Recent work on a couple of channel consulting projects has prompted me to spend some time looking at how IT vendors quantify channel expenditures and returns – and led me as well to appreciate the power of tactics that deliver the insight needed to connect marketing/enablement investments with tangible returns.
The graphic above is at the core of the ChannelCycle© methodology that InsightaaS has been using in conjunction with several partners to help IT product and services firms to bring their products to market. It embeds a couple of loops: one that is explicit (from target customer to market segmentation, from market to coverage map, from coverage map via program features to partner recruitment, from signed partners to sales to the target customers and market), and one that is implicit (from setting financials to investments in the channel program, from program investments to individual partner enablement, from enablement to sales, which, though there’s no connecting line in the diagram, feeds back into the financial metrics).
There’s quite a lot of power in understanding the interaction of these elements at a system level. Where the model gets really interesting, though, is at the next two levels – in defining the specific elements and activities within each area, and in executing on these targets. In recent weeks we’ve been addressing the first of these levels, working with clients to define ideal target customers for their channel, defining territories and developing a coverage map, identifying the program and enablement features needed to support partners capable of reaching the target market, and working through the financial planning needed to justify, calibrate and manage the channel initiative. We’re now onto the second level with some of these clients, building lists of partners positioned to expand our clients’ market presence and engaging with priority prospects to evaluate fit and set up client/(prospective) partner meetings. Once these agreements are signed, we will work with the initial partners to develop collateral emphasizing the collective capabilities that the parties bring to targeted customer solutions, and then work with both our clients and their new partners to distribute this collateral to key accounts.
In developing and working through this process, I’ve gained a great deal of appreciation for the benefits derived from coupling deal registration and loyalty programs with marketing and lead generation to create a closed-loop perspective that feeds into the financial metrics governing the channel program. An effective lead generation program – which from a financial perspective, is a pre-transaction cost that typically isn’t reflected on our clients’ books – provides our client with visibility into pipeline as it emerges from the marketing activity. A sound loyalty program, which involves (relatively modest) fixed and variable post-transaction expenses, closes this loop by capturing deal information. Proper execution in both areas is essential to a sound channel strategy; linking both with the market planning, marketing and lead generation activities provides a management perspective that ties directly and powerfully to the financial view of the channel.
Who’s involved, and why?
If these loops are so clear and compelling, why don’t all IT suppliers follow this pattern? There are numerous reasons for disconnects that apply in different scenarios, but one issue is common across many of them: the difficulty of coordination. No one firm or individual can be expert in all of these areas; no one firm or individual can execute on the decisions that are taken across all of the steps in the process. In our case, for example, we work with 3Quotes to develop competitive deal registration programs; we work with ChannelAssist, a supplier of best-in-industry loyalty platforms, to deliver loyalty programs; we work with Techaisle, a global research leader, to build the fact base required for the collateral; and we work with multiple firms, including 3Quotes and Techaisle, to identify prospective partners and connect collateral with the buy-side firms who would benefit most from the vendor/partner solution.
At a process level – as the graphic at the top of this page shows – the question that is being asked is “what’s involved?” Beyond that, though – at the levels of defining specific attributes and activities, and moving beyond planning to execution – the executive responsible for the channel needs to consider who’s involved. Coordinating the internal staff and external experts and suppliers needed to develop and deliver a closed-loop approach to channels that a) addresses the right customers in the right way, and b) makes sense from a financial and ongoing management perspective, is a tall order.
If the challenge is substantial, though, so too are the rewards associated with success. A firm that builds an effective partner ecosystem can extend its reach in to new geographic, industry and/or solution markets; it can accelerate time to new account acquisition, and customers’ time to benefit; and most importantly, it can scale revenue without directly scaling cost as well, enhancing the bottom line and the value of the business itself.
In order to optimize the bottom-line impact of the channel strategy, though – in fact, even to understand the bottom line impact! – suppliers need to connect the dots linking key activities in the process. Those that can apply meaningful metrics to spending and returns can respond to the famous Peter Drucker dictum “you can’t manage what you can’t measure” in the best possible way: “I can measure, I am managing, and I can demonstrate success.” In the end, this is the best way to ensure that the channel executive and the relationships that he/she is responsible for get the support and promotion that they deserve, that target customers get the solutions and innovation they demand, and that the connection between channel success and business success is clear for partners, senior management and shareholders alike.
Do you have further questions about the ChannelCycle© process? Feel free to contact us at nextsteps@channelcycle.com.
