10 Rules & 1 Step to Channel Success

10 Rules & 1 Step to Channel Success

There is no silver bullet to guarantee success. You must There is no silver bullet to guarantee success. You must customize product, marketing, and support to meet the customize product, marketing, and support to meet the needs of a diverse set of customers. Make no mistake, needs of a diverse set of customers. Make no mistake, the channel is a strategic approach to business, not a the channel is a strategic approach to business, not a

quick fix for something you cannot sellquick fix for something you cannot sell

Paul Rickett, VARKETING!

19981998

Channel Experts Channel Experts ““Paul knows what he is talking about - listen to himPaul knows what he is talking about - listen to him””Bryan Nieder, VP Channels, Electronic ArtsBryan Nieder, VP Channels, Electronic Arts

Channel Experts Channel Experts ““Paul knows what he is talking about - listen to himPaul knows what he is talking about - listen to him””Bryan Nieder, VP Channels, Electronic ArtsBryan Nieder, VP Channels, Electronic Arts

18 Years channel experience; VAR, ISV, 18 Years channel experience; VAR, ISV, DistributionDistribution

Clients include: IBM, Dell, Great Plains, Siemens Clients include: IBM, Dell, Great Plains, Siemens Nixdorf, Digital Equipment, EDSNixdorf, Digital Equipment, EDS

Over 100 articles in VARBusiness, Software Over 100 articles in VARBusiness, Software Marketing Journal, SCO World, SI BusinessMarketing Journal, SCO World, SI Business

Seminar Series: Product Launch, 3Rs of Selling Seminar Series: Product Launch, 3Rs of Selling Through VARs, 10 Rules of Channel SuccessThrough VARs, 10 Rules of Channel Success

The ChannelsphereThe Channelsphere

CHANNELSP

HE

RE

Expansion is driven by Expansion is driven by technology change technology change

Attrition does not Attrition does not balance out expansionbalance out expansion

SegmentationSegmentation

V a lue

Siz

e

R e ta il

VAC

Software

OEM Retail DirectResponse

$20M

$1B

HardwareServiceSoftware

VAR QualitiesVAR Qualities

PLUSPLUS Brand LoyalBrand Loyal Creates whole productCreates whole product Technically capableTechnically capable Strongly influences Strongly influences

buyerbuyer

MINUSMINUS ConservativeConservative Profit drivenProfit driven Not amenable to Not amenable to

controlcontrol Weak in marketingWeak in marketing …….AND does not like .AND does not like

to be called a VAR!to be called a VAR!

Channel CalculusQuantifying the business propositionChannel CalculusQuantifying the business proposition

pp=v((pf*(rp*eos))+(lsp+lpp))pp=v((pf*(rp*eos))+(lsp+lpp))

VARS are profit rather than revenue drivenVARS are profit rather than revenue driven

RULE 1: Deliver a Quality ProductRULE 1: Deliver a Quality Product

Bugs kill….Bugs kill…. Differentiate VAC product from other Differentiate VAC product from other

channelschannels Product includesProduct includes

PackagingPackagingSupportSupportDownstream revenueDownstream revenueSales materialsSales materials

RULE 2: Keep Selling DirectRULE 2: Keep Selling Direct

Know how to sell your own productKnow how to sell your own product Demonstrates needDemonstrates need Channel leverages your activityChannel leverages your activity Provides better market intelligenceProvides better market intelligence

Channel should expand market not just reduce cost of salesChannel should expand market not just reduce cost of sales

RULE 3: Channel is a Strategic CommitmentRULE 3: Channel is a Strategic Commitment

Management must commit to channelManagement must commit to channel Invest in people to manage itInvest in people to manage it Set goalsSet goals Channel friction indicates positive coverageChannel friction indicates positive coverage Allow time for channels to rampAllow time for channels to ramp

