Channel Relationship Management Practices that are Close to Extinction.
Based on our experience of helping manufacturers improve their channel relationship management practices in their distribution chain, we have seen firsthand how common practices can deteriorate profitable partnerships, sales and marketing program ROIs, and gross margins.
One or several of the following practices may still be prevalent in your business today. So, it’s important you begin to slowly move away from these channel relationship management practices habits and evolve with the changing tides of modern channel partner management.
1. Channel Partners know how to market themselves
The “happy hunting,” hands-off mentality of leaving partners to fend (marketing) for themselves is one trend on the brink of extinction.
Manufacturers that successfully influence partners to invest in their offering—only to provide a couple of case studies, product/pricing information, a hand full of leads, 10 co-branded emails and a pat on the back—fail to acknowledge the reality of the situation.
The problem lies in the manufacturer, whose inability to set-up a path to success is felt almost immediately. Channel partners—overwhelmed by intimidating brand/content guidelines and plagued by limited headcount, resources, and marketing experience – simply lack the know-how to execute.
Your channel partners may not always admit it or even realize they need to, but they absolutely 100% need help from their manufacturer when it comes to sales and marketing, and will enthusiastically support it when presented to them. Furthermore, when you leave partners to take on the challenge of marketing your products for themselves, you do have any means of measuring their performance.
- Collateral sheets
- Partners don’t understand the value of your products
- Partners not up to speed on modern selling techniques
- Decentralized ad builders
- Poor measurability
- TCO & ROI Calculators
- Synchronized channel marketing; automated co-branded marketing material via a web-based portal
- Full marketing campaigns with syndicated information that has configurable collateral builds – Designed to the
- Designed to the eke out the maximum number of leads and deals from partners
2. Disjointed Channel Partner Management Systems
As channel partners continue to increase in importance, the need for effective channel relationship management practices is growing. Unfortunately, however, most channel intensive companies lack dedicated resources to optimize their indirect relationships at scale.
Directing partners to multiple web-based outlets to accrue necessary information (e.g., register deals, view available marketing funds or status on reimbursement, submit backend rebate claims, etc.) not only slows down productivity but leads to channel complexity, low program participation, and partner dissatisfaction.
Here’s a snapshot of the “siloed” channel partner management predicament
- Decentralized resources
- Too overwhelming to manage
- Channel system doesn’t “talk” or integrate with each other
- Poor partner experience – multiple log-in information, disparate data, overlapping of materials, etc.
- No “big picture” view
- Single view (from executive, admin, and partner-level)
- End-to-end channel relationship management systems that help to engage, energize and guide
- Unified, integrated channel offering
- Easily executive on a marketing campaign, sales promotion, rebate incentive, etc.
- Admins can easily follow demand generation (from origin to completion)
3. Slow Partner Payouts on Rebates and Credits
Slow payments of incentive programs and rebates kill your partnership’s potential.
If you are not quickly paying your partners based on some preferred behavior and/or achievement, how can you incentivize them to participate in future endeavors?
Furthermore, how can partners know how to repeat a preferred behavior if you reimburse them months after the fact? Given the catalog of (competing) promotions they simultaneously participate in, your partners are likely uncertain of how the reimbursement came to fruition.
- Partners have issues correlating discounts with programs and preferred behaviors; struggle to know what to repeat
- Competitors are capturing mindshare due to faster payments
- Payments typically received after 30 days
- Pay partners in 3 weeks or less after preferred behavior and/or achievement is fulfilled
- For SPIFF programs, payments should be instantaneous
- Payments received consistently and accurately No more delays or requests from MFRs for more information
4. Customization Over Configuration
The choice between SaaS and in-house PRM tools used to be easy.
With software vendors’ high-cost of data storage and bandwidth and limited customization abilities—building channel tools internally was a no-brainer for most manufacturers.
