| We've
all grown up with the "bell curve" as the standard for measuring
performance. During my 14 years at HP, performance evaluations were
always "curved", even though the vast majority of my peers
were high performance, talented, and trained individuals. "President's
Club" and similar practices reinforce the belief that rewarding
a few will incent the others. Are you using the same approach with
your channel? If so, you may not be setting yourself up for success.
Remember, there are some key differences between channel partners
and sales staff:
- Channel partners can choose to focus their energy elsewhere,
and you can't control it.
- Channel partners can compete with one another for the same business,
hurting your margins.
- Channel partners' short term actions may run counter to your
long term goals.
So what can you do to improve channel performance?
Give Everyone a Chance to Be a Winner
Provide the tools and programs to give everyone a path to the top.
- Best Practices. Identify best practices for your channel.
Base them on your experience of what an "ideal" channel
partner looks like. If you have a multi-tier channel programs,
develop a separate set of best practices for each tier.
- Measures. Create a set of measures that reinforces the
best practices you know will bring success to the channel. These
measures should be "leading" measures that influence
the ability to close future sales. For instance, adding additional
demand generation capability, technical certifications, or adding
complementary product lines. Give your channels some targets to
aim for, so that over time they adopt your best practices.
- Incentives. Base your incentive program on improving
performance relative to the best practices. If you use co-op dollars,
set aside a meaningful percentage to making measurable progress
towards best practices. Over several quarters, these incentives
can improve performance across several areas.
- Space. Too many channel partners in one market can cause
frustration. It can also suck up inventory or field support resources,
as several partners pursue the same business. Minimize channel
conflict so your channel is focused on the competition, not each
other.
With good planning and execution, each of your channel partners
can be a star, and you can blanket your markets with motivated,
capable teams.
For Example
A recent client had significant channel conflict. Each partner
could sell all of the client's product families, but each partner
only had the skills and resources to sell a subset of them. However,
this didn't stop them from going after any business that cropped
up. This led to unhappy end customers AND channel management issues:
- Customer returns when solutions didn't meet expectations
- Customer dissatisfaction with sales knowledge and technical
support.
- Excess in-region inventory, leading to quarter-end discounting
and stock returns
- Incentive payments that did not result in additional margin,
market share or new customers.
To address these issues, we helped the client redefine their channel
model and performance measurement system. The steps were:
- Define their "ideal" channel partner for each product
family, and the supporting best practices.
- Define measures that were both reportable from their tracking
systems and reflective of business best practices.
- Align the incentive program and the best practices measures.
Once this was in place, the channel management team could guide
performance improvements in the channel. Developing the measures
took several versions and required active participation from sales
and marketing. The end result, however, was a sound, field-endorsed
system for building channel performance.
Using this approach, the client began systematically adjusting
channel partner product certifications and territories to maximize
coverage, improve channel capability, and minimize overlap.
Sample Best Practices Measures
It's easy to go overboard with measures. Keep it very simple. For
example, demand generation is frequently a green field for improvement.
Specifics include running campaigns, and employing telemarketing
to support field sales. So some measures could look like:
| Measurement Category: Demand Generation |
| Measure |
Metric |
Excellent |
Developing |
Immature |
| Telemarketing Coverage |
Customers and prospects per telemarketer |
Less than 200 |
201 to 500 |
Over 500 |
| Customer Events |
Number of demand generation events (seminars, webinars) in
previous six months |
10 or more |
5 to 9 |
Fewer than 5 |
The critical attributes of best practices measures:
- They are specific
- They can be counted
- They are based on proven best practices relevant to the channel
partner
- They provide guidance on what "excellent" ought to
be
Lead your channel partners to success and you'll move from bell
curve to profit spike.
Al Morgan is the Alliances Practice Manager of the Pacifica
Group, a management consultancy specializing in strategies and
tactics to drive revenue growth.
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