Remember, there are some key differences between channel partners and sales staff:

• Channel partners can choose to focus their energy elsewhere, and you can’t control it.
  
• Channel partners can compete with one another for the same business, hurting your margins.
  
• Channel partners’ short term actions may run counter to your long term goals.
  

So what can you do to improve channel performance?

Give Everyone a Chance to Be a Winner:

Provide the tools and programs to give everyone a path to the top.

• Best Practices. Identify best practices for your channel. Base them on your experience of what an “ideal” channel partner looks like. If you have a multi-tier channel programs, develop a separate set of best practices for each tier.
• Measures. Create a set of measures that reinforces the best practices you know will bring success to the channel. These measures should be “leading” measures that influence the ability to close future sales. For instance, adding additional demand generation capability, technical certifications, or adding complementary product lines. Give your channels some targets to aim for, so that over time they adopt your best practices.
• Incentives. Base your incentive program on improving performance relative to the best practices. If you use co-op dollars, set aside a meaningful percentage to making measurable progress towards best practices. Over several quarters, these incentives can improve performance across several areas.
• Space. Too many channel partners in one market can cause frustration. It can also suck up inventory or field support resources, as several partners pursue the same business. Minimize channel conflict so your channel is focused on the competition, not each other.

With good planning and execution, each of your channel partners can be a star, and you can blanket your markets with motivated, capable teams.

For Example:

A recent client had significant channel conflict. Each partner could sell all of the client’s product families, but each partner only had the skills and resources to sell a subset of them. However, this didn’t stop them from going after any business that cropped up. This led to unhappy end customers AND channel management issues:

• Customer returns when solutions didn’t meet expectations
• Customer dissatisfaction with sales knowledge and technical support.
• Excess in-region inventory, leading to quarter-end discounting and stock returns
• Incentive payments that did not result in additional margin, market share or new customers.

To address these issues, we helped the client redefine their channel model and performance measurement system. The steps were:

1. Define their “ideal” channel partner for each product family, and the supporting best practices.
   
2. Define measures that were both reportable from their tracking systems and reflective of business best practices.
   
3. Align the incentive program and the best practices measures.
   

Once this was in place, the channel management team could guide performance improvements in the channel. Developing the measures took several versions and required active participation from sales and marketing. The end result, however, was a sound, field-endorsed system for building channel performance.

Using this approach, the client began systematically adjusting channel partner product certifications and territories to maximize coverage, improve channel capability, and minimize overlap.

Sample Best Practices Measures:

It’s easy to go overboard with measures. Keep it very simple. For example, demand generation is frequently a green field for improvement. Specifics include running campaigns, and employing telemarketing to support field sales. So some measures could look like:

The critical attributes of best practices measures:
• They are specific
• They can be counted
• They are based on proven best practices relevant to the channel partner
• They provide guidance on what “excellent” ought to be

Lead your channel partners to success and you’ll move from bell curve to profit spike.

Al Morgan is the Alliances Practice Manager of the Pacifica Group, a management consultancy specializing in strategies and tactics to drive revenue growth. He can be reached at (408) 394-7122 or al@pacifica-group.com. Copyright © 2005