However, cost and bandwidth conflicts are no longer as prevalent as in years’ past. Affordability has become a catalyst for SaaS vendors’ value proposition to customers, as has features that focus on balancing customization with configuration.
That’s not to say there are no advantages for building channel relationship management and operation tools in-house.
Advantages of building channel partner relationship management and operation tools in-house
For one, specific features and functionality are more accessible via in-house development. Facilitating complex internal and external workflows—thanks to the implementation of add-ons and integration points—are also more feasible when in-house teams head PRM production.
Opting to go with the SaaS model, however, is arguably the more sensible option to pursue, especially when exchanging the final edited versions of data files on a broad and/or global level is highly prevalent. Furthermore, your SaaS supplier manages the software, database, storage, and security assets through a pay-as-you-go subscription, which means your investment is substantially less risk.
Most importantly, SaaS vendors that specialize in PRM and channel data management are nimble to market changes and demands, which lead to the seamless integration of all the peripherals that create a “single pane of glass” for you and channel partners; and without comprising IT costs and labor.
- Customization over configuration
- Build vs. buy – more expensive – time-consuming – limited agility
- IT holdups
- Configuration over customization
- Rapid scalability – cloud-based
- Flexible Standard APIs, integrate with more sources of data
- Low operating cost
5. Using Spreadsheets to Manage Indirect Rebates and Partner Claims
Consider this hypothetical example:
The Monday morning channel sales operations conference call is not going well.
The sales VP had just received a catalog of emails from disgruntled distributors and reps because her company’s payments on rebates and credits are late. Meanwhile, the financial controller is upset with the sales operations manager because she didn’t give him the weekly channel revenue numbers needed for accounts payable. The three are at each other’s throats, and the sales operations manager knows she will be up to her elbows in spreadsheets for the next week or so reconciling claims and sorting through endless POS and inventory data.
If this situation sounds familiar, it is likely your dependence on Excel spreadsheets has reached a maximum threshold, and no longer can easily or accurately manage increasing amounts of data. It’s time-intensive and intimidating enough to handle backend rebates manually, but when you combine that with the complex Excel formulas needed to calculate incentives, things can go from inconvenient to chaotic.
Ultimately, spreadsheets are disconnected from your business systems as well as other departments critical to managing channel programs and distributing rebates and credits. This leads to inaccurate financial statements and the erroneous validation of partner transactions, which results in overpayments, double-payments, late payments and overall, a poor channel experience for business partners.
- No audit trail for retrieval of historical data or compliance with GAAP requirements
- The primary method for tracking channel performance
- Managing rebates is harder than it should be
- No tool that auto-calculates and applies rebates at the time of sale
- Outdated days or even hours after it’s created
- Timely, accurate payments
- End-to-end channel tools that ensure programs are driving incremental revenue
- Real-time access, everywhere
- Correct rebates automatically applied
The 6 pillars of Establishing Profitable Channel Relationship Management Practices
|Invest in understanding partners’ business|| Appreciate
relationships with channel partners
|MFR goes out of the way to understand partners’ business goals, and synch proficiencies together to create unique service offering to end-customer|
|Establish joint business development plan|| Strategize
|MFR works to create a joint plan that focuses on specific revenue targets, prospects for future growth, profitability and the actions needed to achieve these objectives|
|Help create a unique, competitive edge|| Exclusivity
|MFR collaborates with a partner to identify and combine strengths in order to differentiate product/service from a competitor(s)|
|Tailor your incentive programs|| Customize
Customized tailor your incentive programs
|MFR realizes that the most effective incentives work when they’re designed around partners’ strengths/weaknesses|
|Clear channel incentive parameters||Objective & Quantitative||MFR implements well-defined program parameters. Ex: start/end date, qualifying products, eligibility requirements, stackability, guidelines when submitting claims, etc.|
|Partner-centric programs|| Native Currency
|MFR ensures that partner is paid in native currency and absorbs any fluctuating exchange rate differentiation|