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.

No one ever cost-reduced their way out of a recession and that certainly will not work in this one either.

What’s going to get companies through these hard times is overbalancing the scales when it comes to collaboration and service to channel partners, better coordination with suppliers, and greater ability to solve customer problems by stressing educating them versus just selling to them.

If there is going to be one strong lesson learned from this recession it is this: your channel partners, suppliers, service providers, manufacturing processes and internal systems have never been more dependent on each other. Making these critical internal systems work, from the most basic guided selling to the most complex engineer-to-order processes, all rely now more than ever before on clarity of communication.

It’s Go Time For Team Selling

Manufacturing is getting hit hard in this recession yet there are those manufacturers who still are growing. Despite demand being down, these manufacturers continue to invest in making knowledge of how to work together the critical differentiator – they have been able to move beyond price as their main strategy for competing - and now compete using knowledge.  This dramatically increases their performance.  Making team selling a reality in channels is a foundation of turning knowledge - not price or rebates or cash incentives - the catalyst of growth.

It’s Go Time For Sales Configuration

There’s an urgency to get new products launched ahead of schedule, to introduce new variations of existing products, and create a greater breadth of products to capture additional customers.  Using sales configuration as a strategy to expand and enhance product strategies has the potential to increase sales into entirely new market niches and gain new customers.  Taking the drudgery out of sales configuration processes is also critical for sales representatives to have more face time with the highest value clients.  All of these factors contribute to the fact that it is go time for sales configuration today.

It’s Go Time For Measuring Channel Results

There isn’t a company in existence today not measuring, monitoring and evaluating how to improve their channels’ performance.  Look at how you can use analytics to find the highest-performing channel partners today and create more buzz and excitement of what they have found to work as selling strategies.  Part of this is about posting the key wins by channel partner and creating competition to see which channel partner will be #1.

Bottom line: It’s Go Time For Channel Profitability. All of these factors contribute to any manufacturer being stronger, more integrated, more in tune with its channel partners, resellers, suppliers, and sales reps.  It’s go time to turn away from pricing as a primary competitive strategy and embrace knowledge and insight instead. That’s the surest path through these tough times and it’s go time to think about these tough times as a great opportunity to make these core areas of any channel management, sales configuration, product configuration or channel selling strategy as a basis for making knowledge the differentiator.

One of the breaking news headlines on MSNBC.com today carried a predictably depressing and headline-grabbing note of alarm about the manufacturing industry:

Manufacturing activity dropped more than expected in December, hitting the lowest in 28 years as new orders and employment continue to decline.

The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index fell to 32.4 in December from 36.2 in November. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.

Any reading above 50 signals growth, while a reading below 50 indicates contraction. The index has fallen steadily for the last five months as the economy deteriorated.

The facts in the article aren’t actually a surprise to any company, business or channel that has ties in the manufacturing industry, but the headline grabs attention anyway. Why? Because it serves the imagination as yet another seal broken on the path to economic hell. The panicked atmosphere created in the media has no doubt affected the way people within and outside of the industry look at the business and its future.

Now is the time for a complex manufacturing company to present a calm and assertive tone with its channels, clients and, above all else, itself. A steady resolve is what will bring your company through this recession, not panic and throwing water on fires.

Step back. Understand that, yes, activity and orders are down. But this gives you the opportunity to take advantage of positive change processes in your corporation, setting the stage for market retention and growth even in the midst of the downturn.
Keep your customers through a solid retention strategy. Find out what their unmet needs are and execute a plan to meet those needs and become an essential part of their success. Invest time in tailoring specific retention plans for each of your channels and clients, and then deliver.

Customer’s trust, loyalty, maximizing the customer experience, supply chains that work, quotes that arrive on time and accurate, as well as quoting systems that deliver orders right… these are just some of the weapons you have to fight the recession.

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 use of a product configuration tool to streamline your complex manufacturing process is one of the fastest ways to validate design, configure and price products, and drive downstream processes and systems with the automation that negates the costly risks of incorrect quotes and data. Product configuration itself is the process of defining and managing the product manufacturing process from end to end.

