Channel Management Basics

Channel ManagementThe Basics of Value & Clarity

Presented by Fred Newcome

Good day and thank you for taking a moment to view and listen to my philosophy of channel management through Value and Clarity. This is a brief overview and not intended to be an authoritative treatise on channel managementbut rather a quick look at how to define what a channel is and some ideas on how to start addressing the needs of the players within it. My aim is not to make you an expert in every nuance of managing a channel, its to provide some food for thought as you move forward in your market.1

Presentation OverviewTodays PresenterValue DefinedElements of Channel ManagementStrategiesImplementationTrendsClarity

During this presentation well begin by taking a quick look at my bio and from there delve into what I mean when I talk about channel and value. Next well explore the mechanics of a channel and define the elements that make it up. Once we have those pieces together, how to approach the task of channel management and being able to define its varied elements, well then move on to strategies for making your channel more effective.

No conversation on channel would be complete without discussing how to implement change so well examine that and wrap up with trends in the profession.

Finally, Ill visit the topic of Clarity and why it is essential to your success with channel management.2

Presenters Bio

Former MarineProfessional Services ManagerWeb Application StartupSoftware Channel ManagerFred is great. His enthusiasm is contagious. He has lit the fire of opportunity under us all.

Smead Software Dealer

I am a business professional and former US Marine. Upon Honorable Discharge in 1996, I gravitated toward software and have been successfully employed in the technology sector ever since. I am presently employed as the Channel Manager for Smead Software, a division of Smead Manufacturing. I manage and work with over 300 dealers and 27 direct sales resources. Channel resolution, training, contracts, sales, presentations, GSA, recruitment, coop marketingIve done them all successfully with software for a manufacturer. I was hired specifically to be a brand champion and ease conflict as Smead introduced a direct sales channel for the first time in their 100 year history. I regularly perform negotiations between our dealer channel and direct sales resources as well as help them both work together to close business.

I am a brand champion like no other and I have the experience, energy and enthusiasm to move the needle for any channel.

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Channel DefinitionWhat it DOES:What it IS:DistributeVALUE

In its simplest characterization, of course, your channel is the distribution network for your product or service.

My definition is somewhat different in that I focus not only on what it DOES but rather what it IS.which is VALUE.

If I were to hazard a guess as to why you are viewing this presentation, I would be pretty safe by placing money on the bet that you have trouble with your channelthey dont rep your line very well, you dont like their business practices, they think that you dont do enough for themand on it goes.

What that all stems from, I believe, is a fundamental misconception that all you do is produce a good or service and all they do is sell it. When in truth what you both do is provide VALUEone to the other. Your widget is not just a thing, its prosperity for the families of the people who are selling it and their business is not just a storefront its an opportunity for you to provide more and better prospects for your company and to the people who work for your organization.

When you approach your channel in a fashion that respects VALUEnot only the value to your bottom line, but also the value to their bottom linewhat you get from your channel are sustainable, long term PROFITS.4

The Elements of Channel ManagementDistribution NetworkChannelDirectPatronsVARsIntermediateBasicPremiumIndependent Multi LineInfluencersClientsUser Groups

Now that weve established our perspective, lets take a closer look at the mechanics of a channel.

It all starts with you. The you being your primary face to your channel partners. Maybe thats a Channel Manager, perhaps an inside account manager or external sales forcein any event its important to establish right up front who has the point position on working with you channel partners. They need to have a clearly defined set of goals to reach and the tools to help them be successful. Well talk about that more in a minute.

Next, I have delineated VARs, or Value Added Resellers, as a loose way of defining your dealers. They may be sophisticated integrators, laser focused boutique shops or maybe theyre general in nature and you are one of their many lines of business. In any event, they are the businesses that sell your offering and every one of them is unique in their own way. Consequently, you need to deal with them all and you also need to deal with them all individually. One common way to slice this onion is to assign them to a subcategory that is roughly equivalent to bronze, silver and gold based on their capabilities. They may OEM your product or maybe they are a SaaS model that uses your technology, but they are without a doubt the most demanding part of your distribution.

