Too often channel strategies ranging from the most tactical and short-term to the most strategic and multi-year fail.  Success or failure of a channel management strategy has nothing to do with the time horizon; it does however have everything to do with perspective, timing, and getting away from a “one and done” mentality in so many companies today.  A channel management strategy is never done – it is an iterative process that too many sales, operations, service and marketing managers ignore instead of own – the “fix it” mentality is so pervasive that there are a few channel management software vendors surviving because they are doing the work of sales, marketing and operations.

When channel strategies implode it’s too easy for companies to say that the business model changed and the channel strategies didn’t keep up, or their channel partners rejected strategies because competitors were offering more margin, dollars, or attention.  Those are all cop-outs and speak to symptoms rather than causes.

Worst practices in channel management gets started when these factors begin surfacing, and get perpetuated by a perspective of companies thinking they can buy their way out of these problems.  In fact spending just forestalls the pain:

• “One and done” mentality about lead management, order capture and service. I’ve seen high tech manufacturers in industries known from cut-throat pricing let their managers, directors and even VPs sit behind their desks all day right after putting a channel management system in place.  Sure, the sales force was worked with to begin with to get their feedback – but now that the system is in and launched – these organizations tend to breathe a collective sigh of relief and settle back in their comfort zones which often includes ignoring rather than serving Sales.  So organizational life goes on before – except there is now a $1M plus system in place for serving the channel and the sales force – and the people who were so passionate about it are now on to another project, or worse, their work lives before the system went in.  Nothing changed really; there is a “done” mentality pervading these manufacturers, and while usage rates hover less than 30% or less no one has the time or economic incentive (read bonuses) to make things changes for the better.

• “The Sales Number You Called Has Been Disconnected…” Ironically the manufacturers who do have initial success with channel strategies take their best managers, directors and VPs turn them into firefighters first, long-term business process owners second.  A top director at one manufacturer spearheaded a successful pricing program for indirect channels that included streamlining special pricing requests.  The system had major integration challenges with SAP and Oracle ERP instances, and this high achieving Director worked diligently with channel management, system integration and IT managers to solve the problem – and the result was a system that ran flawless.  The trouble was that this Marketing Director was so strong at organizing the system; time spent staying in touch with Sales suffered.  The result: the most effective Director in the company lost touch with Sales’ needs.

• Lack of integration expertise. With the pipeline for channel management deals slowing down at the beginning of this year there is a tendency of most struggling channel management vendors overstating their ability to handle integration.  Don’t just check the references vendors you’re qualifying give you; go find the references they don’t want you to know about – their failures will teach you much more than their successes.  One manufacturer recently did this and found that error messages – while promised to be in customers’ specific format – weren’t in over a year.  That bumped the vendor down three levels in the short list.

• Beware of vendors waiting for the M & A Train. I’ll go out on a limb here and predict that there are going to be easily over forty different mergers and acquisitions throughout all of enterprise software, and at least three that will re-align CRM overall and channel management specifically.

• Channel Strategies Must Rock The W2s Of Users. When it’s all said and done, one VP of Sales just nailed it with the comment “So what will these channel strategies do to my W2?” The combination of streamlining manual processes and automating them to make more sales happen must reverberate and rock the W2s of the sales people that depend on them.  You may argue that channel strategies are just giving sales, operations and service the tools to do what they are already paid to do – but anyone involved with sales, marketing and channels is dollar driven – and W2s are how these people keep score.  Want to win with your channel strategies?  Then rock the W2s of the channel members you serve.  That is critical.

Bottom Line: This year there is going to be more manufacturers becoming channel driven than ever before.  In previous years the U.S. Department of Commerce has said that 70% of all revenue in distribution will come from indirect channels.  That has held constant in the last three years, and more manufacturers have failed than succeeded trying to tap into that potential revenue stream.  Consider why companies have failed and plan accordingly, but be sure to always ask “How does this grow the W2s of the people who will use this system every day?” and then you can sell with confidence to the most deal-savvy of Sales VPs out there.

The next twelve months of battling to keep existing customers and gain new ones is going to forever change the perception of just what time is in many companies, and completely redefine how time is used. Time – the most precious resource any company has – is going to be in shorter supply than ever in the next twelve months.

