Thursday, January 19, 2012

Channel Marketing from a Sales and Marketing Perspective

Complexity and Diversity at Scale
Channel marketing in large high tech companies is one of the most complex and diverse operational activities in all of marketing. Complexity and diversity are pervasive across: market, product, program, even organizational structure. Channel Management groups typically report to either marketing or sales. The trend today favors the sales reporting approach, especially for regions outside of the US. The in-country channel manager will either be or report to the regional head of Sales. Channel Marketing typically sits within channel management or corporate marketing. In many companies the main function of the channel marketing team is to act as a conduit between business units/product management and worldwide channels. This creates an inherently complex organizational structure from which a wide range of additional sources of complexity and diversity must be managed.
The Sales Perspective
From a sales perspective, channel management is all about recruiting and performance – identifying key opportunities and the partners best suited to capitalize on them, and investing in their success. This typically involves working with key partners to develop business plans, including staffing, investment planning, and performance goals. However, it is rare that these business development plans include specific marketing plans developed in conjunction with the vendor's channel marketing team.
This is a critical point of failure for many channel programs. Most partners do not have the marketing expertise needed to manage full scale, long term strategic branding and lead generation campaigns. Many do not even have marketing staff. As a result, much of the marketing effort focuses on discrete expenditures such as events – it is not managed as a coordinated set of campaigns optimized for a multi-channel, multi-touch, long sales cycle lead generation process.
The Marketing Perspective
From a marketing perspective, channel management is all about programs. Programs for recruitment, training, and of course, performance. Given the immense diversity in the channel it is impossible to offer a one-size-fits-all approach to channel marketing programs. But it is equally impossible to individually serve the needs of every partner.
The Partner Perspective
From a partner perspective, channel management is about of all things, consistency. It takes on average about a year for new partner programs to be fully adopted and implemented so changes must be highly rationalized and carefully rolled out by vendors.
Standardization and Specialization
Thus the need to find a balance between standardization and specialization. To find the right balance, specialization decisions have to be made first and the first specialization decisions that have to be made are about standards. The question is: what can we offer to every partner in each category and what opportunities/requirements are there for custom programs? This should be asked across a defined set of categories:
y Partner class: (Platinum, Gold, Silver, etc.): this one is obvious and universally addressed.
y Partner type: (Dev, VAR, ISV, SI, etc.) This one is also obvious but there is a lot of room for creativity. For example, do VARs get a special "turnkey" product offering that is not available to others?
y Region: This is an especially challenging area for channel marketers as there are real market differences in terms of culture, technology adoption/maturation, regulation, as well as language that make regional marketing more decentralized.
y Technical/Product focus: The need for specialization here is largely determined by the breadth of your offering portfolio. But companies with hundreds of solutions need to be especially careful not to overwhelm the partner community.
y Strategic alignment: Making changes to your market direction or product mix requires a huge commitment from the channel and they will require not only special programs but also special monitoring and guidance to ensure effective changes are made. Data is particularly important and additional incentives for feedback may be necessary.
y Partner potential: This is a two-fold problem - identifying the high potential partners and understanding the specific drivers of their business with your brand. Getting these research issues right is critical to moving the most valuable growth opportunities up the performance curve.
Standard marketing programs, campaign models, events, collateral and other go to market assets can be designed for each of these categories. Then specialized programs can be overlaid to facilitate coverage of partner capabilities relative to market opportunities.
It is important to understand that marketing programs for high tech sales must be highly leveraged over a wide range of media and market segments. They must be managed with a long term perspective. Most MDF, JDF, co-marketing approval processes focus on short term, discrete activities such as an event and are measured on 30 day or 60 day timelines. However, this is not an effective way to market complex solutions that require great education and deliberation on the part of the buyer.
IDC Recommends
To address this, IDC recommends that companies better coordinate their sales and marketing teams with respect to channels. Channel marketing should develop marketing plans as a normal part of the business planning and market development process. In addition, the partner community should be researched and assessed with the same depth and regularity applied to the markets they serve so any changes in business drivers can be quickly identified and incorporated into channel programs in the most appropriate way.

4 comments:

  1. Gerry, great overview. I would add that in the midst of all of this complexity, channel managers need to remember that their job is to not only effectively work with active partners but also to turn inactive partners active. The majority of channel partners in any large high tech company are inactive. And at the largest of these companies, the churn of inactive partners can be as high as 40% per year. The trick is to develop channel marketing programs that get the inactive partners to reach back (self-select)and say that they are ready to re-engage.

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  2. Hi Steve, Thanks for the comment, good insight. Much of the success of any partner initiative is understanding what makes different partners successful with a given brand - e.g. not all ISVs are the same, not all VARs are the same. The key challenges are: quantifying how different partner business models work, sharing best business practices across partner segments, and making sure they invest in the things that will have the greatest impact on their success. For some its programs, others tech skills, others sales resources, etc. That's a huge part of getting inactive partners to come on board and moving the rest up the performance curve.

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  3. Great article Gerry. I agree that better coordination and planning between Marketing & Sales is important. However, another important factor is having proper goal alignment between marketing and sales. It seems that most companies have completely different metrics for sales people and marketers. Sales are typically measured on revenue, gross profit, number of active partners, number of new customers, or some combination of the above. Marketers might be measured by leads generated, campaign execution, or ludicrous metrics like whether they can spend all their MDF in a given quarter! Now, I'm not suggesting that sales and marketing have exactly the same goals, but they do need to be very closely correlated.

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  4. Hi David, thanks for the comment. It's a great point about goal alignment. One of the things that gets in the way for most marketing and sales orgs is that marketing tends to think in terms of contacts and sales in terms of accounts. It's very important to get the account level model and associated metrics in place in marketing or there is always going to be friction at a fundamental level. An example of a good metric is revenue per account. Some of our clients are moving their entire go to market strategy to a Named Account model which is a unifying way for both marketing and sales to think about customer engagement - if you only have 1,000 companies to target that really focuses the effort and dramatically cuts down the contact level KPIs.

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