Magazine Article | October 1, 2019

4 Critical Areas Where Your Channel Program Can Break Down

Source: Software Executive magazine

By Paul DeMore

If you’re struggling with effectiveness in your channel, the root of the problem can often be pointed to customer segmentation, customer engagement, customer messaging, and/or partner experience.

Paul DeMore is a senior partner at Force Management, specializing in sales transformations and programs that improve company alignment and sales performance. He spent 12 years in channel leadership at Parametric Technology Corporation. DeMore and the team at Force Management talked to Software Executive magazine about the four critical areas where channel programs tend to struggle and how organizations can avoid the typical pitfalls.

Software Executive magazine: Running a channel organization is a complex task; how did you narrow it down to just four areas of focus?

Paul DeMore: If a sales organization is having challenges, the root cause is often a lack of consistency and focus on the customer and/or the internal processes that support that customer engagement.

You’re not solving the right problems they have, not bringing them the outcomes they desire, or aren’t articulating what you can do in a way that has meaning to them. If you’re struggling with effectiveness in your channel organizations, the root of the problem can often be pointed to customer segmentation, customer engagement, customer messaging, or partner experience.

Regardless of how your buyers come into your organization, they need to be the critical focus of your selling organization. That’s the focus of everything we do. When you’re enabling your channel, the focus shouldn’t be any different. However, with the partner environment, you have to make sure you’re providing a great partner experience as well, so they are focused on helping your buyers achieve their positive business outcomes.

"For the partners, if they don’t have a clear definition of where they can go after buyers, they will be reluctant to spend time, energy, and effort to grow their business.”

SoftEx: Let’s start with the first area, customer segmentation. What should companies strive for with this category?

DeMore: Segmentation is directly related to how you’re going to drive growth and revenue for the company. When you’re looking at direct and indirect buyer channels, it is the area that can lead to a lot of conflict. That’s why you want to have an outlined plan for segmentation. Who gets what leads, and how do they get them? For example, if a lead comes in from your website, where does that lead go? If you don’t define who gets what, it can get ugly fast.

For the partners, if they don’t have a clear definition of where they can go after buyers, they will be reluctant to spend time, energy, and effort to grow their business. The segmentation could be based on industry, vertical, whatever. It just needs to be defined, so there are no questions or concerns.

SoftEx: There is that tendency too in a lot of companies, if given the choice, to funnel leads to direct.

DeMore: Yes, a lot of times there’s the mentality that the direct organization is better suited to support customers for the long term. There’s also the mentality that there is more of an investment in the reps that are part of the direct organization. The company’s paying for their salary, their travel, their expenses, and their benefits, so they want to make sure those reps are successful. I’ve seen it firsthand. It takes years to build the partnership. It takes years to build trust with the company, but one deal can be a real setback to the partner program.

SoftEx: What about a company that has an established program and then realizes it needs some ground rules?

DeMore: You can make changes over time. People expect changes. Clearly communicating those changes is extremely important. Make sure there are clear rules of engagement, something that a partner could reference to get clarity on any changes.

You don’t want to change it every 30 days, but channel partners should expect a reasonable time frame for change. When I was at PTC, for example, if there was an account that was designated channel and their direct sales organization wanted it or vice versa, you could agree to do the changes once a year, at a certain time, and then you stick with it.

Changing the rules frequently is not in their benefit. At the same time though, as you get more products, as you try to push your direct sellers upstream, or as you get your direct sellers to want to sell more of a certain solution or product set, you could open up new lines for channels. Change may also benefit the partners over time.

SoftEx: Let’s talk about customer engagement. First, define what you mean by “customer engagement” as it relates to the channel.

DeMore: If you think about the sales process, there are a lot of different people who need to engage on both the buyer and seller side throughout the engagement. It can be complicated, particularly when you are in a partner relationship. Your partner sellers need to understand what their roles and responsibilities are throughout that customer engagement.

SoftEx: And for the partner, particularly, they need to preserve profitability throughout that process. Why is that such an important point for a channel partner?

DeMore: An OEM direct seller gets paid on the whole number rather than on the profitability of a deal. Whereas a channel partner cares about margin. They’re given a set margin, and, if they’re going to give discounts, that margin eats into their profitability.

It’s the same thing with a sales cycle. Partners don’t like drawn-out sales cycles. Each time you’re having meetings, each time you have to travel, each time you have to validate another part of the solution, it cuts into your profitability of the deal. That’s why a defined customer engagement process is essential. Partners understand the tools and the resources available to them and are able to streamline the sales process to make it go faster.

SoftEx: Let’s shift to customer messaging. This area is all about the buyer message, right?