The New Reality: Time As A Competitive Weapon

Get ready for a new reality when it comes to attracting, selling and serving customers.  It’s not going to ever be business as “usual” again.  Instead, there is a new edginess to competitiveness right now.  Instead of holding onto manually-oriented approaches to managing your channels, or relying on sales training via PowerPoint on unreliable WebEx connections, get out and do some real social networking, in person, with your channels.  And realize that your quoting systems need work to be as efficient as your competitors if the second major paradigm shift coming in 2009 is going to be a catalyst of change instead of a crutch.

Recession: From Crutch to Catalyst of Change

2009 is going to be a challenging year and instead of lining up all the excuses for not excelling in serving your channel partners, distributors or dealers today because of the economy, embrace the tougher challenge of changing how you serve channel partners instead.  Embrace the responsibility to fight for your channels and get them the tools they need.  Look at those areas of how you’re working with channel partners today and resolve to fix them – now – and make them strengths.  That is the surest path to surviving a recession.

The Path of Survival in A Recession: Serve Channels Aggressively

Go back and look at previous recessions and see how the top-performing companies were actually strengthened by it and also learned how to be more efficient. General Electric Lighting Division faced formidable challenges selling into the European Market and nearly quite its channel management program.  What changed? GE concentrated only on one area, how they managed their quotes and pricing.  The slow economy was making small and mid-size resellers choose Phillips and other European-based manufacturers.  GE concentrates so aggressively on making this specific process so efficient that they began winning market share – even in the midst of a recession.  It can be done.

Time To Get To Work
Instead of looking at 2009 with fear and trepidation and letting that fear paralyze your plans, be the aggressor.  Be the competitor in your industry that takes this opportunity to dominate channel relationships.  Practice real-world social networking by getting out and really talking to your distributors, dealers and resellers to see what their unmet needs are.  Sure, social networking and social media are fascinating, but trust and delivering on commitments are more important than anything else right now.

Bottom Line: Go find what makes your company most painful to do business with from your channel partner’s perspective, and really see how it slows them down from selling more.  Resolve to do whatever it takes to get those strategies cleaned up, more automated, and focus on turning your channel partners’ time into a competitive advantage for them.

Cisco dominates its industry as a result of it, Dell, HP and Lenovo, and even BMW with its Mini also share this common trait: they all have the ability to take highly specific, customized requirements for their products and quickly transform them into deliverable products.  Cisco completely re-defined their ERP system to be more demand-driven, enabling their manufacturing, sales and channel partner organizations to track customized product orders as they were completed.

Redesigning their entire ERP system to allow for greater flexibility in responding to product configuration workflows, Cisco quickly revolutionized its channel management strategy and was able to continually monitor its financial contribution to the company’s profitability

What Differentiates Successful Companies

What all these successful companies have in common is first the ability to quickly quote then deliver non-standard product configurations to both direct customers and channel partners.  Second, there is a constant, unrelenting focus on how to make the quote-to-order process as efficient as possible.  Third, each of these companies, especially Cisco and Dell, never stop looking at how quoting accuracy impacts their bottom line.  As a result, these companies and others like them have been able to tie back their quote-to-order and product configuration performance to financial measures or Key Performance Indicators (KPIs).

An example of just what is possible when a company revolutionizes its qoute-to-order strategy while committing to measure its resutls is shown in the Summary of Product Configuration Key Performance Indicators below.  These series of KPIs were gathered from  AMR Research, Gartner and other research firms’ studies to illustrate just how powerful of an impact qoute-to-order and product configuration  strategies can have on the financial perfomance of companies willing to change.

Bottom Line: 2009 is the year to revolutionize your channel management strategies and make qoute-to-order a major contributor to your revneu growth and profitability.

The surest path during a recession is to invest in and even overcompensate in making those strategies, processes and systems that directly interact with and enable conversations with customers as efficient and streamlined as possible.  Given the choice between spending a dollar on increasing customer loyalty by making your company easier to do business with versus not doing anything, it’s clearly better to err on the side of earning customer loyalty using analytics.

Analytics are often used in customer service and service management departments for resource planning and forecasting, managing the service management system to optimal levels, also for defining schedule and route optimization, in addition to Fleet Management. All of these strategies for using analytics lead to exceptional internal efficiencies – but let’s face it – this economy has sent a very loud and clear signal – it’s a very critical time to keep the customers you have and gain new ones through exceptional, over-the-top service. Using analytics to lock down customer loyalty is possible, profitable and a strategy forward-looking company in a broad range of industries are pursuing today.

