As the year draws to a close we are often asked about our tips or ideas for the coming year. This year our number one tip to improve channel performance is easy to do, costs very little, but will deliver huge gains in productivity, relationship alignment as well as revenue. Simply conduct regular structured business reviews. The following article applies no matter if you are a vendor, distributor or a reseller.
Most channel professionals review the performance of their partners (distributors or resellers) on a semi regular basis. However, this is often a reactive response after a revenue target has been missed. This paper looks at the review process as being an integral part of a best practice partner management program, and a tool that will benefit everyone.
What are you reviewing or measuring, and why?
If you don’t know where you are, you can’t get where you want to go. There have been many variations on this basic premise but, while it may be well known, it is not well practiced. Many vendors (or channel account managers) do not regularly review their partners until the symptom of poor sales appears. Whereas, had there been an ongoing process of monitoring vendor/market/partner alignment, the chances of a partner missing a sales target would be minimised, and in the worst case scenario the possibility of a partner considering a more compelling ROI offer from a competitor could have been prevented.
Before getting down to individual partner measurement, ask yourself “What are all partners, collectively, supposed to be accomplishing for you in your target market?” Then you can break this down one step further by asking the same question for specific key partners or distributors if necessary.
It is easy to try to measure everything, and end up with “analysis paralysis”. However there are generally only a few key metrics worth monitoring regularly to give you a good indication as to the health of the channel. When considering what you should monitor, look at the basic factors that drive partner performance and commitment into your target market (i.e. skills, market focus, product range represented, resources applied, relative financial returns, etc.) If a problem or opportunity is identified then the breadth and depth of the measurement can be increased at that point. Less is generally more.
The problem with only monitoring revenue or sales results is they are an indication of past activities, which may have been implemented many months previously, potentially in different market conditions. It is also possible that partner resources or focus may have changed during that time, which will have had an impact on the results. While monitoring of sales results is of course important, there needs to be more focus around monitoring and measuring the key activities that drive the desired sales results. When analysing sales results the key question is “why or what contributed to achieving the results”, not the result itself.
Preparing for a review
As the saying goes it takes two to tango. However for a successful partner review not only will it require the active participation of both parties, but multiple stakeholders from both parties. A critical success factor is that the decisions made during the review can and will be implemented during the next review period. This therefore will usually require senior management from both parties to be present at the review. Additionally they should be adequately briefed prior to the meeting on key operational or background results, upcoming initiatives as well as having a high level meeting objective for moving forward. The aim is that any worthwhile or contentious issues can be dealt with within the meeting framework, so that operationally post meeting the relevant people can just get on with implementing the agreed actions.
Plan for the future
As mentioned previously, continuing alignment of markets and activities are the main drivers of partner commitment and performance. Therefore it is important to focus on the activities that will drive the desired outcomes for at least the next review period, taking into account the market situation and resources available on both sides to be able to execute effectively.
Keep the planning process simple by only selecting 3-5 critical goals or activities that will drive the requisite outcome. Ensure they are measurable for the next review by being as specific as possible. This goal should include the necessary commitments by both parties.
Here are some structured activities that don’t just focus on revenue; achieve sales results of <$x> with will require hiring a new sales person by , training to be provided by the vendor completed by and marketing development funds of <$y> to be spent on generating of which will result in closed sales.
Finally, remember that any major change to channel policy will have an impact on the channel momentum and sales performance, possibly for a number of consecutive or future quarter’s results. If changes are required to policy, remuneration, product range, etc, the formal partner planning and review process is the ideal vehicle for this discussion, regardless if the potential impact is positive or negative, as all of the key stakeholders will be present.
These situations are much better dealt with pro-actively and collaboratively as a face to face meeting and will often result in improved depth of the partnership if managed correctly. A partners’ ongoing sales success is of course the vendors’ sales success, and this will not happen unless it is continually planned, measured and adjusted to match the market opportunity.
Best Practice Channel Review and Planning Guide
- Be prepared. Ensure both parties and key stakeholders are aware of the process and have appropriate information before the meeting or at hand in order to make decision
- Agree on and circulate a single set of sales results numbers before the meeting
- For the largest partners, a formal review and planning session with key managers from both parties should be held 3-4 times per annum
- The focus should be about driving future activities. As a guide – Review of past sales results and analysis of the vendor/partner activities that delivered those results (25%), Analysis of current situation, define and set goals, objectives and forecasts for next period (50%), Agree on sales and marketing plans, timetables and resource allocation (25%)
- Align your channel incentive schemes both internally and externally to reward the activities committed to by both parties, not just the sales result
- The actions of the current meeting should be the first topic of the next meeting, but viewed as results “were the actions achieved if so why or if not why not
- Be prepared to revisit the relationship if it becomes clear that there are continuing gaps in alignment or commitment that cannot be solved after using this process a number of times