Effective Channel Management Craig Justice, Alliance International Lecture to Master of Science in Executive Leadership University of San Diego, March 12, 2010
Dec 02, 2014
Effective Channel Management
Craig Justice, Alliance International
Lecture to Master of Science in Executive Leadership University of San Diego,
March 12, 2010
Channel experience from a number of industries.
Definitions“Channel Sales” is the use of well-defined
distributors, resellers, VARs, websites and other sales outlets to transact sales of your branded product/service
“Business Development” involves creating partnerships with companies to take advantage of their channels and customer base and includes OEM, Private Label, M&A
A “Reseller” , “Dealer”, and “VAR” sell direct to end-users. A “Distributor” sells to resellers and does not sell direct to end-users.
Why Use Channels?Reach important buyers or segments not
adequately served online or by your sales repsExtend sales reach & accelerate growthMake it convenient (remove obstacles) for
customers to buyPenetrate international markets
Channel Fundamentals 101It’s all about the incentives/motivation you
provide ….
Channel Fundamentals 101With the exception of VARs….
distributors & resellers don’t sell your product.
(Your marketing & your sales team do that.)
Distributor & Reseller Landscape
Courtesy of :ChannelSources
YourCompany Price Paid
Retail Sales Model
Aggregrator(5% - 10%) $59 - $50
Distributor(5% - 10%)
Ingram MicroNavarre (Consumer)
$64
Retailer/Reseller
(20% - 30%)
Best BuyFry's $69
End User $99
Watch Out:Consignment sales, fees, 60+ days toreceive payment, threat of returns.
Multi-Channel ModelYour
Company
InternetSales(0%)
Reseller(10%)
VAR(20%)
Premier VAR(30%)
North AmericaDistributor
(20% - 30%)
Reseller 1(10%)
Reseller 2(10%)
Reseller3, etc.
InternationalVAR
(20%)
InternationalDistributor
(35%)
Reseller 3
Reseller
Reseller 1(10% -20%)
Considerations Before Starting
Executive management: growth objectives, margin, price control, resource allocation priorities, support, credit policies, cash flow
Operations: channel manager, sales support, marketing support, resource allocation, budget, compensation policy inside sales, lead allocation
What is your value proposition? For channel partner? For channel sales rep?
Ideal profile of your channel partner?Ideal program for your offering? Talk to potential
partners before finalizing program.Your Goals, Objectives & Plan
Comprehensive Program PiecesPricing Considerations:
Does your pricing reward partners who promote /recommend/demo your product? Order Makers vs. Order Takers
“Deal Registration” Special Pricing to encourage huntingRetail price maintenanceMAP (Minimum Advertised Price)MSP (Minimum Sales Price)
Channel Sales TeamIn-houseIndependent sales reps in field (5% - 10% commission)
Recruitment StrategyDevelop profile, trade shows, telesales, in person calls, reseller
sales sheets & resources (price lists, contract), eval programContract: key business issues: territory, exclusivity, price
level, return policies, stock rotation, payment terms
You’ve Recruited Partners, What Next?In House Resources
Who will provide training, answer questions, provide sales assistance, manage account?
Out of sight, out of mind. 90% of life is showing up.
Training: KISSRecorded webinars, videos, screen cast with
incentiveTraining sheets, tests to become certifiedLive training over web, in person
Develop Territory Sales & Marketing Plan With VAR partners with goals & planned activities. Manage it!
Channel MarketingMarketing “kit” for partners containing resources (on line)Special demo pricing. Friends & family special. If reseller
rep uses your product they will recommendProvide leads to channel partners or sell direct?Market development fund (2 – 5% of sales). Will you require
partner to co-invest in activity? Will you proactively work with partners to generate leads?
Pay to Play. How effective?Pay to be in their print catalogPay to be on their websitePay to participate in lunch & learnPay to participate in their vendor summitPay to participate in their show case to end usersPay to do direct mailing to their listPay to participate in their trade showsPay to support a funded head
SPIFFs & RebatesSPIFFs can be useful to stand out from crowd
where there is competitionBut….Rebate program to reward VAR ownersRebate program (through distribution) for
specific resellers as part of a marketing program
International ChannelsPlanning, prioritizing. Where is low hanging
fruit? Which are largest, strategic markets?Regulatory requirements? Electrical, safety,
power?Piracy, patent infringement considerationsLocalizationExclusivityPricing: should you price higher, lower, the
same?
What They Don’t Teach You in School
Channel sales reps respond to enthusiasm & opportunity to make money.
Channel reps appreciate when you make money for them (give them leads, support, joint sales calls)
Channel reps/partners appreciate honesty. Screw them, loose them.Taking an account directMislead / Lie
Case Studies: Risks of Foregoing Channel
Interactive Whiteboard IndustryU.S. company cuts VAR channel program to sell
direct and stalls. UK -based IAWB company comes to U.S. sets up channels and becomes strong player.
Software IndustryInternet sales focused company ignores
channel & remains small. Other companies starting at similar size built channels & grew 5 X larger.
Tips for Channel ManagersIt’s not about: “It’s the end of the month and you
need to order.” It is about making money for valued partners
Develop good relationship with accounting deptAvoid end of month, end of quarter “specials”Be wary of large, stocking order “deals” – low priced
product may show up where you don’t expect Avoid exclusive contracts. If you must, draft &
monitor goals. Require opening stocking order to demonstrate commitment
If you’re trying to build a VAR channel, be careful about over distributing
Be responsive. Be straight-forward.