Consider the following key points about how analytics can be used to make service more customer-centered and capable of fulfilling the goal of locking down customer loyalty:

Service Level Agreements (SLA) need to be exceeded during this recession – and analytics can tell you if you can or not. Instead of just “getting by” on the measures of performance you commit to customers on, go after the ones specifically in your SLAs and do an exceptional job on them.  When it comes time for contract and service renewals, your service strategies aimed at delivering exceptional performance can form the foundation of keeping the customer.

First time fix percentage needs to continually go up, even faster right now. Do you know what your first time fix performance is?  Get a hold of that figure and track it down and then begin to create a time series of it.  Chart it over time, work with your service department to figure out how to drive this figure up.  Consider it a leading indicator of customer loyalty.

Attack manual processes that cost you money and automate them over the Web instead – now. Consider the fact that your customers live in a 24/7 world, why force them into a 9 – 5 world that is further constrained by when your RMA Specialists are at their desk.  Automate the RMA process online.  QVC, HSN and other mass merchandisers who must make multichannel management work to survive are doing this today.  On the tech side specifically in the B2B arena, HP and IBM are masters of this as are dozens of component suppliers.

Get your service act together and create a dashboard to measure performance. Realize that service is the path to locking down customer loyalty in this recession.  Get a dashboard together and start measuring how youa re doing on a set of key measures of service performance.  Resolve to do whatever it takes to drive up these measures of performance – because they are measures of your ability to keep customers loyal.

Bottom line: Want to lock in the loyalty of your customers during this recession?  Use analytics to measure how you save them time and respect their unmet needs by trying to anticipate their needs with more targeted and efficient services strategies.  When in doubt exceed their expectations on SLAs and measure – and celebrate that.  That’s where the future of any company’s viability is.

The competitive advantage of contracts is lost in many companies because they don’t take the time to organize them into an enterprise-wide system that can deliver pricing, service and negotiation intelligence.  If manufacturers could capitalize on their contracts more efficiently they could gain major advantages in negotiating with channel partners, defining new pricing strategies with suppliers, and have a better grasp of their liabilities.  There would be far fewer surprises for many manufacturers if they also had an enterprise-wide contract management system in place as well.

Here are several key lessons learned from companies who have moved from being entirely manual in managing their contracts to automating them into an enterprise-based system:

Managing contracts through cross-functional systems is how the majority of companies are handling this process workflow today. Realizing that having contracts stored on several different peoples’ systems and not cross-referenced leads many manufacturers to initially develop cross-functional approach where portals begin to proliferate.  This is where many manufacturers stop their efforts to improve, as contracts are at least searchable, even though it often takes several different portals to find the specific contract of interest.

Defining enterprise-wide systems that can search to the clause level is where highest-performing companies are at in terms of maturity today. Being able to parse contracts to the clause level is critically important as any manufacturer begins to increasingly rely on indirect channels.  The fact is that indirect channel strategies lead to the development of an exponentially greater number of contracts and cross-functional, portal-based approaches can’t scale to the level of analysis necessary to support complex channel relationships.

Create standardized processes for managing contracts instead of having individualized and often inconsistent approaches across business units. As is often the case when cross-functional versus enterprise-based approaches to managing contracts, often each business unit will define a completely different approaches to managing dates, commitments, costs and pricing.  The net effect of this is that company-wide opportunities are missed to make the most of all contracts enterprise-wide.

Bottom line: Contracts can be a significant competitive advantage if they are managed to be an enterprise-wide asset versus a departmental or division liability or cost of doing business.

Estimating software has been around long enough for businesses and industry experts to track it’s evolution from the beginnings and benchmark it’s changes, adaptations and innovations over the years.

At first used as a stand-alone application, estimating software applied general algorithms to cross reference the type and cost of materials, the price assigned to the amount of time needed to produce the final product and the base cost of business specific add-ons. Basically the first estimating software applications had all of the functionality of an Excel spreadsheet. The need for more in-depth estimating software was earmarked as soon as it became apparent that the true costs of a project, especially a complex one, were more complicated than that.

Over the years, the base processing of estimation software systems were easy to understand for anyone in the business, but the perfection of execution remained tenuous, especially as new processes changed the businesses themselves, who then had to adjust their processes to match the change in business. (Which then changed the businesses, which then… well, you get the idea.)

The answer to truly useful cost estimating software was found when programmers, developers and business industry professionals agreed that a whole-system integration was needed to correctly address hidden costs inherent in production lifecycles, regulatory initiatives, channel differentials and more. Once estimating software was utilized as a module that integrated into a guided selling, bidding and estimation and knowledge based process, it’s true functions were realized.