I have also indicated on the slide a third channel which I define as Patrons. Patrons are the most overlooked channel as they rarely ever sign agreements or sell anything directly for you. But in terms of the hand that feeds the mouth, they are a remarkably impactful group. These are the folks in the user groups, the industry experts and lets never forget, your own customers. They are an indirect channel, if you will, but arguably the most important tributary in your channels ultimate success.5

The Elements of Channel ManagementThe Champion Maestro

ChannelDirect

With the pieces of the channel puzzle defined, lets take a closer look at some of the art of making those elements work.

At the core of your channel is, of course, your direct organization. Regardless of what it is that youre selling, you need to know first whos selling it and then how its being sold. While this may be an oversimplification and the execution of any plan can be difficultit is no more complex than knowing your product and understanding how its appeal can best be presented by a sales agent. What you have at your disposal to enable the understanding and acquisition of your product is where to begin Channel Management 101.

For the sake of this presentation, well assume that you are a Channel Manager of a typical manufacturer and that you have both direct sales people and a dealer channel. There are some essentials that need to be addressed and well go over them from 50,000 feet to give you an idea of how to organize your planning.

As a Channel Manager, you need to carefully allocate your personal focus and rely on your corporate team members to assist you in aligning the channel. I believe that a good channel person needs to have a bit of the diplomat in them and that your sales cycle never endsand sometimes selling your own team is the biggest challenge. In short, you are the maestro and this is your orchestrayou need to have a vision of where you are going and be able to coax, influence and occasionally demand your way to success.

Above all, you must be the Brand Champion. You are the face of your company and product to the world and your energy around that needs to be top notch. Sales resources, be they internal or external, must see you as the fount of enthusiasm and feed off of your leadership. Another way to put it is that they must be sold on you. The product will be what it is, but its your perspective on it that sparks the flames of success.6

The Elements of Channel ManagementYour Resources

ChannelDirectProfessional ServicesTechnologyMarketingAdminProduct ManagementSales

Any one of these elements is fertile terrain for an in depth discussionIn the interest of time I am going to outline a few of the key aspects that will require your attention.

Sales (Literature, Defined Territories, Production Data and Quota system)This is first chair in your symphony, your selling effectiveness begins by knowing the framework and personalities that work within it.

Marketing Resources (Value Proposition, Campaigns, Coop Budget, White Papers, Tradeshows, Website, Leads)This is the rhythm and melody of your orchestra and vital to your success.

Product Management (SME, Thought Leadership, Innovation, Positioning)Knowledge of your organizations view toward the market and strategic differentiators in your product will help you communicate to dealers how to position and sell it.

Technology (CRM, Intranet, Hardware)You must have a centralized repository for your channel to access tools, information and support. Likewise, you need to utilize a CRM to coordinate your efforts.

Administration (Contracts/Dealer Agreements, Business Plan, Educational & Training Material, Fulfillment)Clearly defining how to cross the Ts and dot the Is will create a solid foundation and is truly square one

Professional Services (Delivery, Installation, Training, Help Desk, Development/Engineering)This is where your focus on quality control will pay dividendsyou need to include this team in your message delivery because while sales may be the first chair and marketing your virtuoso, services is the depth and quality of your offering.

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The Elements of Channel ManagementExternal Partners

VARsIntermediateBasicPemium

This is where the Champion Channel person must truly shine: finding, recruiting, motivating, training and retaining channel resellers or VARs. Our partners are truly the focal point for all of our activity and it is crucial that you maintain your focus on not only their value to your company, but also your value to their organization. Think of all the effort that it takes to find them and it is immediately obvious that you have to create a win/win mentality. In sales, the axiom of Our best prospect is one that is already sold should be your guiding principle. Stated plainly, your dealers are your customer.

One of the common mistakes that I see is the philosophy of If you want to sell more gas, you need more gas stations. In a certain light, this is truebut from a more holistic angle fewer, more robust relationships ultimately bears better and arguably, more fruit. It also makes your task of unifying the message and maximizing your brand impact more effective.

