A key challenge in developing a successful channel program is to anticipate the economic impact of implementing one element versus another. Bear in mind, there’s never enough money to test every element. Determining the evaluation factors of channel programs will become the input variables for conjoint or logit modeling of your channel program. Use of a rigorous statistical analysis will provide you with data to make the hard choices. It will provide evidence to share with channel partners who challenge your choices. (For more information on enabling your channel partners, please see Improving Alliance Marketing on the Crimson Consulting website.) By using analytics, you will also help build confidence with your CFO as you deal with the usual internal budget wrangling. Specific benefits of program modeling include:

• Identifying innovative program elements
• Determining the value of each program element
• Implementing smarter cuts in program costs
• Deploying the best program elements to maximize channel revenue
• Providing the evidence you need to sell changes to your organization
• Strengthening your channel relationships

The ability to value nuances is a big benefit of conjoint or logit modeling. When managing a multi-million dollar channel program budget, the cost of changes is often understood—but the cost of revenue lost is overlooked. It’s in your best interest to incur a minor cost for the research; this is a drop in the bucket compared to the high cost of implementing the wrong program elements. Analytical modeling provides you with a cost-effective way to make better decisions, reduce the price of your channel programs, and maximize revenue.

Modeling also enables economic simulations that may not be obvious to your team or they may not appear in qualitative surveys. Results can reveal cost saving measures by eliminating elements that are expensive or generate a miniscule return. You will be able to justify program designs and changes by using objective analysis. Modeling will help you maximize return on the program investment based on your strategic alternatives. As an added plus, it can also simulate competitive responses.

How do you model your channel programs before you execute and what is working well for you?

A channel program analysis will be tailored to each specific program. One cannot assume that program elements are interchangeable between business sectors, companies, or even the individual brands within a single company. Quite often the lessons learned in one program are confidently applied to another and fail miserably. Your channel program will blend a unique combination of brand, technology, business plans and other channel program elements.

The evaluation will use the same analytical tools you employ with many other areas of marketing. An analytical process such as conjoint or logit modeling demands precision in defining program categories and prioritizing each element. One requirement is to objectively quantify elements in order to avoid emotional judgments in the evaluation. Avoid skewing the analysis with negative reactions by channel partners who tend to voice frustrations on what cost them the last sale.

The table below provides examples of elements you may identify in a channel program. The examples show ways to group the elements and weightings for analytical modeling. Specific elements in your evaluation will vary based on requirements of the particular channel program.

 
What factors do you use to objectively evaluate your programs?

How do you measure the success of stimulus spending? It’s an obvious question for the Government, and it’s one that channel marketing professionals should also pose when it comes to money spent for demand generation. The ugly truth is this – money you spend to boost channel sales often disappears into a black hole. Sadly, your campaign can spend millions of dollars and tie up scarce resources with no viable return. Unfortunately, instead of boosting sales, it reaps just a meager blip. If managed effectively, these programs should bring stories of success. Instead, channel partners congregate to heap undesirable blame on you for hampering their success with “sub-par” support. To make matters worse, your CFO blames you for nuking the budget.

Before you spend a dime, you need to counter these risks with better modeling of channel program options. In coming weeks, we’ll take an in-depth look at how you can optimize your channel o¬ffering and enjoy more accuracy in predicting program revenue. The goal is to know, in advance, how a change in discounts, MDF funds, contracts or other elements will impact competitive challenges and return on investment. For more information on how to align your channels, check out Crimson’s channel articles in the Insight section of their website at http://www.crimson-consulting.com/insight.html.

As we explore this subject, let us know how your channel programs are underperforming or outperforming.