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Channel Strategy & Management

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Addresses issues to consider when developing an effective channel strategy & program. Lecture delivered by Craig Justice at University of San Diego to graduate students in the MSEL (Masters of …

Addresses issues to consider when developing an effective channel strategy & program. Lecture delivered by Craig Justice at University of San Diego to graduate students in the MSEL (Masters of Science in Executive Leadership) program, March 12, 2011.

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  • 1. Effective Channel Management
    Craig Justice, Alliance International
    Lecture to Master of Science in Executive Leadership University of San Diego,
    March 12, 2010
  • 2. Channel experience from a number of industries.
  • 3. Definitions
    “Channel Sales” is the use of well-defined distributors, resellers, VARs, websites and other sales outlets to transact sales of your branded product/service
    “Business Development” involves creating partnerships with companies to take advantage of their channels and customer base and includes OEM, Private Label, M&A
    A “Reseller” , “Dealer”, and “VAR” sell direct to end-users. A “Distributor” sells to resellers and does not sell direct to end-users.
  • 4. Why Use Channels?
    Reach important buyers or segments not adequately served online or by your sales reps
    Extend sales reach & accelerate growth
    Make it convenient (remove obstacles) for customers to buy
    Penetrate international markets
  • 5. Channel Fundamentals 101
    It’s all about the incentives/motivation you provide ….
  • 6. Channel Fundamentals 101
    With the exception of VARs….
    distributors & resellers don’t sell your product.
    (Your marketing & your sales team do that.)
  • 7. Distributor & Reseller Landscape
    Courtesy of :
    ChannelSources
  • 8.
  • 9. Multi-Channel Model
  • 10. Considerations Before Starting
    Executive management: growth objectives, margin, price control, resource allocation priorities, support, credit policies, cash flow
    Operations: channel manager, sales support, marketing support, resource allocation, budget, compensation policy inside sales, lead allocation
    What is your value proposition?
    For channel partner? For channel sales rep?
    Ideal profile of your channel partner?
    Ideal program for your offering? Talk to potential partners before finalizing program.
    Your Goals, Objectives & Plan
  • 11. Comprehensive Program Pieces
    Pricing Considerations:
    Does your pricing reward partners who promote /recommend/demo your product? Order Makers vs. Order Takers
    “Deal Registration” Special Pricing to encourage hunting
    Retail price maintenance
    MAP (Minimum Advertised Price)
    MSP (Minimum Sales Price)
    Channel Sales Team
    In-house
    Independent sales reps in field (5% - 10% commission)
    Recruitment Strategy
    Develop profile, trade shows, telesales, in person calls, reseller sales sheets & resources (price lists, contract), eval program
    Contract: key business issues: territory, exclusivity, price level, return policies, stock rotation, payment terms
  • 12. You’ve Recruited Partners, What Next?
    In House Resources
    Who will provide training, answer questions, provide sales assistance, manage account?
    Out of sight, out of mind. 90% of life is showing up.
    Training: KISS
    Recorded webinars, videos, screen cast with incentive
    Training sheets, tests to become certified
    Live training over web, in person
    Develop Territory Sales & Marketing Plan With VAR partners with goals & planned activities. Manage it!
  • 13. Channel Marketing
    Marketing “kit” for partners containing resources (on line)
    Special demo pricing. Friends & family special. If reseller rep uses your product they will recommend
    Provide leads to channel partners or sell direct?
    Market development fund (2 – 5% of sales). Will you require partner to co-invest in activity? Will you proactively work with partners to generate leads?
    Pay to Play. How effective?
    Pay to be in their print catalog
    Pay to be on their website
    Pay to participate in lunch & learn
    Pay to participate in their vendor summit
    Pay to participate in their show case to end users
    Pay to do direct mailing to their list
    Pay to participate in their trade shows
    Pay to support a funded head
  • 14. SPIFFs & Rebates
    SPIFFs can be useful to stand out from crowd where there is competition
    But….
    Rebate program to reward VAR owners
    Rebate program (through distribution) for specific resellers as part of a marketing program
  • 15. International Channels
    Planning, prioritizing. Where is low hanging fruit?
    Which are largest, strategic markets?
    Regulatory requirements? Electrical, safety, power?
    Piracy, patent infringement considerations
    Localization
    Exclusivity
    Pricing: should you price higher, lower, the same?
  • 16. What They Don’t Teach You in School
    Channel sales reps respond to enthusiasm & opportunity to make money.
    Channel reps appreciate when you make money for them (give them leads, support, joint sales calls)
    Channel reps/partners appreciate honesty. Screw them, loose them.
    Taking an account direct
    Mislead / Lie
  • 17. Case Studies: Risks of Foregoing Channel
    Interactive Whiteboard Industry
    U.S. company cuts VAR channel program to sell direct and stalls. UK -based IAWB company comes to U.S. sets up channels and becomes strong player.
    Software Industry
    Internet sales focused company ignores channel & remains small. Other companies starting at similar size built channels & grew 5 X larger.
  • 18. Tips for Channel Managers
    It’s not about: “It’s the end of the month and you need to order.” It is about making money for valued partners
    Develop good relationship with accounting dept
    Avoid end of month, end of quarter “specials”
    Be wary of large, stocking order “deals” – low priced product may show up where you don’t expect
    Avoid exclusive contracts. If you must, draft & monitor goals. Require opening stocking order to demonstrate commitment
    If you’re trying to build a VAR channel, be careful about over distributing
    Be responsive. Be straight-forward.