Working with Channel Partners
How do you determine whether you should use channel partners, or how do you determine you have the right channel partners?
To address the first question, you should evaluate your sales efforts and options. Do you have enough direct sales people to adequately serve your customers or to grow the business to the level you want? If you do not, then you then need to decide what type of channel partner will meet your objectives. Do you just need sales people or manufacturers’ representative? Do you need a national distributor? Do you need smaller local distributors?
You also need to determine the best type of distributor that will add value. To get a competitive edge or to meet specific sales goals, this may mean using a channel that serves a different industry or an adjacent industry. For example, I have seen significant growth for companies that consider using a non-traditional channel for their industry. There is usually less competition for their products and the non-traditional channel partners have the relationships with the end users.
Measuring Channel Members’ Performance
From time-to-time you should evaluate and rate your channel partners. You should decide what is important to measure; and generally it is a combination of items. Some businesses look at overall sales, new sales, sales growth, profitability, training course attended, joint sales calls, inventory carried, payment terms, or sales coverage. Whatever criteria you use should match your business objectives.
Other items to consider when measuring channel members’ performance:
- Sales-per-salesperson ratio
- Number of new customers
- Local tradeshow involvement
- Number of competitive suppliers
- Close rate on quotes – what percentage turn into orders?
The evaluation should be conducted monthly or quarterly. Top performers should be rewarded and under-performers should be encouraged to improve. If these underperformers continue to show up at the bottom of the list quarter after quarter they should be encouraged to move on. You can also reward and discourage through pricing policy.
At least once a year you should meet with channel partners one-on-one. During these meetings you should review:
- Current situation / ratings
- Directional vision / desire objectives
- End customer expectations
- Geographic coverage
- Product limitations & opportunities
- Competitive environment
- Financial limitations
- Timeline for desire change
- Marketing programs and pricing policy
This conversation should also include a detailed evaluation of current sales and together you should build a model that defines change based on mutually accepted objectives. Any gaps in the current situation and the desired position should be explored so that a strategy can be implemented that achieves growth for you and your channel partner. During this review meeting, I would also suggest you review your channel partner agreement, make any necessary changes and then both you and your channel partner sign the document.
Check back next week for part 3 of 3 of our channel marketing solutions series. To learn more about channel marketing services, contact John Moore of Skoda Minotti Strategic Marketing at 440-449-6800.