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October 5, 2006
Is Your Product "Channel-Friendly?" -- Part II
by Sridhar Ramanathan
Last night I had the privilege of addressing about 75 product managers at the Silicon Valley Product Management Association. My talk was entitled Is Your Product "Channel-Friendly?” Click here to Download slide deck
SVPMA board members told me that the level of audience interest and interactivity was unusually high. Definitely a timely topic. Half of my talk was about understanding the “channel.” The other half was a call to action for product managers to improve the likelihood that their product would produce brisk channel sales. I gave them the following litmus test to guide their actions. These tests come from having studied some of the most successful product companies that sell largely through the channel.
- Do you have a compelling, one sentence value proposition?
- Do you offer attractive margins for the channel (e.g. > 30%)?
- Can a channel sales rep prepare a quote in less than 5 minutes?
- Does it take less than 90-days to close a purchase order?
- Do you have a killer demo that channel reps can deliver in less than 15 minutes?
- For each dollar of your product sales, do you leverage $2-3 of other channel product sales?
- Do you create a reason for reps to call again within 6 months of initial purchase?
- Do you have a goal to drive down support cases?
At the end of the talk, I asked for a show of hands for each question. Surprisingly, only one third to half the audience could answer yes to each question, and no one could say yes to all eight. The point here was not to be right on all eight points but rather to drive changes in the product organization that will very positively impact channel sales. I welcome your reactions.
Posted October 5, 2006 | Permalink
Posted to Channel Management
, Marketing Management
Sridhar,
I liked the Channel Business Driver slide. I've found that it's hard to get people who have never worked in/with channels to walk in a partner's shoes. This could get them thinking in that direction. One thing that I found interesting is that all of the channels have cost/operational excellence/low margin business models except for the SI's. Arguably some VAR's fall into the SI-type category - those with application and/or vertical domain expertise. I'm thinking that you could evolve this into a quadrant, with cost vs. value on one axis and maybe product/brand commitment on the other. Some channels are extremely brand neutral while others build their entire business around being a "Microsoft" VAR for example. I don't think it negates any of your other points but when getting to other channel issues, the business model question has some additional validity.
I like what you did around the 'tests' at the bottom of the page. Gets the audience mentally interacting with the material and potentially sets up a dissonance with their current practice which could be the first step to change.
Regarding Value Propositions - I've found these to be challenging to work with. You are absolutely right in your comments. And for this kind of a talk, your comments are sufficient. However, having a great value proposition to the end customer is only half of the equation. Back to your business model slide - what is the value proposition to the channel partner? It's partially the margin/incentives but there is also the question of push vs. pull. If a channel is very brand neutral (what we used to call "box pushers"), then the vendor has to do all the market creation and the channel provides distribution services. They follow the path of least resistance. Other channels will help you educate and build demand.
Regarding usability - for technology, this is becoming a huge issue. So many companies don't link the need for progressively simplifying products to gain broader adoption. You use channels to scale - which implies that the stage of adoption you are in is at least moderately advanced (channels don't do well with extremely innovative products that are very raw). Yet, companies often do not change the product to prepare it for this scaling. You need to remove the rough edges so that it can roll through the market smoothly.
Thanks again for the information. I shared it with some people here.
--Kathleen
Posted by: Kathleen Schaub | December 21, 2006 8:11 PM