Crimson Consulting has effectively helped its clients to evaluate channel offers and optimize programs with sophisticated research design, implementation of program modeling, and analysis of results. Each analysis recommends which programs elements meet the business objectives, and which ones are counterproductive. While each analysis is different, we have discovered several themes that are common to many hi-tech marketing campaigns:

• The decision to purchase based solely on brand may overwhelm all other elements
• Increasing discounts seldom matters to the channel
• Returns processing time is inordinately important
• Technical support is often cited in qualitative research, but seldom affects choice
• Contract length can affect choice
• Larger channel players often need custom programs

In one case, a major distributor found its industry amidst a shift from one type of channel program to another. It was imperative to learn if there would be enough potential sales growth to offset the market hit. In this situation, bankruptcy was a distinct possibility. Modeling with conjoint and logit analysis revealed a need to change virtually the entire channel program, and illuminated which new elements would provide the best returns. After implementing the new channel program, the client increased its annualized revenue by 60 percent in the first quarter. As a result, it went on to become one of the top three distributors in its market.

Your company may be looking to improve the effectiveness of its channel programs. In today’s environment, it’s crucial to create correct programs, messages, value propositions, and go-to-market strategies. By so doing, these will help you to better engage your channel and partners, and enable them to sell your products. By using the same analytical modeling tools you apply to other areas of marketing, you can take control of these challenges and apply them to channel programs. With modeling you can optimize your channel programs with confidence— and know that you are deploying the correct elements that will reap the biggest benefits for lead generation and revenue growth.

For a more in-depth discussion of tuning your channel programs, please contact Dylan Charles, Partner leading the Channels & Partners Service at Crimson Consulting Group. You can get a .pdf copy of the entire paper on Tuning your Channels, on the Crimson Consulting website.

And let us know how modeling in your channel programs is paying off for you.

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.

Lead management systems delivered as a SaaS (Software-as-a-Service) solution have revolutionized Sales and Channel communication. Their capabilities provide enormous benefits for cross-channel selling. With these systems in place, there is now every reason to provide your channel partners with access to the automated lead or deal registration process used by your internal sales representatives. To achieve this capability, be sure to use the best practice of setting up a repeatable and selective process for interacting with your direct sales reps, channel partners, on-line or retail channels.

F500 companies often have multiple platforms to manage sales and channel opportunities. Integrating marketing campaigns and lead qualification into these sales systems provides the sales rep with a prospect’s relevant history of interest and contact with your company.

New automated Lead Management systems now facilitate the means of driving growth in incremental revenue—without attaching significant cost. A particular benefit is accurate measurement of marketing ROI on each campaign. Additional benefits, specifically for marketing include:

• Best leads to go to appropriate sales channels
• More sales coverage through engaged partners

On the sales side, additional benefits include:

• More efficient use of selling time
• More prospects who are ready to buy

For a great synopsis of lead management best practices, take a look at the Crimson white paper “Tuning Lead Management for More Profit”.

What’s working and what needs fine-tuning in your own lead management practices?

It struck me in a very personal way the other day that cloud computing is here in a big way – and it’s not good for the channel.
 
For me as a consumer, here’s what it looks like:

• I download my books from Amazon to my Kindle, so Barnes & Noble lost my business,
• I download as many movies as I can watch via Netflix, so Blockbuster lost my business,
• I listen to my music via Pandora, so both the poor record store and even iTunes lost my business.

In these examples, one channel player won, and the other lost. And it’s not happening just in a B2C environment. From a business perspective:

• We store business information on a wiki (Socialtext), so the local server reseller lost our business,
• We backup our systems via Mozy, so Best Buy / Fry’s (the channel) lost our business,
• We use Salesforce, so the local CRM reseller lost our business.

In these very simple examples, you see how the channel is disintermediated. (And if you would like a more comprehensive and more enterprise-level perspective of cloud computing, see here.)

From a vendor perspective, the changing channel landscape poses both an opportunity and a challenge. Your opportunity may lie in grabbing a greater share of wallet of the buyer because you don’t need the channel as much. Or, your opportunity may lie in aligning yourself with the emerging channel players (transitioning from CD stores to iTunes to the Pandora-like solutions).

However, your challenge lies in the fact that you probably rely very heavily on the channel today. The vendor that creates the best value proposition for the channel to sell their cloud computing solution will take the most market share. We see some of our clients who help their resellers change to succeed with them and we see others that don’t yet understand the importance of the channel in cloud computing.