DeMore: Right. If I’m a buyer, what is the message? What am I receiving from the company? If I’m interested in buying something from a large OEM or a large software company and I go to their website, what is their messaging to me? Is it based on solutions to my biggest business challenges? There needs to be alignment on that buyer message, no matter who they’re buying from.

Like I said earlier, companies tend to favor enabling their internal sales organization. There’s a budget to enable direct sellers within a company. But, in a lot of companies, a majority of their revenue could come from partners. Therefore, if you’re not enabling your partners on how to add the value-based conversation in your messaging, then you’re missing an incredible opportunity, and your channel program isn’t going to be successful.

SoftEx: It’s one thing to have the messaging. What’s the best delivery mechanism for this messaging? How do you ingrain this in your partners?

DeMore: It’s the three-foot conversation that you have with the buyer. It’s ensuring that all the tools, whether it’s the website, the webinars, the PowerPoint presentation, the proposal presentation, everything, is consistent and focused on the buyer.

SoftEx: A three-foot conversation?

DeMore: It comes down to the moment of truth when your direct sellers or your channel partners are having the three-foot conversation with the buyer, sitting in a meeting, having a face-to-face conversation or a conference call. How do you ensure that what they’re presenting to their buyer is a relevant solution that articulates the value in differentiation that you bring to the market?

"You need a champion for the partner organization, someone that has power and influence in the organization and has a vested interest, whether it's a financial interest or otherwise, in a successful partner program."

How are you enabling that conversation? You need to ensure your partners are talking about the business problems that you solve, how your company solves that differently from the competition, and are providing the buyer with relevant proof points that shows that you’ve done this before.

Within direct sales organizations, sellers tend to find a talk track that works with them, and then that’s what they use repeatedly. You do want to make sure that, when a partner gets engaged with the client, that the most relevant information is shared and they’re speaking the same language.

SoftEx: The fourth area you bring up is partner experience — what do you mean by that?

DeMore: Part of having a formalized, successful program is ensuring your partners understand that they are a true partner and that by being a channel partner, they will grow in the long term. As the OEM, you need to define what that model looks like.

Then, from a partner point of view, what is their experience working with you as an OEM, as the main company? How do you ensure that the decisions you make result in a positive experience so they continue to grow their business around you to be more successful?

SoftEx: Where do you see this breaking down the most?

DeMore: It breaks down with change. For example, you may bring in a new chief sales officer who might have a different point of view on using channel partners, or there’s a change in the market segmentation, whether it’s beneficial or not for the partners. It also breaks down with not having clarity around these areas I’ve mentioned. Partners need consistency, and they also need an opportunity to grow. If you’re putting obstacles in their way, it impacts that partner experience, which leads to less mindshare and eventually less revenue.

SoftEx: So how do you identify those key areas that impact the partner experience?

DeMore: You need an internal advocate. You need a champion for the partner organization, someone who has power and influence in the organization and has a vested interest, whether it’s a financial interest or otherwise, in a successful partner program. You need somebody who is not afraid to step up to different departments and make sure that the partners are being heard.

Another area to consider is a partner advisory council. But, a lot of times it’s not enough. Having partners come in and provide relevant feedback is one thing. An advisory council is effective when you leave the meeting and come back three months, six months, nine months later, showing that you actively made progress on some of those issues. It’s a partnership. It shouldn’t be a one-way street.

SoftEx: Where do companies go from “I know we need to get these four areas right” in theory to getting it wrong in practice?

DeMore: It goes back to the support model. I’ve seen channel sales organizations where they’re good at doing business planning with partners. They’re good at doing enablement, marketing, recruiting new partners, but they never get in front of a customer.

If you are not in the field or have experience with customers giving you real feedback, it’s hard to truly understand where the frustrations are. A lot of channel sales managers or channel leadership are in an ivory tower. They’re making decisions, which could be good and relevant. But, a lot of times, they don’t have a way to truly understand what the customer is saying in the field and how they adapt to that.

"Ask yourself, ‘How are we truly enabling our partners to have a value based conversation in the field and reduce the overall length of a sales process, which would ultimately drive product or profitability?'"

SoftEx: What would be the bottom line to driving this effectiveness?

DeMore: If you are leading a channel organization, I would encourage you to ask yourself, “How are we truly enabling our partners to have a value-based conversation in the field and reduce the overall length of a sales process, which would ultimately drive product or profitability?” The more productive your sales organization is with what you have, the more revenue you’ll get out of that channel.

PAUL DEMORE is a senior partner at Force Management, which helps businesses drive rapid revenue growth by focusing on organizational alignment and critical areas of sales effectiveness. Its highly successful Command Series helps clients balance an external focus on the customer with an internal focus on sales management best practices.