By Mark Geene | Published 10/11/2011 in Expert Opinion
As a veteran of both direct and channel sales management for IBM and Oracle, I know firsthand that companies selling through the channel face no shortage of challenges. Unlike with direct sales managers, channel sales managers don’t know their end customers; they only know their reseller partners. This is further complicated by the fact that data collection in the channel is difficult and sporadic.
The problem boils down to this: For most manufacturers, data comes in from tens, hundreds, or thousands of different partners, in a number of formats, via varying delivery methods, and with differing levels of priorities. So, while channel sales managers have all the accountability, they don’t have the visibility.
Being responsible for hundreds of millions of dollars of business without the same level of information and control afforded to those in direct sales leads many channel sales companies to make critical decisions based on mere rumor and innuendo. This is the weak link in channel sales.
Vendors need to better understand their partners and end-customers, provide more targeted marketing programs aimed at meeting their needs, improve the product pipeline. and make the very best channel investments. To do so, it is critical that those manufacturers receive fast, accurate, consistent channel sales data from their partners.
Foresight is 20-20
So what is the magic bullet that will enable more effective management of channel partner performance and meet the needs of end-customers? Visibility into channel sales information enables companies that sell through the channel to better understand who their end-customers are and what they need.
Manufacturers can increase sales because they are targeting specific markets with customized campaigns, messaging, and offers versus shooting in the dark. For example, they may see trending that identifies many of their end-customers as being in the healthcare market. Armed with this knowledge they can then provide guidance on which products work best for that audience and why.
Their resellers in turn can improve revenues, while the end-customer benefits from an enhanced awareness of their needs in the form of better service, as well as getting access to the products that are the most effective for their business.
Automate and dominate
So how can manufacturers get to know their partners and end-customers better? Automated
delivery of valuable sales information back into CRM and PRM systems, as well as to partner portals help manufacturers and partner gauge partner performance. They also simplify life for both vendors and partners by eliminating resource-intensive manual submission and processing efforts and giving vendors the ammunition they need to effectively target their programs.
More specifically, automatically submitting POS and inventory data ensures the following:
• Vendors can better manage the product pipeline and enable resellers to be an extension of the manufacturer’s supply chain.
• Vendors can more effectively serve channel partners with incentives, training, and rebates that can be better aligned with the end-customer and market segment.
• Partners, by sharing data, can be more effective and benefit from quicker incentive payouts and more targeted programs.
• Improved partner working capital position due to faster payments.
• Scorecarding shows growth (via aggregate data), which helps partners understand benchmarks for their own performance compared to peers.
Simply put, tools that automate the delivery of channel sales data allow partners to end the data struggle, while manufacturers get actionable data on time. As a result, both parties benefit from the improved channel relationship.
Don’t just take my word for it
From the manufacturer’s perspective, the ability to collect accurate, consistent, and timely POS and inventory data from the channel provides better strategic alignment between the manufacturer, its partners, and the end-customer markets they serve. Analysis of the data can be used to update the manufacturer’s channel development strategy, focus on incentive programs that work, reduce channel conflict, and, ultimately, drive more revenue in the channel.
Take Enterasys, for example. The global provider of hardware, software, and services decided five years ago to transition from a direct sales model and expand its use of the channel to address its rapidly expanding global markets. The company was accustomed to a level of customer intimacy that executives valued and did not want to lose. They knew that they needed to deliver more unified communications to partners and end-customers and build a cohesive strategy for their direct and indirect sales efforts. Yet, the company’s legacy solution just wasn’t yielding the immediate, visible information necessary to provide that same customer visibility through the channel. Today, the company manages its channel sales from opportunity generation through quoting and discount management based on real-time POS data, which has restored the level of customer intimacy it had with a direct sales model. Additionally, based on initial estimates, Enterasys thinks it can save up to $10 million per year by using automated channel sale management tools to more efficiently manage sales, special pricing, and inventory.
A final word
The bottom line is that in an economy that continues to be challenged, it’s more important than ever for companies to take a hard look at the effectiveness of their channel programs. By using timely, accurate POS data, manufacturers are able to better assess their channel opportunity, and ultimately, realign their channel programs to position their partners for greater success, simply by better knowing their customers.
So as you plan for 2012, ask yourself if your channel program is based on what your customers need. If so, you will increase your revenues and experience the expansive growth that you expect in the coming year.