RULE 4: Allow for Multiple Strategies RULE 4: Allow for Multiple Strategies

ADDADD Product opens new marketopportunitiesProduct opens new marketopportunities

COMPLEMENTCOMPLEMENT Product adds value tosomething already soldProduct adds value tosomething already sold

DISPLACEDISPLACE Product substitutes for anexisting oneProduct substitutes for anexisting one

These may run concurrently with different VAC segmentsThese may run concurrently with different VAC segments

Relationships Change over Product LifeRelationships Change over Product Life

Use VARs to work the bowling alley

Fulfillment stage. VARs notdifferentiated by your product

Pioneers tend tobe either very largeor very small. Selfselection is im portant

.Product loyalty declines

Larger VARs lead this stageUse certification tocontrol demand

Adapted from Geoffrey Moore, “Inside the Tornado”Adapted from Geoffrey Moore, “Inside the Tornado”

RULE 5: Execute WellRULE 5: Execute Well

More ImportantMore ImportantActual ProfitActual ProfitNFRNFRTraining Training Tech SupportTech SupportDeliveryDelivery

Less ImportantLess ImportantDiscountsDiscountsCollateralCollateralSPIFFs/RebatesSPIFFs/RebatesSales SupportSales Support

RULE 6: Minimize Pain FactorRULE 6: Minimize Pain Factor

Terms of businessTerms of business FulfillmentFulfillment ResponsivenessResponsiveness SupportSupport

Good exception handling is a great loyalty builderGood exception handling is a great loyalty builder

RULE 7: Use VARCOMRULE 7: Use VARCOM

Communicate directly to channelCommunicate directly to channel Customize to segmentsCustomize to segments Cover entire spectrumCover entire spectrum Co-market like crazyCo-market like crazy Clearly state value propositionClearly state value proposition

Reach the influencers in the VAC selection processReach the influencers in the VAC selection process

RULE 8: Get CommitmentRULE 8: Get Commitment

Qualify & CertifyQualify & Certify Money commitments mean actionMoney commitments mean action Train themTrain them Have mindshareHave mindshare Product buy-in favours sell-through effortsProduct buy-in favours sell-through efforts

Use commitments to raise entry barriersUse commitments to raise entry barriers

RULE 9: Profits come from Repeat BusinessRULE 9: Profits come from Repeat Business

80/20 Rule rules80/20 Rule rulesTier programs for recognition and Tier programs for recognition and

rewardrewardKnow your cost and payback Know your cost and payback

metricsmetrics

Mindshare is everythingMindshare is everything

RULE 10: Constantly EvaluateRULE 10: Constantly Evaluate

ListenListenAdoptAdoptAdaptAdapt

A sales is not a sale until you know who the customer isA sales is not a sale until you know who the customer is

Rule RecapRule Recap

1. Deliver a quality 1. Deliver a quality productproduct

2. Keep selling direct2. Keep selling direct3. Channel is a strategic 3. Channel is a strategic

commitmentcommitment4. Allow for multiple 4. Allow for multiple

strategiesstrategies5. Execute programs 5. Execute programs

wellwell

6. Minimize pain factor6. Minimize pain factor

7. Use VARCOM7. Use VARCOM

8. Get commitment8. Get commitment

9. Profit from repeat 9. Profit from repeat businessbusiness

10. Constantly re-10. Constantly re-evaluateevaluate

VAC Success is not MagicVAC Success is not Magic

Bend the rules when appropriateBend the rules when appropriate Multiple channel strategies will co-exist Multiple channel strategies will co-exist

simultaneouslysimultaneously Pay attention to segmentationPay attention to segmentation Have sufficient stamina to stay the courseHave sufficient stamina to stay the course Execution is everythingExecution is everything

STEP 1: Put VARKETING! on your TeamSTEP 1: Put VARKETING! on your Team

Channel strategies don’t come Channel strategies don’t come from a bookfrom a book

Experience and diversity countExperience and diversity countTake the AuditTake the Audit