“So, have you designed the Channel Management Program?”
“No. I’m going to worry about that after I sign some partners. That’s my first step. I’ll worry about the program afterwords.”
This was a big mistake. A Sales Manager wouldn’t hire a new recruit without a outlining job responsibilities and plan compensation. Why would you hire a new channel partner without the same road map and expectations? At SBI, we have seen this many times. It results in Channel Partners who are ill-prepared to sell the product, complain about the competition’s margins, and are unable to install the product (should they miraculously sell it). This is usually why the top 20% of your channel partners sell 80% of your product, and why the others have given up trying. Download this to see a simple representation of a Cisco Channel program. They are one of the best-in-breed when it comes to channel programs.
Why should you have a firm channel partner program in place?
1. Standardized Contracts
One vendor recently informed me that they constructed unique contracts for each of their Channel Partners, which were modified and renewed every two years. While this may work for a handful of Channel Partners, it is not scalable. By establishing a program, you are transparent about the expectations and rewards for each channel partner- hit this volume, and receive this discount. No more bickering from one channel manager about how his competition is receiving bigger discounts. You want a bigger discount? Go sell more. Also, it eliminates tedious paperwork and negotiation on behalf of the channel manager every time a new recruit wants to sign in.
2. Establishes Service Requirements
At another company I visited, the Channel Manager was scrambling around the country, coordinating the firm’s direct consultants to patch up botched channel partner installations. Why? Channel Partners were overpromising on implementation with inadequate engineers. When it’s your reputation though, you have to fix the mess. By establishing channel partner service obligations and certification requirements, you are ensuring that there is a staff that is well-trained and capable of installing your product. If your channel partners aren’t willing to invest in their implementation process, they shouldn’t be part of your program
3. Ability to Change Focus
Back to Cisco. Before 2001, Cisco was in a massive expansion phase, signing up VARs as long they could show customer demand. However, following the internet bubble, Cisco realized that the days of flooding the market were over. Instead its Channel Partners needed to become solution providers. Cisco boldly changed tack and dropped all volume requirements. Instead they focused on specialization points. Specialization points, beyond mere individual certification requirements, mandated that reseller’s learn specialties to solve their customers’ biggest needs and requests. The reseller’s customers were then followed up on by an independent 3rd party conducting a customer satisfaction survey for extra Specialization points. The result? Cisco shifted their channel partners from being a commodity based sales service to a set of specialized solution providers that were held to quality standards. The process wasn’t without some pain- half of the resllers were dropped. But this created less competition for the remaining VARs, improved the overall sales experience, and increased brand reputation. Do you think a change could have come this quickly with individual 2 year contracts?
Key Takeaways: A successful channel partner program (Great Example Here) relieves Channel Management of the burden of “specialty contracts”, incentivizes the right behaviors, and puts the responsibility for performance on the partner. Keep in mind, a successful channel partner program should not just be a list of requirements, but also a list of benefits (Sales Engineer Support, Marketing Dollars) that your company is committed to providing should certain benchmarks be reached. Build your Channel Partner Program before you Go-To-Market and save yourself a major headache in the future.
Channel Managers, I’m interested to hear your stories about Channel Management Program implementation. Where have you experienced success/setbacks? Please comment below.
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