In many industries and businesses, channel partners are the key links between employees and customers – a weak link if they’re ignored; an important source of strength if they’re engaged
Not every business has distributors or resellers, but every business has collaborators, advisors and others who help it succeed in ways that complement the activities of customers, employees and vendors. The advantages of engaging the key constituents to your success, including partners, are universal. Whatever the role of a partner, they’re an important part of your success and must be engaged like all other audiences and stakeholders.
In many industries and businesses, channel partners are the key links between employees and customers – a weak link if they’re ignored; an important source of strength if they’re engaged. The stakes are high. Channel partner impact can be enormous in terms of sales volume, market share, brand reputation and “share of customer.” Indeed, channel partners are in many cases the sole link to the customer. And channel partners can also impact employee engagement, especially when they fail to deliver. Conversely, channel partner engagement is directly affected by the employees who manage and interact with them.
In short, most businesses succeed only to the degree that symbiotic relationships exist between employees, customers, channel partners and vendors. This is the basis upon which Enterprise Engagement is built.
Employee and customer engagement have become high management priorities over the past several years and rightly so. But while organizations concentrate on making customers and employees happy, they sometimes take partners for granted. It’s important to remember that channel partners are subject to the same drivers and emotions as employees and customers – in fact, they have added distractions. They often work with numerous source manufactures or service providers and naturally will favor some over others. Being low on the priority list for your channel partners is not a winning strategy.
Like customers, the reasons channel partners favor some relationships more highly than others is based on a variety of factors. Certainly financial motivations are key among them. Yet just as the lowest price can’t be the only customer engagement strategy (or the most effective) “spiffs” and margins aren’t the only ingredients to engaged relationships with partners.
Organizations should actively nurture a culture of partner engagement so that, like employees and customers, channel partners become emotionally engaged and are more likely to take an active interest in the organization’s success. You can’t expect a disengaged channel partner to build engagement around your brand. They may meet monthly goals and be able to accurately describe the benefits of your product, but they’ll be far less effective if they’re emotionally detached. And their detachment (versus their enthusiastic engagement) is also bound to have an impact on your employees, just as an unenthusiastic, disengaged employee will have a negative impact on any channel partners they interact with.
Are your channel partners talking up your brand? Do they appear proud of the association with you? Are they making suggestions or identifying innovative ways to extend your brand and boost sales? Are they delivering the brand promise? Their level of engagement and strength of engagement is directly related to the strength of your brand. Think about Apple and Harley Davidson; their customers are fully engaged, but so are employees, suppliers and channel partners. People like being associated with great brands, and that attraction, in turn, creates more brand value – a “virtuous cycle.”
Since your sale is going through an intermediary – an agent, channel partner, distributor, broker or reseller – your “Channel Ecosystem” is the mix of paths to the consumer and how they’re aligned and integrated. Whether the ecosystem is harmonious or in conflict depends a great deal on engagement.
So how do you build a successful channel partner culture and process? The main requirements are Recruitment, Enablement, Management and Reward.
First, know what kind of partners you should be pursuing. This will depend on your position in the market, your brand strength and the reach of your internal sales and marketing capabilities. To what extent does your channel partner have a sales strategy aligned with your own – types of consumers, values, etc.? Do they already have a broad clientele you can leverage, or do you have to help them build it? What kind of services do you expect your partners to provide – are they adding configuration, service, installation, etc.? Are they selling competitive products? If so, is that acceptable? And if it is, is your value to them going to be compelling enough so you get your share of their attention?
When recruiting channel partners, avoid setting yourself up for channel conflict. Consider delineating audience segments and geographical boundaries. If you sell to both the private and public sectors, for example, look for partners with expertise to target segments within those sectors and avoid channel conflict by granting exclusivity (tied to performance) in those areas. Also, clearly delineate where your channel partner picks up and where you leave off in the marketing/sales cycle.
Now that you have the right channel partners on board, you should change your focus to reducing the time it takes them to become productive on your behalf. In the spirit of engagement and building a harmonious Channel Ecosystem, think less about their obligations and more about how you can offer support to get them up and running with minimal effort on their part.
A great deal of this will be accomplished by assigning a strong partner advocate to work with them. You might also provide qualified leads, offer co-marketing programs and product or technology/sales & marketing training. Some organizations provide channel partners an “MDF” (Market Development Fund) which is an allowance provided to partners to offset marketing costs and/or go toward demonstration equipment, customer events, training, etc. It’s extremely important to enable the actual people interfacing with the customer, not necessarily the dealer principal, who values organizations that help train his/her sales team to be more effective.
Part of creating a positive channel partner culture is making sure that you’re easy to do business with. Your complexities may be understood internally, but remember your product is probably one of many your channel partner represents.
For example, do you require multiple log-ins to systems they have to interact with? How fast can they get answers to their questions about products, prices and new features? How many steps are there in the sales process; how much bureaucracy impedes the process? Management is where the relationship succeeds or fails. Again, both parties should have an individual who is committed to the other partner’s success – an advocate.
Organizations with a positive channel partner culture naturally think more about how they can drive the success of the channel partner and less about how they can squeeze the most out of the relationship for themselves. This, in turn, drives engagement and better results for both partners over time. Finally, you should also realize that channel partners have a lifecycle. Your engagement process will be different depending on where your partner is in that cycle – i.e., whether you’re onboarding them, ramping them up, or in long-term maintenance mode.
Margins and commissions are not enough. Companies that implement non-cash reward and recognition programs for their channel partners report annual revenue increases averaging 9.6%, compared to an average of only 3% for all other companies, according to research from Aberdeen Group and the Incentive Research Foundation (IRF) in 2011. In fact, the Aberdeen/IRF study suggests that organizations that implement non-cash reward and recognition programs tend to outperform other organizations across several major business indicators, and not just in terms of revenue growth. According to IRF Chief Research Officer, Rodger Stotz, “Perhaps the greatest lesson to be learned from this study is that professional sales staff tend to respond to measurable rewards and recognition much like other employees, so it's not surprising to find that companies using such programs post better sales results.”
Again, it’s critical to make sure your reward programs target the people who are helping you achieve your goals. Many dealer principals value having their partners provide extra rewards for their sales team. Marketers have to understand the behaviors they want to encourage; these could be different for a distributor as opposed to a reseller, for example. You have to motivate differently to get mindshare. In addition to margins and equity rebates, consider non-cash rewards for meeting and exceeding goals.
Creative rewards can have a significant impact on relationships, but a culture of partner engagement requires more to build true emotional engagement. Tangible rewards must be combined with regular, verbal recognition and acknowledgement of your partners.
The principles of engagement are the same between constituent groups. After all, people are people. Everyone craves recognition and feedback; everyone wants to be treated with respect and no one can resist favoring a person or organization with which it has established an emotional connection.
Organizations should take care and caution in recruiting the right partners. Next, they should onboard those partners proactively and methodically to reduce that partner’s “time to contribution.” A management structure should be in place where a channel partner mindset is encouraged (in which partner success is at least as important as your success). It’s important to address both the dealer principals and their employees, as it’s often the employees who can make the difference.
Finally, a well-designed and professionally run reward and recognition program for partners is essential in shaping and reinforcing desired behaviors and building a strong, emotional connection over time.
Excerpted from the EEA Curriculum whitepaper “Channel Partner Engagement,” co-authored by Conyngham Performance Group and SpearOne. For a complete copy, go to www.enterpriseengagement.org/Channel-Partner-Engagement/