4 Keys to Channel Management Success
If you are going to effectively implement channel management there are four key things you’ll need to master: channel readiness, local demand generation, channel focus, and continuous improvement. Good channel management systems will embrace all four of these practices.
How ready is your sales channel? It’s a simple question, yet achieving readiness can be anything but simple. Do your channel partners know your products and services well enough to sell, implement, and support them? How well do they know sales and support best practices? Does your sales channel know how to take orders from customers and place them with you? These are some of the many things that go into getting a sales channel ready.
Channel readiness is all about execution. If the channel can’t execute, revenue goals won’t be achieved and customer satisfaction is likely to be low. This is why world class organizations that sell through distribution channels focus on readiness.
For most organizations readiness is about training and certifying partners in products, practices, and procedures to be successful. Leading organizations have a checklist of training and best practices for knowledge transfer with a new partner. They also recognize that training isn’t a one-time effort and requires ongoing nurturing to ensure the channel stays on a leading edge. A good channel management system will keep track of all the programs and certifications available and completed by channel partners.
Local Demand Generation
To create demand you first have to create awareness. Ralph Waldo Emerson said, build a better mousetrap and the world will beat a path to your door. This may have been true in the 1880’s when he said it, but not today. Today, we are bombarded by so many products and services that it would be easy for the world’s best mousetrap to fall on deaf ears.
The question is how do you get your brand to stand out amidst all the noise? This is usually done through a combination of national and local marketing. The brand owns the national awareness campaigns and the channel partner handles local marketing.
The channel management challenge is in getting local marketing done by the channel partner. Most channel partners don’t have marketing departments, or if they do, they have a junior level person at the helm. Channel partners also tend not to trust brands with their leads making this an even more challenging task. Brands must deliver marketing programs that can be easily executed by channel partners. Channel management must track this activity to ensure it is getting done.
There are two types of channel partners: exclusive and non-exclusive. As the words imply exclusive partners only carry your products, where non-exclusive will carry several brands. Keeping the channel partner’s focus can be a challenge in both instances, but usually for different reasons.
Most channel principles (the person managing the local business) are a combination of sales person and entrepreneur. They likely got the business by being opportunistic and that opportunistic/entrepreneurial spirit doesn’t just go away. They are always looking for the next opportunity to make a dollar. Your job is to keep that focus on your brand.
With the non-exclusive channel partner this is even harder. They may carry competitive products and they likely make similar margins on all of them. Again, your job is to keep their focus on your brand.
Effective channel management requires creative programs to focus channel partners on the brand and best practices required to be successful. This is usually done through sales incentive programs.
There are two types of sales incentive programs: cash and non-cash rewards. When selling through a distribution channel you have to be very careful with cash rewards as often they don’t find their way to the channel sales person you are trying to influence. Good incentive programs focus channel sales people on your brand.
Channel Management Insights
You can’t manage a distribution channel if you don’t know what is happening on a day to day basis. You need to know if you have coverage, if the channel partners in those territories are ready, focused, and generating demand. If you don’t know these things you’re just flying blind.
Many sales organizations have historically managed channel insights through word of mouth and large opportunity tracking. This anecdotal information can be very mis-leading if it isn’t balanced with good data driven facts. As W. Edwards Deming, the father of modern process engineering use to say “in god we trust; all others must bring data.” These are words to live by when doing channel management.
Effective channel management ensures channel readiness, local demand generation and focus through constant data monitoring used to drive continuous improvement.