Channel Building 101

By Elliot Markowitz  |  Posted 2005-04-30 Email Print this article Print
 
 
 
 
 
 
 

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The Do's and Don'ts aren't complicated, but they're not negotiable, either. Ignore them and your attempt to sell through the channel will flop.

If you're a technology vendor, building a successful reseller or VAR channel could either make or break your organization.

Nearly every successful computer company—from hardware vendors such as IBM and Hewlett-Packard, to software developers, like Microsoft and Oracle—owes a large part of its success to its channel partners. Great products and technology advancements need representation and the knowledge base that solution providers have in order to be part of any company's IT solution.

Embrace the channel early in your company's development cycle and you are far more likely to enjoy success than trying to penetrate the market yourself.

Here are my "Top 5 Dos and Don'ts" when it comes to formulating a successful channel plan. Let's start with the building blocks first.

1: Decide What You Are, and What You Are Not

The first thing you need to do is be honest with yourself before even embarking on a channel recruitment plan.

The first realization you have to make centers around whether your product offering is a straight sell that can be part of an overall technology solution or if it needs customization or integration involvement before being installed.

If your product is more of a straight sell that has a certain price point, you need to focus your efforts on distributors first and resellers second. IT distributors are masters at reaching a large number of resellers in a cost-effective and timely manner.

For distributors, volume, pricing, availability and warranty support are key drivers for their carrying strategies. The financial stability of your organization can also be a determining factor.

But if you are targeting VARs, integrators or resellers directly because your product is part of a bigger solution and can be integrated or customized to a specific customer's needs, then there is a different set of criteria to get them interested in your offering.

VARs and resellers are attracted to products that give them a service opportunity. That is where they make most of their money. Any product that allows a channel partner to add to, customize, service and support will win out over one that doesn't.

2: Align Internal Structure

The key to any channel strategy is the realization that your channel partners are an extension of your company, plain and simple.

Because your customers are resellers, your sales staff has to be dedicated to supporting the channel. That means having sales personnel assigned to handle specific channel partners.

You can break this down via product line, geographic region, partner size, vertical industry or whatever makes sense for a particular structure. The key is these internal sales reps work closely with the different needs of your reseller partners and provide them with any educational, training and product material that will help them represent your offering better. Also, lead generation should be passed through at this channel touch point.

Next page: Telling your sellers how to sell.


3: Build Information Kits

VARs, integrators and resellers need to adequately represent your product.

They need hard material to study and learn in order to be knowledgeable about what they are representing. Whether you provide hard copy or a gated Web site, your channel partners need access to product specs, dimensions and compatibility information.

On a regular basis, such material should be updated with special promotions, marketing strategies, new products and, of course, names and numbers of all company people that they may need to contact inside your organization including internal sales, finance and support.

The second part of the education kit should include material that can be passed through to their end-user customers. Color photos, product specs and compatibility information should be part of this.

4: Communications

Trust is a big issue for resellers and VARs. Regularly communicating with your channel partners is an absolute requirement if you hope to stay top of mind with your agents in the field.

Assigned sales and support reps should regularly check in via phone and even visit their channel partners in person to build trust. Invite them to your company headquarters for briefings on new products or programs. Form a Channel Advisory Council where members regularly get to hear and evaluate your company's plans or programs before you actually roll them out.

Click here to read Elliot's take on whether SAP lives up to its channel ambitions.

This is a vital way to get feedback before wasting time and money on an initiative the channel won't support. Also, communicate as quickly as possible to your channel partners regarding any internal company news, whether it is a reorganization, a technology acquisition or a change in support representative. Your partners do not want to hear about news regarding their suppliers from other sources first.

Encourage true open-ended dialogue among your VAR partners and take their opinion into account, and you will quickly develop a strong channel.

5: Follow Through

The final leg of developing a strong channel strategy is the follow-through. If you say you are going to have dedicated resources to support an individual VAR, then do it. If you say your executives are available for client visits, then make sure they really are. Give them one strong point of contact to answer their questions instead of several. If a shipment or development is late, let them know ahead of time.

These are all common-sense things. Remember, channel partners primarily are business operators trying to pay their mortgage and send their kids to college. Be upfront with them and help them make more money, and they will be a loyal ally.

Now for my list of "Don'ts" when forming a channel program:

1: Avoid Fire Sales

Don't push outdated products because you have to get rid of them. Channel partners are long-term business partners, not quick-sales vehicles. Pushing products that are going to be discontinued, outdated or low support items will result in bad blood.

2. Cooperation, Not Competition

The worst thing you can do to sabotage your relationship with the channel is to build a direct sales force that is targeting the same accounts, or limiting the accounts VARs can service.

Any direct sales effort should be designed to generate leads that ultimately get pushed through your channel partners or for a support mechanism to jointly call on accounts. Teaming up with VARs will earn you more loyalty than going behind their backs.

3. Don't Mislead

Don't make promises you can't keep about product developments, pricing and availability. VARs are on the front lines juggling deployments and customer expectations. They need to know when products are going to be on time or late, and they need to know recall and warranty information immediately. Any changes in any of these can greatly effect how they service their own customers.

4: Don't Rotate Personnel

Channel loyalty is built on trust, and that comes from individuals not businesses. VARs like forming relationships with individuals inside their vendor partners that they can turn to at any time. An individual that consistently solves a VAR's problem has built a strong bond. Constantly changing support personnel or inside or outside sales reps who work with individual channel partners breeds confusion.

5: Don't Lag

If you owe a rebate, pay it. If you owe a credit, apply it. If you owe marketing development funds, supply them. Keep your financial relationship with your channel partners clean, and you will avoid contempt.

These are just a few of the right steps to take and pitfalls you should avoid when building a channel strategy. Keep in mind that all business relationships are different and a one-size-fits-all approach is not a good one. Be flexible and be honest.

In addition to being editorial director of Ziff Davis eSeminars, Elliot Markowitz is also editor at large of Ziff Davis Internet's The Channel Insider.

 
 
 
 
Elliot Markowitz Elliot Markowitz is Editorial Director of Ziff Davis Media eSeminars responsible for the editorial content of all eSeminars. Markowitz is a 14-year publishing veteran and was previously Editor-in-Chief of CRM Magazine and the destinationCRM.com website and related live events. Before CRM Magazine, he was Business Editor at TechTV, responsible for helping to manage the TV station's website as well as conducting live on-air interviews with key industry executives.

Markowitz also spent 11 years with CMP Media's award-winning weekly newspaper Computer Reseller News (CRN), where he held many key editorial positions including News Editor, Business Editor, and Senior Executive Editor. In 1999 he was named Editor of CRN, responsible for the entire editorial operation of the newspaper and in charge of coordinating its redesign and re-launch in June 2000. While at CRN, Markowitz initiated many key alliances including the Industry Hall of Fame event in Las Vegas and the annual CRN/Raymond James Conference. Early in his career Markowitz was a news reporter on Long Island for the Massapequa Post.

He holds a B.A. in journalism from Hofstra University and is a graduate of the Stanford Professional Publishing Course.
 
 
 
 
 
























 
 
 
 
 
 

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