, and the Power of Observation

Observation is what separates belief from truth.

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

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

There are basically six steps to the method:

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

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

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

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

Ch...Ch...Changes

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

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

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

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

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

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

Where Does Social Media Fit?

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

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

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

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

Aligning Your Channel Plans

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

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

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

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

Celebrate Good Times...Come On!!!

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

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

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

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

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

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

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

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

Hierarchy of Motivations - Channel Actualization

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

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

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

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

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

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

The Channel Hierarchy of Motivations would look something like this:



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

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

Educate, Motivate and Celebrate

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

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

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

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

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

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

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

Pyramid vs. Diamond

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

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

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

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

Different Types of Channel Relationships

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

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

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

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

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

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

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

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

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

Is Channel Marketing Changing?

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

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

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

Connexions Process

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

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

Learning

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

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