The complexity of a product configuration process will be directly related to the complexity of the products, product lines and sub-products that you need to configure in order to automate. If you have one product or one product line, your configuration will of course be much simpler than one with multiple products across numerous lines; but it is important to remember that in both cases, the right product configuration tool can save you significant costs and increase ROI.

Competing in the Today’s Market:

In the past, your company may have been in competition with businesses that still manually processed their product orders, quotes, validations, order management and document delivery facilities. It was a basically level playing field that was changed only when one company had the best detail-oriented staff with stringent guidelines. This has changed as more and more companies turn to a product configurator process and guided selling process that immediately gives them the speed, agility and level of accuracy that a manual process cannot match.

In order to compete in the market, your company needs to level that playing field by acquiring a product configurator and guided selling process, but if you want to truly get a leg up on the competition, get the right product configurator and guided selling process software for your complex products and services.

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.

Estimation software, bidding software, guided selling software, contract management software… some people talk about these different software packages like are completely separate entities that never interact. In actuality, these system packages should be used together, as a package, with all of the components that meet your company’s needs.

If you are shopping around for a business product configuration and guided selling software package, make sure you request a demonstration from the vendor. Even the most basic software demonstration should be able to answer the vital, but simple questions about coverage of purchase order management, scheduling and CRM, product configuration, contract design, support and training and whether or not the software can work with platforms that you already use.

Instead of focusing on what the software can generally do, focus on what the software cannot do at all. Those will be your weak points. Can you live without those features? Focus on what the product can do only if you also purchase additional pieces or modules. Do you need these functions now? Will you need it five years from now? Look at what the software cannot do for your business now and what it will not be able to do for your business if it continues to grown and change at it’s current pace.

Put simply enough, this type of software package is a business investment on a grand scale. The right guided selling and contract management package along with the very best in CRM will maximize your exposure and relationships with your customer base and develop your reputation among your competitors.

Researching and testing the right guided selling and product configurator software is going to take a lot of thought and a detailed knowledge of what your business needs to take it to the next level.

The Guided Selling process enhances, simplifies and speeds up the sales process of customer specific products and services, all the while minimizing mistakes that are common with a selling process that relies on manual intervention at numerous key access points.

Guided Selling simplifies and automates the deployment and maintenance of company knowledge and information that is required to analyze customer needs, define the solution and generate a proposal. You will not have to have one person that knows the customer and their needs, one person that knows the products and can try to make a match, and one person that has the expertise to create a well written proposal. A guided selling product does all of that, leaving your experts the time they need to surface more customers and better manage the ones they have already.

A functional guided selling solution is one that provides the customer with complete prices, margins, texts, illustrations, lay-outs etc. In addition, the technical specification of the solution (such as bills of materials and routings) is generated for manufacturing and distribution without outside system input.

The proposal specific functions of Guided Selling are product configuration, technical calculations, commercial calculations and document generation.

In essence, Guided Selling allows you to:

Simplify and Automate the translation of customer requirements into deliverable products and services

Configure and price products and drive downstream processes and systems

Produce flexible, configured outputs (products, projects, documents, drawings, etc.) and comprehensive business rules (constraints, dependencies, decision flows, component selections, and formulas

Able to effectively customize engineer-to-order system requirements as well as build-to-order, configure-to-order, and make-to-order.

What is product configuration and is it always a world class endeavor? First, with Cincom Acquire you don’t have to worry about whether your product configuration is world class. Your products will be world class and that’s what really matters.

Product configuration is the process of defining and managing the product manufacturing process. It can as big or as small as your company needs it to be. Whether you have one product that needs configuring or multiple products with multiple product lines, the configuration process and guided selling process for complex manufacturers is a necessary one. Automating the processes that go into your guided selling and product configuration are a necessity in today’s marketplace. Many functions are so routine that you cannot leave them to chance. You will save money and increase ROI if you automate the processes and streamline the steps necessary to complete the product configuration process.

Essential functions of the product configuration process include design validation, pricing, order management, and document delivery. There’s no better tool for these functions than the Cincom Acquire product configurator. And when you use a world class software solution like that, you will have a world class product configuration process with world class products.