At a recent conference for the construction industry, top corporation that specialize in construction met with the smaller local owned companies to talk about the kind of cost saving efforts that affect everyone in the construction business. One of the biggest topics of the conference was the necessity, for every size company, to utilize software for accounting, bidding, contracts and HR related tasks, even if the company only employs a handful of people.

In discussing the needs of both large and small companies in the construction industry, most agreed that one of the ways in which business software system could help the most is in the payroll system. HR tasks for employees can become complex accounting procedures when you take into account withholdings, timesheets, wages, benefits, taxes and so on.

Another key liability in current industry practices is the inability to correctly track committed costs. While many small companies use free estimating software, almost all of it will only track costs that have been entered as bills, which makes it difficult for you to see how much a job in progress is actually costing the company.

Relying on Excel and Quickbooks can only carry a company so far before their limitations are clearly reached.

Many costly errors are made when your current freeware or old estimating software will not integrate with other task specific module software that you use. Your staff ends up having to complete estimates in one application and then retype or copy and paste that data into the construction accounting software. The inherent risks to such a task are clearly evident from an accounting, estimating and regulating viewpoint.

The catalyst of any successful customer experience is trust.  Earning trust from customers takes a consistent, passionate level of commitment to delivering customer experiences above expectations.  Keeping and growing that trust with a customer, whether it is in B2B- or B2C-based industries, is difficult yet attainable even during a recession.

No One Ever Cost-Reduced Their Way to Customer Loyalty

Many companies are cutting drastically back on the very staff they need to deliver exceptional customer experiences, while others are reinvigorating, redirecting their staffs to concentrate on delivering over-the-top service that far surpasses customer expectations. These latter companies are using the recession as a galvanizing force in their companies to focus everyone on keeping their existing customers and winning new ones with exceptional, excellent service. Companies who see the recession as a rallying point to passionately serve their customers more responsively, completely and with greater focus than ever before are staying financially viable today.  No one ever cost reduced their way into exceptional customer experiences.  Instead it takes a new perspective, the focus on using these difficult economic times as a reason to show customers why their trust is warranted, valued and respected.

Thawing B2B Spending With Over-the-Top Service and Concern

During a recession B2B marketers face the daunting task of keeping the key decision makers in their top accounts from freezing in fear or panic and not spending or doing anything.  What’s needed is for B2B companies to extend their expertise, even for no charge, and go into their key accounts and work to help them overcome their biggest problems today.  Retention strategies like this in tough times don’t lead to immediate sales.  They do send a powerful message that any B2B marketer doing this is in their clients’ corner for the long-run. Retention strategies often unearth other areas of the company that can use existing solutions in place, already sold.  Helping B2B customers get more value during these times is a brilliant strategy to stay relevant to them during this recession.

The Only Security Is Exceeding Customer Expectations Daily

In better economic times, companies will often define mutually agreed-upon benchmarks and then put bonus incentives and salary raise multipliers in place if the expectations are exceeded.  This sends a powerful message through any B2B-based organization, and that is do whatever it takes to get performance consistently above the B2B customers’ target levels of performance.

Now the galvanizing force has to be not only these metrics but the fact that both the B2B marketers’ and their customers’ viability is on the line.  For B2B marketers, its’ time to fight for your customers by pitching in to solve their problems even if it doesn’t lead to immediate increased sales.

All B2B marketers aspire to be trusted advisors; the ones that gain this level of confidence with customers have done the hard work of making sure their entire organizations back up strategies, plans and tactics that consistently deliver experiences that surpass customers’ expectations.

Strengthen Your Serve With Knowledge

To learn more about how customer experiences can be improved from both a B2B and B2C standpoint, begin by subscribing to Paul Greenberg’s blog, as Paul is an excellent and entertaining author and speaker, and is founder of the Line56 Group. His blog entry on December 6th specifically focuses on customer experience in recessionary times.  I also recommend subscribing and regularly reading David Meerman Scott’s blog WebInkNow.com and one of the best books I’ve read all year on the subject, Tuned In, by Craig Stull, Phil Meyers and David Meerman Scott. There is also the excellent book, Managing the Customer Experience: Turning Customers Into Advocates by Shaun Smith and Joe Wheeler.  I also read Bruce Temkin of Forrester Research’s blog, Customer Experience Matters, in addition to John Jantsch of Duct Tape Marketing Blog and Marketing and Strategy Innovation Blog.  There is much being written today about the impact of social networking on the customer experience.  Dr. Andrew MacAfee has a blog that is excellent in this area and the broader issue of Enterprise 2.0’s impact on customer centricity in organizations, and Ross Dawson’s Trends in the Living Networks.  Finally I subscribe to Harvard Business School Knowledge Blog and the blogs of analyst and advisory firms active in this area as well.