It is as important for a partner to find and promote their value proposition as it is for you, the vendor. Consider how you may be able to optimize your dealers by helping them understand their own value add. Perhaps its price, speed, or accessibility but in any event the bottom line is that the market can be murky for end consumers and you can add tremendous value by orientating your approach toward dealers with an eye on maximizing their value proposition via your support.

Dealers in your channel should also have the certifications required to promote both themselves and your product. As the vendor, you need to make the certifications comprehensive and provide marketing support for those who have completed it such as certified logos for websites and business cards and a partner finder on the corporate site. You also need to do your part to promote the services that should be offered with the product or set of products.

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The Elements of Channel ManagementExternal Partners

VARsIntermediatePremiumBasic

Volume IncentivesPreferred Pricing LevelsCoop MarketingAdvanced TrainingTechnical SupportLead Share & RegistrationBusiness Development

Most channels benefit from different levels of service from partners and therefore require different levels of certification and service from you, the vendor.

Premium Partners represent your companys entire product and services portfolio, receive the most favorable pricing, automatic product registration within assigned geographical territories and preferred status in a lead-share program. Intermediate Partners are regionally-focused and specialize in end to end offering of a limited product set. A Basic Partner may offer product on demand only or referral for service.

All partners should participate in Market Development Funding and Volume Incentive Rebates, and have direct support and purchasing relationships with your company.

Partners truly have to differentiate themselves in the current market and economy which becomes even more difficult if your competing partners are getting the same air time from your company. This also provides a framework for you to move dealers upstream and provide a path to increased profitability from your product set.

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The Elements of Channel ManagementPeripheral Resources

PatronsInfluencersClientsUser Groups

As I stated at the outset, this is the often overlooked element and perhaps, in my opinion, the single biggest factor in exponentially changing the game for your channel. It is quite common for different segments of a business to operate in a silo mentality where sales takes care of the front end, Services perform implementation in the middle and support is handled by admin on the back. While it is an operational necessity to focus, as an effective channel manager your requirement is to draw together all of the elements to move the needle.

Patrons, therefore, are a big part of how you can force multiply your dealers. You need to have an active presence with the people using and evaluating your product. This can be accomplished in a variety of ways both obvious and subtle. To name but a few:Do you help your dealers sponsor active user communities in their territory?Have you considered foundations and trusts that directly or indirectly participate in your vertical segment?What would the outcome be if you actively courted industry analysts?How do you help upsell existing customers?When is your next scheduled thought leadership event/article/forum?

This can be a truly enjoyable endeavor. As you help to burnish the image of your company and product you are also expanding your dealers influence and profile in their community. It can also be a challenge to justify the expense of targeting this area so you should make certain to document long term metrics of specific activities. Another consideration is to actively solicit your channel for ideas and support participation.10

StrategiesTraining, Tools & Engagement

All of the pieces of the puzzle that weve discussed so far are necessarysome more than others so your job is to prioritize them. Once you have your focus, get a strategy document together and get sign off from the top of your organization and then execute against it.

Simple, right? Perhaps Easily said is a better way to characterize it. For me, no matter how much internal support you can garner or which element you require focus on, it will all boil down to boots on the groundyou need to be visible to your dealers in a meaningful way. That translates into Training and Tools in my estimation.

Priority One is how to get unity of message for your brand and that means providing step by step instruction to the people who will ultimately be presenting it. Dont make the mistake of thinking that sending some training binders and PowerPoint's out to the field office will accomplish the missionit wont. Turn this into an opportunity to advocatetraining does not have to be a tedious, mind numbing requirement. Make it engaging, challenging and interactiveall of which requires a face to face engagement. Get out there and do more than trainlead by example. You are the Pro from out of town and these type of dealer visits are a golden opportunity to get in front of customers, prospects, their marketing team, their support staff.

Make sure your tools are useful, as well. Approach it from a selling professionals perspectivewhat are the key messages, product features & benefits, how do I demonstrate the product, show ROI, produce a proposal and on it goes. Put yourself in their shoes and go A to Z on a sales cycle and youll be on the road from influence to control.

