Channel Management

Marketing to the SMB

by Sridhar Ramanathan

Over the holiday I read four business books but only one stood out as a “must read.” The book is “Drilling for Gold” by John Warrillow, and it’s full of very practical and insightful approaches to winning in the small/medium business (SMB) market.

Here are some US Census Bureau statistics that surprised me. There are 5.9M companies in the US with fewer than 2,500 employees. But 14% have no employees (just owners), 61% have four or fewer employees and 37% have 5-99 employees. Warrillow does a brilliant job in blowing up the “SMB” into actual segments and delineating some very sharp differences between them. Warrillow presents three useful archetypes that help us understand business owners.

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Posted January 9, 2007 | Permalink

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

Channel Sales – Where the Simplicity of a Toaster Rules

by Sridhar Ramanathan

One of my clients sent me a nice article as an example of my mantra on simplicity when it comes to channel sales. Checkout this article “Barracuda Keeps Programs to a Minimum—and Keeps Partners Active.” And for your information, Barracuda sells firewall appliances for spam, spyware, and instant messaging. Several key points to highlight as best practices here (still valid even if reality falls short of what this press release promises):

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Posted July 12, 2006 | Permalink

Alliance Development – Speeding Time-to-Contract

by Sridhar Ramanathan

A client Chief Operating Officer asked me how long it would take to have signed reseller agreements with target companies. My short answer to her was that we saw a range from 3-6 months for companies in the $10M-$100 bracket and more like 9-12 months for companies over $100M in sales. It got me thinking about what factors, besides company size, affect the time it takes to reach a contractual agreement. You could argue that what’s more important than time-to-contract is time-to-revenue. And you’d be right. But it is a fair question worthy of a thoughtful answer. We offer some hypotheses on what affects time to signature and how you might accelerate that so you can get on with the real objective—revenue growth.

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Posted May 30, 2006 | Permalink

Is Your Product "Channel Friendly"?

by Sridhar Ramanathan

A lot has to happen right to drive real revenue with your channel partners. We’ve had the fortune of working with storage companies such as Seagate, Bell Micro ($2B+ storage distributor) and security products companies (Symantec, Cisco, Reactivity, InfoExpress, and others). This experience has really helped us see that it’s not enough to do the usual tactics to drive revenue---marketing distribution funds, partner rep training, web portals loaded with sales tools, lead gen campaigns, advertising, promotions, one-to-one sales rep bonding, etc. All of that is expected. What’s essential is a product suited to the channel. Here are our recommendations.

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Posted May 7, 2006 | Permalink

Bonding with your Channel Partners’ Sales Reps

by Sridhar Ramanathan

Over lunch today one of our clients mused how challenging it has been to been for his sales force to bond with their channel partner sales reps on a one-on-one level. Turns out this is a very common challenge that many of our clients face. So what are some best practices that we’ve seen from vendors that rely heavily on the channel such as VMware (now part of EMC), Cisco, and HP?. Here’s our short list for recommended practices for channel sales reps:

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Posted March 2, 2006 | Permalink

Guy’s Truth -- Partner for Spreadsheet Reasons

by Sridhar Ramanathan

Over a decade at HP deeply instilled within me the importance of metrics. In fact it so drove the culture that people used to say “tell me how you’re measured, and I’ll tell you how you behave.” I took this to heart and built metrics into the marketing function and the P&Ls that I managed. Very likely this was a major reason for my promotions. That practice continues today with even greater emphasis from Mark Hurd, CEO.

Our consulting practice exposes us to many startups and large technology companies. Sadly, not enough companies apply metrics rigorously to business partnerships. Guy Kawasaki does a brilliant job of articulating the importance of basing alliances on fundamental metrics (ones that impact business performance) in the The Art of the Start. Here’s a snippet: “An effective partnership can produce attractive results for a startup. It can speed entry into a new geographic area or market segment, open additional channels of distribution, accelerate new product development, and reduce costs. I call these ‘spreadsheet’ reasons because they change your financial forecast.”

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Posted December 23, 2005 | Permalink

Channel Results Come From Relationship

by Sridhar Ramanathan

We’ve all heard the rule of thumb that it costs a company typically four times as much to win a customer as it does to retain one. Very true. And the same applies to channel partnerships. I have a simple model for the lifecycle of a channel partnership. Notice how the “acquisition” phase -- prospecting for channel partners through to contracting-- is only half the picture in terms of phases.

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Posted December 5, 2005 | Permalink

Momentum is Everything

by Sridhar Ramanathan

We’re leading the charge for the channel strategy and tactics for one of our technology clients. They intend to sell 100% of their security appliance products via the channel within 18 months, up from only 10% today sold indirect. The key is signing up and ramping up new channel partners. I’ve found the best results have come from partnerships where the focus was on closing business even before the contract was officially signed.

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Posted November 22, 2005 | Permalink

Is “Bell Curve” Thinking Flattening Your Channel Performance?

by Al Morgan

We’ve all grown up with the “bell curve” as the standard for measuring performance. During my 14 years at HP, performance evaluations were always “curved”, even though the vast majority of my peers were high performance, talented, and trained individuals. “President’s Club” and similar practices reinforce the belief that rewarding a few will incent the others. Are you using the same approach with your channel? If so, you may not be setting yourself up for success.

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Posted August 27, 2005 | Permalink

Ensuring Liftoff for a New Business Partnership

by Al Morgan

Business alliances are critical to reaching new markets and expanding geographic reach. Every day the business news tells of major alliances forming – and yet we all know that many alliances never reach their full potential. There are some basic reasons some partnerships accelerate to stardom and some never get off the ground – and they are all rooted in people, performance and measures.

Let's assume that a new alliance has all the basics, grounded in good due diligence on both sides:

• There is a good-sized target market.
• The products and services from both sides complement each other well.
• Both sides are eager to work together, and have set aggressive sales goals.

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Posted August 4, 2005 | Permalink