Regardless what’s going on in the broader economy, you still have significant control over your own channel relationships.  You can still make them stronger and more capable of delivering results.

Even in the most commoditized industries including high tech distribution where resellers and channel partners are loyal to the distributor with the lowest price, there is room for improving the service your company delivers to channel partners.  Consider the fact that there are many services companies and a manufacturer expanding their distribution channels right now – in the midst of the nearly daily onslaught of bad news – and one realizes that a company’s reaction to these broader economic factors is much more important than the factors themselves. Instead of letting the daily litany of bad news paralyze your company for investing in and making your channels more aggressive, focused and passionate about getting to shared goals, consider taking the following steps:

• Take a hard look at pricing workflows in general and how you can automate special pricing requests (SPRs) specifically. This is an area two high tech distributors were able to automate for their resellers, netting average gains of nearly 80% (AMR Research).  Typically distributors and manufacturers who offer SPRs on sales deals staff this area with only Sales Operations Managers, many of which ending up working 80 – 100 hour weeks this time of the year to keep up with all the SPRs.  Automating this not only saves these valuable employees an all-nighter or two at the end of your fiscal year, it also means you’ll be able to respond that much faster to pricing requests and win business.

• Use Team Selling To Tackle Sales Opportunities.  Instead of pointing fingers about whose fault it is why there aren’t enough sales in this last quarter of the year start gang-tackling sales opportunities and consider using Web-based team selling applications that give you the opportunity to collaborate between dealers, distributors and your sales management. Many customers, especially in commercial accounts, are changing their purchasing priorities.  Time to get in front of them with a sales team and figure out what really matters to them right now.

• Face time is the best investment there is with your top 20% of distributors and dealers right now. So much has been written about automating the sales process, including Web-based applications to serve each specific segment of your distribution channel as well.  Automating service responses to the lower 80% of the channel is a great way to save on costs, while freeing up your best direct sales reps to work with the top 20% of accounts.  Want a hedge against the broader economic factors in play right now? Get your best sales reps in front of your best distributors and work very hard at understanding their business better than ever before.  The company’s were seeing gaining sales despite this economic downturn are those that see a direct link between face time with the top 20% of their customers and their attaining the role of trusted advisor in their products’ area of expertise.

• Be more passionate about serving your channel than any competitor. Your customers want to win. They want to get out of these broader economic times as much if not more than you and your company does.  If there is one thing any channel partner needs right now is the sense of their services and manufacturers they represent are in their corner, fighting for their success.  Want more mindshare in your top accounts?  Use Web-based collaborative tools to bring all the resources your company has to the problems your customers have is a great step in the right direction.  Use Web-based applications to free up your best salespeople to invest valuable face time with your most profitable customers – as your competitors no doubt are also targeting these accounts with a greater intensity than ever before.

Time to get passionate delivering exceptional service to your customers, including automating Special Pricing Requests and developing entirely new approaches to using Web-based collaborative and team selling applications.  Automate serve to the lower 80-% of your channels and get face time with the top 20%.

Bottom Line: It’s all about earning the chance to serve again and being a trusted advisor; using Web-based apps to accomplish this goal can be done, now.

Bidding for multinational corporations and complex organizations has traditionally included the hands on approach from just about every division in the company, no matter how large. Various divisions within the company itself all have vested interests and coverages that they have to ensure are met within the bidding process, so every bid hit every desk on it’s way up the ladder.
With so many different sectors of your business giving their input to a bid, doesn’t it make sense to provide them with a central point of contact, data extraction and knowledge sharing and project estimation? After all, a decision can be made that much faster if everyone has all of the data they need to provide their expert input. Having a central input and knowledge sharing system will enable your staff to make critical decisions without waiting for the next update cycle on their particular leg of the data stream.

Your customer will appreciate the increase in response time to their quote needs, you will appreciate the decrease in lag time and manual input errors.

Cincom Acquire allows you the flexibility you need to make changes to bids based on additions, subtractions, and the changing situation, without having to start from square one.

This key component to a centralized bidding system is the ability to monitor and update the bid while it is in process throughout your system. In the old days, if a parameter changed on the project that meant that the bid had to go back to square one and be sent back up the ladder for approvals with the edited information.