January 29, 2021
Preventing lockdowns muddling the channel partner model: a senior manager’s guide
Here we are again. In the middle of another lockdown. What’s different on this occasion? Well, quite a lot actually. Firms caught up in the spring 2020 stampede towards home working have been there, seen it, done it. That created a mini-UC boom, and it’s petering out. The new lockdown will squeeze companies harder as the economy shrinks, unemployment rises and bottom lines head south. New IT sales opportunities will inevitably get much harder to find, especially among SMEs.
The effect on the channel partner sales model may be profound. In a Catch 22-like paradox, manufacturers might cut channel marketing development funds (MDF) while still relying on the channel to plug revenue shortfalls. What’s the solution? We suggest returning to basics. We’d bet, since digital took off, simple things like measuring MDF return on investment haven’t exactly been front of mind. Nor, we’d guess, have ideas like differential partner rewards for sales success at speed.
Cashflow is king
The opposite strategy, a fool’s errand, would be to pump more MDF into the channel in the hope some will fall on fertile ground. While that might have worked in times of plenty, if the fundamental controls aren’t there some of the ground’s likely to be stony or weed strewn (which may never have been noticed before).
Think about it in terms of cashflow, an essential discipline for any well-run business. In a channel partner sales model (in fact in any bilateral commercial relationship) healthy cashflow is naturally a shared objective. MDF money from the supplier’s pot may draw on its bank balance, but measurable results contribute to the partner’s bottom line. Done right, that creates a self-sustaining virtuous circle. Done wrong? Well, read on.
Six steps you ought to take
To be blunt, the onus is on the supplier. First, don’t flirt with increasing MDF. It could raise questions you might not be properly prepared to answer and get you in trouble with your CFO. Instead, take the following six steps:
- Check the robustness of your channel marketing people’s methods for monitoring return on investment from MDF. If they don’t survive scrutiny, or even don’t exist, insist on immediate action.
- Many suppliers rank their channel partners as platinum, gold or silver (or some similar categorisation). Audit the respective benefits they’re entitled to and whether they’re earning them against stipulated criteria.
- Audit your channel partners’ websites. Do they position you as a first-choice solutions provider? If they don’t, get your people to put things right (or modulate MDF allocation in terms of bang for the buck).
- Audit your channel partners’ marketing collateral. Does it feature case studies that showcase your solutions? Does it include brochures and data sheets that champion your products? Does it ask the right deal-closing questions?
- Link your commitment to continuing MDF investment to bilateral benefits like lead generation, real-time conversion rates, deal-closing speeds, and added deal value from linked product and service sales.
- Finally, have you got up-to-date joint value propositions in place? Competition will be even fiercer in the next normal and reminding customers why they should buy from you and your channel partner is always money well spent.
At first reading, much of the above might seem a bit harsh on the channel partner but remember MDF isn’t charity. The supplier must be sure it’s getting value for money.
Sensible money saving
On the other side of the coin, there are plenty of added value activities the supplier can do that don’t necessarily require cash investment. They include channel partner training and communication as well as refocusing existing marketing activity on lead generation. Also, in terms of conserving cash, although it may be tempting to buy proprietary channel partner management software, much of the above is simple enough for a spreadsheet to suffice.
Returning to cash flow, to sweeten the pill the supplier should look at accelerating its reimbursement processes so channel partners can see a beneficial link between higher performance and speed of reward. In closing, the supplier should also think about weighted channel partner league tables updated in real time to maintain focus.