hawkeye Channel: Channel Loyalty Guide


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The number of valuable partners has decreased, creating fierce competition for their loyalty among technology vendors. You may be asking yourself “How can I secure and maintain my partner relationships?” We have the answers.

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hawkeye Channel: Channel Loyalty Guide

  1. 1. 1 A Publication of hawkeye Channel Contents: 2. Introduction – The Arena Has Changed 3. How Do You Measure Loyalty? 4. Top Tips for Creating an Unbeatable Channel Loyalty Program © 2014 hawkeye Channel GAIN A COMPETITIVE ADVANTAGE THROUGH CHANNEL LOYALTY A GUIDE FOR CREATING AN UNBEATABLE CHANNEL LOYALTY PROGRAM
  2. 2. 2 Introduction – The Arena Has Changed Loyalty drivers are under YOUR control when you decide to retrofit your program. During the 1990s, the rise of the Internet gave birth to a slew of fresh businesses and with it, new opportunities for large tech vendors to expand their global channel revenue. This ever-growing pool of candidates eager to increase their own revenue made it easy for vendors to select and maintain quality channel partners. At that time, it was enough as a vendor to simply offer quality products and services to attract valuable partner to your channel. Now, channel ecosystems are changing as a result of dramatic shifts in technology delivery methods (such as cloud computing) and ever-increasing customer engagement through non-IS personnel, altering sales and marketing paradigms. Additionally, there are a diminishing number of channel partners due to the lagging economy, mergers, and failure to adapt to emerging business models. The remaining partners are faced with more options than ever when choosing among the vendors, products, solutions and business models available. For the first time since the 1990s, channel partners are in the driver’s seat when selecting which vendors to do business with. It is becoming increasingly important for you to rise above your competitors to secure and maintain productive partnerships. Unfortunately, channel partner loyalty can be a difficult concept to comprehend and building a successful channel loyalty program often presents many challenges. When channel partners are determining which vendors will earn their loyalty, they first consider the vendors they wish to invest in and how much. Then they decide which of those vendors’ products they will carry and sell. These dynamics make it vital to explore how you will entice potential partners to invest in your company. According to current research from Forrester, vendors who maintain loyal channel partners provide programs that exhibit potency in the following six determinants: strength of brand, breadth of portfolio, business planning and financial support, quality of support and enablement, ease of doing business through accessibility and support and market opportunity. Thankfully, most of these loyalty drivers are under your control when you decide to retrofit your old channel loyalty program.
  3. 3. 3 How Do You Measure Loyalty? It is important for you and your company to determine what aspects of your partnerships best quantify the loyalty your channel partners are devoting to you. Traditionally, share of wallet has been the best proxy for loyalty, as partners who disclose their data offer you the opportunity to factor in wallet share fluctuations in your new loyalty program. However, this data is often hard to get your hands on. Fortunately, there are other measures of loyalty, including: 1. Your Partners’ proactive investment in your company. How much skin do they have in the game? This includes things like training and certification programs. However, investment includes “time” as well, such as their active participation in partner user groups and community forums. You should also consider any recognition or achievements they may have earned. 2. RFM analysis—Recency, Frequency, Monetary Value. How broadly have your partners invested in your product portfolio? What is their level of program participation (e.g. Reward payout or MDF utilization), how frequently do they open new opportunities? What is their close ratio? How often do they participate in elective programs? These should be evaluated not just as a static snapshot, but also how their behavior has trended over time. You know the arena has changed. The competition is fierce among vendors and you are aware that even though there are more opponents, you are all chasing after fewer and fewer quality partnerships. You know that you need to be decisive in which partners to invest in and offer extra value and support to. The global tech market will experience growth of 5-6% in 2014. Forrester’s recent predictions for 2014 channel spend state that due to improving U.S. and global economies, the global tech market will experience growth of 5-6% in 2014, with tech purchases reaching a projected global total of $2,221 billion. They expect 2015 to offer even greater growth for the market and that the U.S. will stand as a major actor in this. The time to recharge your program is now.
  4. 4. 4 Top Tips for Creating An Unbeatable Channel Loyalty Program The following shares the preeminent practices for reevaluating and redesigning your company’s channel loyalty program to offer your partners the best global rewards, as well as secure your status as the partner program of choice. 1. Understand what makes your best partners successful. You want to know the behavior that sets your successful partners apart from the rest. Once you have identified them, you will need a way to quantify those characteristics across your entire partner community – either through qualitative means of self-reporting or through more qualitative measures. Ultimately, you will design all your channel programs to foster the characteristics you want replicate for both new partners and existing partners – and have a quantitative result that monitors your progress. 2. Tailor your partners’ unique business models. Back in the ‘90s, resellers were limited in their classifications: Systems Integrators, VARs, Retailers and Distributors. Now, segmentation is less clear, with the merging of partner types and the addition of Consultants, Hosting and infrastructure Partners, Direct Marketers, MSPs, OEMs, ISVs and more. As a result, the one-size-fits-all program no longer serves the needs of your broader partner community. You must first design (or redesign) your channel program with consideration to the business models each of your channel partners follow. Profile your partners and understand their customer base, products and services, revenue sources, and any elements of their financing for insight into how they model their company, and how you can best mold your loyalty program to fit their specific needs. 3. Reward appropriate behaviors across the entire sales cycle. To motivate the right behaviors and promote mutual success, the current trend is to shift your incentives mix to reward pre-sales behaviors, not just post-sales rewards. Shifting investment to pre-sales rewards will help reduce the time to productivity for new partners, as well as encourage your existing partners to be more effective in sales and marketing. The latter is especially significant in today’s market, as buyers shift away from IS and more choices than ever emerge for technology consumers.
