When It Comes to Channel Partners, One Size Doesn’t Fit All

Q1 is behind you and your channel partners are behind on their number—just like they were last year. You’ve got time to right the ship, but time is running out as the miss compounds into the summer. You are not alone. Many sales executives take a look at their current channel activity and start asking the tough questions.

  • My market share is eroding, my channel partners’ sales are declining, and the usual “fixes” don’t seem to be helping. What’s changed? (The economy is no longer an excuse.)
  • What is the best way to identify the root cause of the decline and underperformance of my channel partners? (More training and channel investment is getting harder to justify.)
  • How do I transform my partner channel with half the budget and more activity? (This year’s underperformance can’t happen again.)

The key to the successful management of channel partners is ongoing analytics. Not just the sales reporting of whether or not they are selling products, which most of us focus on, but other data points that capture the nuances, which help us understand exactly how each relationship can be maximized.

It may seem counterintuitive, but partner-level data down to the greatest level of detail is the right starting point. By segmenting this data and uncovering correlations of both strong and weak performances, you can uncover a gold mine of information on your channel partners. Experiential instinct is helpful, but data-driven decisions will ensure the right next step and could make the difference of how your year ends. Below is a quick checklist of some of the other analytics to capture and consider when developing a channel partner improvement plan.

Sales Consistency

Look for trends where groups of partners have become less consistent in sales over a period of time. With a quarterly view of a couple of years, you may see a trend where a segment of your partners has reduced purchase frequency. During good, overall channel performance, you may see purchases vary a quarter here and there but when that trend shifts to a higher frequency of missed quarters, you know there is a problem.

It is critical to identify the cause of this change in brand loyalty and sales performance these partners are exhibiting. Was a competitive product recently introduced, and is that competitor offering huge incentives? Did those partners have a bad experience? Is end-user preference driving the change? By segmenting your partners and researching this data, you can uncover the reasons and begin to rectify the issues.

In his blog, Alan Pelz-Sharpe, a VP at Digital Clarity Group, shared about Cisco’s shift of focus regarding its partners and customers. In order to build greater customer adoption of its technology, Cisco moved from financially rewarding its customer to giving the financial incentive directly to the partner.

He wrote, “In theory, the partner knows the full potential of the technology that the customer has bought and so with only limited effort can guide the customer to make the most of their investment. By making this change, Cisco is seeing a significant uptick in customer adoption, and presumably, satisfaction as well. Making the move, as disruptive as it may be, is a win for all involved. Customers are happier, the channel partner is rewarded, and the risk of churn is reduced.”

Product Categories

Here you may see segments of your channel partners moving from one product category to another. During times of poor performance, you may find this new focus leading to negative consequences, such as low average partner revenue. You might ask why partners would engage in something that seems to be counterproductive for them.

Look to the market. This behavior change is most likely due to some trend or change in the market. You need to know what those trends or changes are. Has a competitor come out with a new product? Are the partners clear on your value proposition? As they aggregate various technology components for their full customer-facing solution, they may be shifting where they leverage you in their product mix.

Product Roadmap

You may find a segment of partners who are not keeping pace with your product roadmap. Good performers will most likely follow the roadmap and take full advantage. Poor performers may stick with what they know and where they are comfortable. I saw this firsthand with many partners when product roadmaps went from traditional switching and routing into more advanced technologies.

End-User Attributes

Shifts in end-user focus is another area to seek correlations. Changes in attributes such as vertical, business size, etc. can indicate your partners moving with the market. This may require you to change your supporting strategy to ensure it aligns with their target market. For example, the Internet of Things is opening up manufacturing to many technology partners and requires a different support approach from partners serving the business vertical. As I mentioned earlier, a look into what’s happening in the market can help you understand this shift, as well.

Channel partners are more than just a route to market or sales channel. Understanding the broader landscape and correlations to channel partner behaviors are critical to maximizing channel relationships, which in turn boost revenue and market share. Furthermore, data-driven management of channel partners enables your organization to make decisions based on objective facts and empirical evidence, rather than ad hoc interpretations of dynamics impacting partner performance. The key is to leverage your data and take the right action—perpetuating what links to good performance and shifting away from what is connected to poor performance.

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