Have you determined who the right channel players are for you and what your value proposition should be for them?

What’s the best way to get started?  How does one decide where and with whom to work?  The most important starting point is understanding your key customer care-abouts.  That ensures that any joint selling initiative has the greatest relevance in the mind of the customer and also ensures increased partner credibility.  Ultimately any collaboration effort can be broken down into 3 major components:

1. Solution Selection - Prioritization of customer care abouts and alignment of solutions to those care abouts
2. Partner Selection - Select the most appropriate Route to Market partners from the partner ecosystem
3. Go to Market Planning with Partners - Determine the joint partner value proposition with the partner targeting the end customer

The following diagram illustrates some of the key steps:

Why Collaborate?
 
In the past few years, our research has shown a marked spike in the interest of partners in working with their peers.  Recent studies have shown that partners see a significant value in partnering, both from an economic perspective and from a capabilities perspective.  More than 74% of resellers saw collaboration with other partners as a significant factor in sourcing new customers, generating revenue, and winning larger projects.  Most partners regularly work with an average of 8 other partners, and 31% of their revenue comes via partnering (growing at 15% annually).  This feedback is even stronger as it relates to the recent economic challenges.  Our research also shows that one of the key hurdles in making collaboration happen is the lack of trust that exists between partners.  Partially for that reason IBM has created and IBM sponsored forum that ensures that you are working with some of the best companies in the business. 

The key to ROI is finding someone else you can work with to sell in new geographies, or sell a new solution.  The first step is picking someone with complementary skill sets.

As I continue to work with companies, discussion business plans and strategies, I have realized I have an aversion to the word “could”. I am hearing it more and more, especially as economic times get tougher and and more companies are rethinking their business strategy.
 
The problem is that I am hearing it at the point in the discussion when executives need to define their path forward. Strategy is all about making clear choices, then executing well on them. The strategy is the strategy until there is new information that require a change in direction and a new strategy.

There is no room for the word “could” in the definition of strategy. In fact, the use of the word signals to me a lack of strategy, a failure to make clear choices, because it leaves many pathways open for consideration. It is difficult for a company to execute effectively and efficiently on a strategy that has multiple pathways. Just because a product “could do this function” or a company “could go in this direction” does not mean it should.

With that said, there are still good applications for the use of “could” in the strategy process:

• It is necessary to open up new options and possibilities in the brainstorming or idea phase. What could the company build? What go-to-market approaches could they follow? But once the brainstorming is done, it is time to close down the number of possibilities.
• It is often helpful to consider what external events could happen over the next few years - in the areas of competitive moves, economy, customer tastes, or technology developments - to ensure the company has a response to these events. But each of these are external factors, rather than undecided choices for the company.
• It is fine within limits to keep some options open for further down the road in the strategy. For example, it is fine to use “could” to define several exit options for the company 3-5 years down the road. Lots can happen in that time, and it is less necessary to nail down the specifics right up front. But watch out for applying this logic to choices in the next 6 months or a year, because every option left open has a cost in execution.

Listen to the discussions in your business planning sessions. Are you comfortable with how the word “could” is used? Or do you need to put a ban on the word to force some important choices about your direction?

We are working with a client that is very focused on driving down their global channel costs, but wants to see a simultaneous increase in channel revenues. So, how is that going? Amazingly, it’s going well.
 
What I will share with you is partially the strategy of our client and partially input from us. The program hinges on two major points:

1. Developing and nurturing a Partner Ecosystem,
2. Providing an outsourced concierge service.

(I’ll use “we” here, and acknowledge that many third-parties can play the role of “we”. My objective with this post is to show you what can be done.)

Like most of our clients, they have thousands of Partners already. They even talk about an existing Partner Ecosystem. What we are doing is building out this ecosystem so that they have what they need to really work well together. It’s quite easy to have a Partner program that you call an ecosystem, it’s another thing entirely to have a real ecosystem. By that, I mean Partners who can, and do, work with each other and with the vendor to create a 2 + 2 = 5.

How are we doing that? Via the concierge service.

The concierge service profiles, matches and connects (via social networking) a global group of Partners. The service manages the planning, execution, management and reporting of:

• Co-development, funding and execution of demand generation programs,
• Partner business plan creation,
• Consultative guidance on brand usage, partner program benefits, offerings, promotions, etc.,
• Partner-to-Partner enablement via social tools,
• Revenue creation through connecting Partners and our client on opportunities (where the rubber meets the road).

 How are your channel costs and revenues doing?