  5. 5. 5 Progressive channel marketers are designing their incentive programs using one or more of the following criteria:  Extend your certification and accreditation programs to sales and marketing – not just technical product knowledge. Then provide individual rewards for attainment and use attainment as qualifiers for advanced programs.  Allow individuals to earn rewards for accepting leads and opening new opportunities – not just closing deals.  As the number of cloud solutions increase, you must move from post sales rewards on the transaction, to a commission structure that rewards partners according to the Life time Value (LTV) of the deal. In the instances of recurring revenue, pay incentives based on LTV instead of unit price.  Motivate all of the stakeholders in your partner ecosystem by providing a mix of rewards on the individual, team and company levels.  Combine rebate and rewards programs into a single, points-based program to ensure all partners receive benefits through earning and redemption opportunities that support their business models.  Rewards should be paid into a wallet, where your partners can have an option of reinvesting some of the funds back into your business for mutual benefit via additional MDF. Often, this is awarded to a partner in a higher ratio than monetary rewards (e.g: 2:1 ratio – if you earn $1 in rewards, you can take it as $2 in MDF).  Although you should not reward existing or recurring business, you should reward revenue growth (not attainment) observed through the achievement of quotas. 4. Make it easy, make it engaging! By all measures, Ease of Doing Business is one of the most cited attributes channel partners seek when selecting products and brands to carry. Most partners don’t have a deep roster of administrative personnel to manage programs. Nor do they spend their day perusing your extranet (or those of the other lines the carry) to memorize the administrative requirements of your program. If your program requires too much administration, it will discourage partners from participating. Decrease the amount of work your partners need to dedicate to the partnership, to increase your chances of fostering loyalty from those partners.
  6. 6. 6 When dealing with potential partners, guarantee ease by:  Developing a simple registration or activation process  Presenting clear rules of qualification and engagement  Providing consistent validation and claim procedures  Delivering a consumer-like user experience  Preparing a unified login with simplified password policies  Aligning Terms & Conditions with all local, legal and tax requirements 5. Engage every level of rewards participation with a mix of communications. What’s in it for me? (WIIFM): Position the program to revolve around what’s in it for your partners. Why should they participate and recommend it? How do they get rewarded? Why will their customers like them better? “Why buy/why sell” messaging is often missing or taken for granted in partner communications. Too much communication to partners focuses on the benefits of your products and services – “speeds and feeds” messaging. Your partners are not extensions of your sales force, they are independent business and want to be treated as such. Therefore, they want to know: “how are you going to help me grow my business?” Target messaging to various audiences in the partner community that are critical the program’s success. The WIIFM message will be slightly different for admins, owners, sales reps and technical people – and your value proposition should reflect that. Create personas for each business role within your partner organizations. These personas should profile their role and identify their success criteria, as well as define challenges and pain points they routinely encounter. Further, clearly position how your products AND programs help make their jobs easier and overcome the challenges they encounter. Refer to this before each partner communication and program launch to ensure your message resonates with their unique needs. Break through the clutter – your partners are inundated with communications, so consider the following suggestions to make your messages stand out:  Engage in an active social media presence that displays weekly top performers and video interviews of collaboration and teamwork wins to increase individual commitment.
  7. 7. 7  Produce video messages that align to the sales lifecycle and send them to partners and internal stakeholders to motivate them and encourage action.  Educate, inform and encourage competition among your partners with frequent online posting on a blog.  Record webcasts that highlight the best techniques for your partners to reach their goals and showcase early indicators of your program’s success. 6. Manage your programs on a common global infrastructure. Channel programs today can be managed on a common infrastructure – without the need for a separate system for each program in each region. No longer are drawbacks like multiple data silos (which hinder reporting and analytics) and system complexity (a natural by-product of trying to tie several disparate systems together) an issue. Conversely, a single global platform yields many benefits, including:  Lower management costs and system complexity. What you lose in system complexity, you will gain in improving Ease of Doing Business for your partners. You also have the added benefit of redirecting those administrative resources to more strategic engagements.  Increased visibility into partner and program performance because your data is no longer distributed across several silos. You will accelerate your results and be better equipped to recognize and reward the achievements, actions and activities that accelerate the desired results. About hawkeye Channel hawkeye Channel provides software and services that drive channel revenue growth for enterprise marketers who sell through indirect channels. With a unique blend of robust channel programs and expertise, hawkeye Channel helps clients easily integrate with their CRM platform, accurately measure channel performance and optimize channel incentives on a global scale. www.hawkeyechannel.com