Channel News

4 Rules Of Engagement to Avoid Channel Chaos

Thursday, August 15, 2013

Author: Cam Wayland
Recently I’ve been working on several channel program design projects, and I am surprised to see vendors invest so much effort into their program offering (tiers, benefits, etc), but not put much thought into the actual engagement model. The end result is usually some form of channel conflict, or gaps between partner’s expectations and vendor deliverables, often resulting in dissatisfied partners.

Based on our experience, best practice involves firstly thinking through the appropriate go-to-market strategy for the target market, then designing the partner program to support this. Then make sure that the physical resourcing, channel or sales functions and associated compensation schemes are aligned to support the first two. And finally, document this with published rules of engagement.

Just as importantly, to qualify for best practice, there needs to be clear and enforceable consequences for breaking the published rules of engagement, otherwise why bother with having any rules in the first place. But before we look at solutions, it is worth looking at what we see as the most common problems when there are either no rules of engagement or poorly aligned engagement practices. See if you can identify with any.


Common Problems

Follow the money
Whenever we conduct an audit of a channel program, territory or sales mapping exercise, the first thing we look at is the compensation scheme of who gets rewarded for what partner and/or end customer related activity.

Conflicting rewards between multiple parties targeting similar partners (or their customers) is by far the number one issue that causes the most amount of grief and loss of sales productivity. The old adage “you get what you reward” is so true, and we constantly see people with variable or commission orientated compensation from the same company fighting each other due to poorly designed compensation systems. This can be direct and indirect sales, direct touch BDMs and the partner group, vendor pre-sales engineers and partners or any combination of roles that engage with partners and/or customers.

Vague or unenforced customer segmentation
Firstly let me state as a “channel guy” I actually do not have a problem with direct sales. However, I do have a big problem and so do our clients when there are no clear demarcation points between direct sales targeted customers and partner lead sales. The same applies if there are “categories” of specially certified partners finding non certified partners within the same customer. No need to say any more on this one.

Broken deal registration systems
Where we see problems is where deal registration systems “leak” and deal or customer information gets into the hands of those that should not have it or do not need to have it, usually because of item 1 (the money). Understandably this causes much anger, angst and worse at the original partner that registered the deal, as well as mistrust at the customer level if other vendor contacts or partners suddenly appear unannounced, but seemingly “in the know”.

Poor territory & customer management
Put simply this is where the left hand does not know what the right hand is doing and so there are mixed or conflicting messages, offers or information provided. This includes things such as telemarketing into partners or customers with no knowledge or respect for incumbent partner/solutions, special offers or discounts being made to customers without understanding the partner requirement or their margins, promotions to partners without informing the relevant distis or CAMs etc, etc. This can also be described where enthusiasm for the specific task or deal is put before the need to understand the bigger and longer term picture.

Solutions and Ideas

The solution to all of the above is to firstly think about the desired outcome, then align your resources, document what the policy or procedure should look like, as well as creating consequences for breaking these rules or policies, and then widely communicate the policy.

1. Publish Policies & Communicate to all Stakeholders

Best practice is that any channel based organisation publishes a channel charter or rules of engagement, especially if there is a direct touch or direct sell portion of their go to market. This short and succinct document sets out the desired “culture” of how and why the organisation respects and values its channel partners as much as what the hard and fast rules are around direct customer accounts, joint engagements, deal registration and all of the usual potential flash points. To ensure this document is not just a feel good marketing exercise, it needs to have teeth and be enforced i.e. what are the consequences for the vendor, disti or partner if the published and agreed behaviours are not followed, once and for a repeat offence. As mentioned earlier, there’s no point in having rules unless there are enforceable consequences of breaking them. This will probably need senior management or HR sign off as serious repeat offences may require quite drastic action.

Finally with this point, it is not much use having rules of engagement if no one knows what they are. Therefore ensure they are communicated to all involved parties, regularly, clearly and passionately (not just a one off email) so they do become part of the normal sales culture, thereby hopefully eliminating breaches before they occur.

2. Think Big Picture

Most of the problems we mentioned are brought about by not thinking through the entire sales, partner or customer engagement process at a high enough level. Often individual departments or groups within a vendor will implement a policy in good faith but not think through the knock-on effect of that policy on another group. This is either because they don’t know or, in some cases, don’t care i.e. so long as I look after my patch I will be OK. The only way to solve this is to ensure key stakeholders are brought together and moderated by a senior enough manager that has total responsibility for the entire sales number, not just a silo.

3. Anticipate Unintended Consequences

When rules or policies are being written, not enough time is spent thinking through the unintended consequences of that policy. We have seen one vendor, in a well-meaning effort to make them be more “channel friendly”, change their compensation system so that direct touch enterprise pre-sales engineers and sales people were recognised for the ultimate partner sales to the same end user they had proposed their solution for. However the unintended consequence of this was that the partner was now being “engaged” not only by their partner manager but a range of eager direct customer resources that were not really interested in the partner but in being able to log the customer sale via the partner. End result was the partners stopped using deal registration and engaging with the enterprise team, and in some cases actually proposed an alternative vendor solution as it was slowing down or hindering their profitability in these customer accounts.

4. Use your Measurement & Management Systems

One of the keys to having an orderly channel engagement, especially in a complex or hybrid partner and direct model, is that there are accurate and accessible CRM/systems in place so that partner or customer demarcation points and relevant activity can be logged. Disputes usually happen when the facts are not clear/known or there are shades of grey about a particular partner or account.

There are so many good CRM systems around today, many with full blown partner modules or portals that allow partners to either view or even actively log information, that there is no real excuse for not having one. However CRM systems are only as good as the data they contain, so keeping them accurate and up to date is essential. Therefore potentially CAMs KPIs or even disti/partner rebates around their use or upkeep should be considered to ensure as accurate as possible information is available from the system. Accurate and timely information has real value, especially in a high stakes deal with multiple parties are involved to ensure rules of engagement are followed, and of course purely from a sales productivity perspective.

Conclusion

We would expect that most experienced channel managers reading this article will not be surprised at any of the symptoms or suggestions we have outlined here. Nevertheless, in our experience, it is often harder than expected to implement and create sustainable channel order in what is often a chaotic and competitive market, usually driven by aggressive quarterly sales targets. So chaos still reigns.

However we hope that this article will help senior channel managers take time to review their current channel engagement practices, take a step back and design in and then publish some better rules or polices that will improve the productivity and overall satisfaction at all levels of the channel.

 


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