5 Channel Program Trends That Are… or Ought to Be
Channel programs are widespread in the high tech market, often complex and with millions of dollars at stake invested. When implemented correctly, channel programs can increase market share and help build important infrastructure for future success. Consequently, most high-tech vendors consider them an essential component of their marketing strategy.
However, channel programs have their limitations. When selling through channels it is difficult to stimulate end user awareness activities and demand creation campaigns. To win over partners vendors need to combine a "heart share and mind share model" that communicates the benefits of the partnership. Futhermore, many partners simply ignore channel programs or fail to use them effectively. As a result, millions are wasted every year.
However, successful vendors are quickly taking steps to revitalize and transform their channel programs with a focus on proactively directing investments towards outcome oriented results.
These vendors recognize that channel partner community is an impatient group. Partners commit significant resources to support vendor products and, in return, rely on that vendor to help drive revenue.
Here are five key trends shaping channel progams.
1. Put Your Money Where the Market Is
Successful vendors are encouraging their partner network to expand their breadth of their shipment revenue away from simple one-off product focus to bundling products and services, in turn helping them generate improved cash flow as well as base revenue. To do this they are revitalizing channel incentive programs and directing channel funding to those partners that are clearly demonstrating a willingness to support the new direction.
2. Show Them the Money
Microsoft recently touted in an IDC white paper that it provides on average $320,000 in value annually to a Microsoft partner with about 50 employees, $5 million to $10 million in annual sales, and between two and five Microsoft competencies. Vendors are working to clearly articulate the benefits of their program. This includes helping partners understand how much it costs to sell and support the vendor’s products, and what kind of revenue can he expect to generate.
3. Raise the Bar
Receiving accreditation status helps partners in gaining stronger company credibility and recognition within the market, and is a symbol of joint investment in technical and business competencies to support evolving customer needs. Vendors are using certifications and accreditations to establish minimum requirements in order to earn channel incentives. The incentives in turn are driven by the partner competency level. These requirements include establishing deadlines for partners to become compliant or lose the benefit.
4. Pay for Performance
Pay-for-performance incentive programs are designed to encourage partners to win new customers and expand sales to existing customers, not just maintain a customer base. The partners that drive growth are more highly rewarded than those that do not. By investing in those partners that spend more time hunting for new business, vendors are building and investing WITH the partners.
5. Keep It Simple and Straightforward (KISS)
The KISS principle states that most systems work best if they are kept simple rather than made complex. Vendors are taking a look at their channel programs and removing any unnecessary complexities. Most programs can benefit from a healthy dose of simplicity as they tend to be complex involving legal conditions, compliance considerations, eligibility criteria, timing windows, and industry jargon.
The bottom line is that changing the structure and mechanics of channel programs alone will not deliver the desired results. It is the commitment to invest (yes, the word is indeed invest) in the most capable and devoted partners, and the courage to make decisions in the face of what may appear as unorthodox given most historic views of channel programs.