Do we Need to Update our Channel Management Strategy?

In a recent survey we conducted with 187 companies on sales performance, a misaligned channel strategy was cited by 28% of the respondents as the primary root cause of poor results this year.

Most companies rely on the channel for 30% or more of their revenue.  That concentration of revenue presents a great opportunity given the scale advantages but it also represents a significant risk.  So how do we know if our channel management strategy needs to be updated.

Begin by asking the following questions:

1. Did any of our partners experience a 20% change in their own total sales results over their last fiscal year?
2. Did any of our partners experience a 20% change in sales results for our products in the last 12 months?
3. Did we lose a customer that bought through the channel and contributed 1% or more to our revenue?
4. Have we lost or gained position on our partner’s line cards (i.e. we are now #2 in supplier ranking)?
5. Have any of our partner’s experienced a loss of key sales talent in the past 6 months?

There are many more questions that need to be asked but these 5 give us an idea of the change in the environment.  Let’s discuss the loss of a customer to bring this to life.

The lost revenue stings but it may be a sign of something much worse.  One of our clients experienced this situation and they performed a Loss Analysis Interview with the customer.  The interview identified poor customer service by the partner as the reason for defection. 

Our client immediately changed their channel management strategy to include quality of first line customer support as a selection and de-selection criteria.  This was distilled into tactics such as:

• Including reviews of partner’s customer service metrics during quarterly business reviews
• Increasing content and support personnel to lift partner’s front line service capabilities.
• Introducing Win Loss Interviews for all partner transactions of $300K or more.

Key Takeaways: Review your channel environment for clues that signal new opportunities or potential risks and modify your channel management strategy now. Also, download our channel management Whitepaper.

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