Remember, these are your customers and many a bone of contention can be finessed with your personal touch. Its easy for a dealer to argue via email or the phone, its tough for them to reject a person who actively works to make money for their dealership.

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Implementation

VALUE, Strategy & SupportSystematic & DocumentedEnthusiasm!

So far during this presentation, weve gone from defining what a channel is to exploring an overall philosophy of value and then to an examination of the mechanics. At this point Id like to spend a moment on the execution of your strategy. In the interest of brevity, Ill assume that youre not watching this presentation in order for me to explore the minutiae of how to roll out a system wide plan, but rather to gain some food for thought. If your implementation is anything like the norm, it will be success followed by setback augmented by tediumall part of the business within a business that is channel management.

Here are a few hard earned tips that may help to ease your way:Have vision of success that you have hand crafted and equals win/win for allVALUE!Make certain that you have buy in from upper level management, period. You will be interdisciplinary in nature and you need the force of conviction from your leaders.Draw up an implementation plan that enables all of your internal resources to contribute and be vested in the channels success.Work systematically and incrementallythis is why your overall strategy is so important. It may be a long stretch between A and B and then C-P in a flash only to be months for Q to fall into place.Manage to the numbers and by that I mean know your production metrics and cost outlays to the nickel. Reports are the baseline for demonstrating your progress and advocating for ideas that will drive your further success.Be an unfailing light of enthusiasmwork tirelessly to promote your channel, heroes, and brand highlights. Passion makes up for much of the daily reality that you will work through.

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Trends

While channels have existed for as long as there have been products, there are some trends in the space that are well worth your time, such as:

Social Media Engagement: It is vitally important that ALL of your partners feel like you communicate HOW they want you to. If 20% still prefer email and 25% prefer phone contact and 30% will look on your website but 25% are on twitter/LinkedIn/blogs youve lost that 25% completely. Subscribe to blogs or periodicals to keep up with what other vendors are doing and current channel trends. Be sure to catch the comments as well as the original post, sometimes they add even more value.

Webinars: Much like a PowerPoint presentation, these can be an outstanding advantage or an utter waste of time. Prepare worthwhile content, rehearse and refine and then deliver with an energy worth your investment of time. Try to always involve an active dealer from the field, whether its to augment a message, deliver a best practice or simply present a different viewpoint. Remember, youre corporate and a dealer is One of us to your channeltheir perspective will always carry a certain weight of authenticity.

Integrate innovation: Some people are more comfortable knowing their specific tasks and responsibilities and sticking to them. It is imperative however, that you also have people willing to manage short term projects above and beyond. These people should be doing surveys, following trends, reaching out to partners, and constantly reassessing elements of your current program.

Form an Advisory Council: Set up a group of dealers with a representative from each of your types of partners, not just your large partners. Make sure the small shops are represented. They individually make up a tiny percentage of your revenue but together create a long tail of revenue where word spreads. They would be missed and would speak out if they felt alienated or felt your program was not providing them with support they need. Surveys or a few phone interviews will also help to actively engage your partner community. I guarantee they will notice.

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SummaryClarity of Vision

Ive organized this presentation so that each element of Channel management was preceded by a philosophical way of approaching it. As I stated at the outset, the Channel Champion is not just a mechanic, but rather a Maestro who utilizes the art of selling to provide CLARITY for all stakeholders.

And its focus on this clarity that Id like to summarize with. A channel is a complex element with many of facets, as the leader for your organization in this area your ability to distill your strategy into meaningful actions on every level, both internal and external, will drive your success. Clarity means that everyone knows where they are going and why they are going there and its not as simple as Sell more stuff. Some days will be diamonds and some days will be rocks, but its the individualized approach and VALUE delivery to each component that will earn their buy in and that will make the all difference.14

Thank You!

Fred Newcome(651) 762-1184fredscout@ymail.comPresented by:

In closing, Id like to thank you for your time and welcome you to contact me with your questions and comments on Channel Management. My name is Fred Newcome and I am a Channel Maestro and Champion.15