Wednesday, July 28, 2010

Channel Marketing Automation – When CRM is not Enough

Whether you pursue a lead through direct sales or a partner it doesn't really matter how you get the lead. But what happens next? With your direct sales, you track the nurturing process as the lead develops into an opportunity. You measure your sales reps by the number of meetings they get, the deals they close. You may even have a closed loop reporting process that shows the efficiency of your marketing and sales funnel.

With your partners, your lead gets passed off and … then what? Does the partner accept the lead? Do they follow up? Do their marketing outreach programs conform to your policies and expectations? How much time and how many touches does it take them to close? How do you decide which partner is qualified for which leads? How do you efficiently identify the productive partners, those that need encouragement and those that should be dropped?

Multi-Billion Dollar Channel Management Questions
These are critical questions that have a tremendous impact on businesses with significant indirect revenue. A recent IDC study of large IT companies found that on average channel revenue was $2.4B. It was generated by 34 channel marketing staff managing 8,500 active partners. That equates to $45 million of revenue per channel marketing staff member but only $1.2 million per partner. The dirty little secret – there are also on average approximately 19,000 inactive partners!


Source: IDC’s 2010 Best Practices Study in Channel Marketing (n=13)

A Better Way

Your CRM and SFA are not going to answer any of the critical channel management questions – although many companies think their CRM system is where they should be "managing partners". In fact, a partner management system fulfills a role more like an SFA – it tracks all the activity that occurs after the lead is generated. It should also facilitate the process of lead distribution – managing all the partner credentials and accreditations need to qualify for a particular lead. Then there's deal registration where the partners accept the lead so that it is not poached by another partner or … ahem … the direct sales force. And when you consider some of the other requirements of partner management, the CRM fallacy becomes clear:
  • Recruitment and on-boarding
  • Training and development
  • Business Planning and Reporting
  • Compensation and Incentive program management
  • Marketing and Sales support
Are these capabilities that your CRM can provide? Your SFA? Would you even want them to? The answers should be no, no, and no. Don't be thrown off by that last bullet – the marketing and sales outreach your partners require is very different than the corporate outreach that marketing operations is doing. They rebrand, reschedule, embed, and otherwise repurpose marketing content, making a direct translation from corporate marketing to partner marketing wholly inappropriate.

If you have (or want to have) a significant amount of revenue going through the channel, you need a dedicated partner relationship management (PRM) system to automate more than just marketing and sales activities. Don't look to your CRM, SFA, or even the newer marketing automation vendors to provide you with the full set of capabilities necessary to effectively manage channels. Those solutions are focused on a very different set of requirements. They may have slideware and inch deep functionality, but that's typically it. Do ask about integrating a PRM with these systems as reporting should roll up easily across direct and indirect sales.

A number of key capabilities to consider when implementing a platform channel marketing automation:

  • Manage partner profiles and contacts
  • Deliver and track training, certifications, etc.
  • Set business rules for lead distribution
  • Handle deal registration
  • Provide a single system of record for partner and channel management
  • Provide detailed performance reporting (12-month rolling review)
  • Track partner outreach campaigns
  • Manage market development funds (MDF) and co-op spend
With these issues on the table, it should be clear that automating channel marketing requires a dedicated, purpose-built solution. It will be costly and painful and meet substantially lower expectations otherwise.

Friday, July 23, 2010

The IDC Sales and Marketing Automation Framework

Sales and marketing organizations are seeing a rapid evolution of solutions for automating their core business processes. While we are years away from anything like an integrated ERP-class solution that can manage the full range of sales and marketing activities, the building blocks are available today. CRM vendors have established that a single system of record is within reach for the sales team, and an emerging group of companies are is starting to prove that this goal is attainable for the marketing side of the house as well.

However, automating these two organizations will be a major undertaking for large companies. There will be significant process, cultural, and technical challenges. But the benefits are self-evident: lower cost, higher efficiency and productivity, greater accountability, better performance, improved customer experience, and potentially shorter sales cycles.

The Need for Alignment
The 80/20 Rule and the 50/50 Rule: IDC research shows that up to 80% of the content marketing generates is not used by Sales, even though a lot of it is specifically created for Sales and Channel enablement. Additionally, customers say that Sales reps are insufficiently prepared for their initial meeting 50% of the time. Clearly a massive disconnect is at work.
IDC's Framework for Sales and Marketing automation is, therefore, focused on the tight alignment of key Sales and Marketing processes. This framework represents only those processes that must be coordinated (potentially integrated) between the two organizations. It is not meant to be a comprehensive map of all the processes in which each organization must engage to be successful – there are many activities on each side of the dynamic that do not have a corollary on the other.
Each high level process in Sales that has a counterpart in Marketing must share:
  • A common set of definitions for inputs and outputs
  • Proportional allocation of budget and resources based on overall business objectives
  • Phase-appropriate performance metrics
  • An integrated IT ecosystem


Source: IDC, 2010

Implementation
IDC recommends that sales and marketing automation efforts be tightly coordinated across both organizations so that the customer experience and lead management processes are handled seamlessly by all parts of the infrastructure. Even if a marketing implementation will have no sales users and vice versa, the data definitions and flow will be critical for both organizations. IDC recommends that:
  • Senior marketing and sales leaders meet regularly to plan, review, and asses automation projects
  • Marketing operations and sales enablement teams are especially critical, they should have representatives from both organizations with senior level sponsorship.
  • Marketing needs to be very cognizant of how leads and lead details will flow into the SFA/CRM environment.
  • Sales needs to be diligent in making sure marketing is capturing the high priority prospects and the high priority details so that lead acceptance criteria is routinely fulfilled.

Next Steps
One of the key issues for automating sales and marketing is establishing a shared automation road map. Upcoming research from IDC will help you: prioritize your plans based on business impact and implement best practices to be most successful.