Monday, October 06, 2008

Five Strategies for Improving Channel Sales

Channel executives at IT hardware and software companies are being asked to sell more through their reseller channels, and both they and their channel partners know what kinds of programs can help make resellers more successful. Yet new research indicates that, despite knowing what to do, technology vendor channel chiefs don't always act on this knowledge.

A channel sales effectiveness study just concluded for PRM vendor BLUEROADS by Sirius Decisions shows a "clear link between the types of partner programs that top channel executives emphasize and their impact on revenue growth in the indirect channel." Of executives "who said they focused on sales ‘effectiveness’ strategic activities such as lead management and deal registration, 62% reported an increase in revenue. Paradoxically, 80 percent of the channel investments by the vendors that were surveyed focused around tactical issues such as training, partner portals, and partner communication tools – all activities that simply automate the relationship with partners. Of those who focused investment on these types of ‘efficiency’ programs, only 40% reported an increase in channel revenue."

In other words, the study says that channel executives, on the whole, know what works—they just don't do it. They're all hat no cattle, all show no go, they talk the talk but can't walk the walk, pick your over-used idiom.

Charles Watson, Senior Vice President of Marketing and Sales for BLUEROADS, suggests that many channel chiefs lack the "alpha mail" orientation of their direct sales counterparts, and thus continue to make small, "safe" investment in low-return activities like training programs and partner portals. Such investments are focused more on reducing costs through improved efficiency than increasing revenue but typically don't require executive team buy-in because they have low visibility and little impact on the enterprise. An alternative explanation may be that the corporate culture in many organizations discourages precisely the type of risk-taking that is needed to significantly improve channel sales effectiveness.

Based on this study as well as past research focused on channel partners, BLUEROADS recommends five practices that should be employed to improve channel sales performance:
  • Invest in high-quality leads for partners; depending on the product category and price point, this can range from a quick visual screening to making pre-qualification calls before handing leads to the channel.

  • Ensure that leads are delivered rapidly. Particularly for near-commodity products, leads can "cool off" quickly, and first-to-respond often beats best product offering.

  • Get the right leads to the right partner, every time. Besides checking for named accounts and pre-established relationships, this may include sorting and routing leads based on industry vertical, company size, geographic location and product. (The folks at BLUEROADS are quick to point out that their PRM software automates this process.)

  • Protect partners from channel conflict. Okay, that one's pretty obvious.

  • Help partners accelerate sales cycles with selling guidance and coaching. Engaging with channel partners as they need assistance—learning by doing—is less common though much more effective than "train and forget" programs.

Finally. the most sophisticated vendors are creating feedback channels that enable them to collect valuable market intelligence from channel partners, to answer questions such as:
  • How does our product compare (in detail) to competitive offerings?

  • What new capabilities are most important to the market?

  • What is the "whole product" that customers (and potential customers) are buying?
The study concludes that channel chiefs, in many cases, know that they need to focus investments on high-visibility, high-impact programs aimed at increasing channel sales effectiveness, yet continue to invest in safer but lower-yielding efficiency improvements. this research from BLUEROADS suggests that those vendors willing to improvements in channel effectiveness a higher priority will ultimately prevail over their more cautious counterparts.


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