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Tuning your Channel Program for more Profit


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In this paper, we’ll take an in-depth look at how you can optimize your channel offering and enjoy more accuracy in predicting program revenue.

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Tuning your Channel Program for more Profit

  1. 1. Channel TUNING YOUR Program for More Profit Analytics clarify the channel options with more payback A Crimson Brief CONTENTS Predicting Payoff of Channels Programs 2 1 Evaluation Factors 2 2 Using Analytics 3 3 What Crimson Has Learned 4 Conclusion 5 About Crimson Consulting 5
  2. 2. C R I M S O N C O N S U LT I N G G R O U P Predicting Payo of Channel Programs How do you measure the success of stimulus spending? It’s an obvious question for the Government, and it’s one that channel marketing professionals should also pose when it comes to money spent for demand generation. The ugly truth is this – money you spend to boost channel sales often disappears into a black hole. Sadly, your campaign can spend millions of dollars and tie up scarce resources with no viable return. Unfortunately, instead of boosting sales, it reaps just a meager blip. If managed e ectively, these programs should bring storiesTUNING CHANNEL of success. Instead, channel partners congregate to heap undesirable blame onPROGRAMS you for hampering their success with “sub-par” support. To make matters worse,• Establish Elements your CFO blames you for nuking the budget.• Weight value of Before you spend a dime, you need to counter these risks with better modeling each element of channel program options. In this paper, we’ll take an in-depth look at how• Use conjoint or logit you can optimize your channel o ering and enjoy more accuracy in predicting 1 modeling for analysis program revenue. The goal is to know, in advance, how a change in discounts, MDF funds, contracts or other elements will impact competitive challenges and return on investment. Evaluation Factors Identifying and weighting factors for your channel program A channel program analysis will be tailored to each specific program. One cannot assume that program elements are interchangeable between business sectors, companies, or even the individual brands within a single company. Quite often the lessons learned in one program are confidentlyBENEFITS applied to another and fail miserably. Your channel program will blend aFOR MARKETING unique combination of brand, technology, business plans and other channel• Lead Profiling program elements.• Lead Qualification• Integrating Leads The evaluation will use the same analytical tools you employ with many for Channel Partners other areas of marketing. An analytical process such as conjoint or logitFOR SALES modeling demands precision in defining program categories and prioritizing• Leads will be each element. One requirement is to objectively quantify elements in order to qualified, receptive, avoid emotional judgments in the evaluation. Avoid skewing the analysis with ready to buy negative reactions by channel partners who tend to voice frustrations on what cost them the last sale. The table below provides examples of elements you may identify in a channel program. The examples show ways to group the elements and weightings for analytical modeling. Specific elements in your evaluation will vary based on requirements of the particular channel program. 1 2 3 4 5 © Crimson Consulting Group. All rights reserved.
  3. 3. C R I M S O N C O N S U LT I N G G R O U PPROGRAM CATEGORIES HIGH-PRIORITY PROGRAM FEATURES LOW-PRIORITY PROGRAM FEATURES Marketing • Marketing tools • Marketing training Resources • Marketing planning • Partner conferences • Marketing Development Funds (MDFs) Sales • Field sales engagement/ • Sales tools Resources lead sharing • Sales planning • Sales coverage/rules • Sales training of engagement • Relationship management Technical • Technical tools • Technical training Resources • Technical planning • Professional/technical • Technical support certi cations • Technology/product integration and alignment • Product certi cation Infrastructure • Partner portal, directories, partner networks, partner relationship management Rewards and • In-house use products, proof-of- Incentives concept funding, OEM and resale discounts/rebates, in uence/ referral fees, non nancial recognition (non-cash awards)2 Source: Crimson Consulting Group, IDG Using Analytics Statistical program modeling “unpacks” economic impact of tradeo sA key challenge in developing a successful channel program is to anticipatethe economic impact of implementing one element versus another. Bear inmind, there’s never enough money to test every element. Determining theEvaluation factors such as those described above will become the inputvariables for conjoint or logit modeling of your channel program. Use ofa rigorous statistical analysis will provide you with data to make the hardchoices. It will provide evidence to share with channel partners whochallenge your choices.1 2 3 4 5 © Crimson Consulting Group. All rights reserved.
  4. 4. C R I M S O N C O N S U LT I N G G R O U P By so doing, it will help build confidence with your CFO as you deal with the usual internal budget wrangling. Specific benefits of program modeling include:C O N J O I N T A N A LY S I S • Identifying innovative program elements • Determining the value of each program elementMethodologies • Implementing smarter cuts in program costs • Deploying the best program elements to maximize channel revenueSTIMULUS CONSTRUCTION • Providing the evidence you need to sell changes to your organizationTwo Factor at a Time; • Strengthening your channel relationshipsFull Fractional design;Fractional Factorial Design; The ability to value nuances is a big benefit of conjoint or logit modeling.Self Explicated; Adaptive When managing a multi-million dollar channel program budget, the costConjoint Analysis; of changes is often understood—but the cost of revenue lost is overlooked.Hierarchical Bayes Estimation It’s in your best interest to incur a minor cost for the research; this is a dropDATA COLLECTION in the bucket compared to the high cost of implementing the wrong programTwo Factor at a Time Tradeoff elements. Analytical modeling provides you with a cost-effective way toAnalysis; Full Pro le Concept make better decisions, reduce the price of your channel programs, andEvaluation; Feature and Level maximize revenue.Evaluation; CombinatorialApproaches Modeling also enables economic simulations that may not be obvious to your team or they may not appear in qualitative surveys. Results can revealMODEL TYPE cost saving measures by eliminating elements that are expensive or generateCompensatory and a miniscule return. You will be able to justify program designs and changesNon-Compensatory Models; by using the objective analysis shown in the Revenue Forecast and Program 3Part Worth Function; Vector Costs modeling. Modeling will help you maximize return on the programModel; Mixed Model; Ideal investment based on your strategic alternatives. As an added plus, it canPoint Model also simulate competitive responses.MEASUREMENT SCALERating Scale; PairedComparisons; ConstantSum; Rank Order What Crimson Has LearnedESTIMATION PROCEDUREMetric and Non-MetricRegression; MONANOVA; Lessons from channel program modeling by our clientsPREFMAP; LINMAP;Non-Metric Tradeoff; Crimson Consulting has effectively helped its clients to evaluate channel offersMultiple Regression; and optimize programs with sophisticated research design, implementationLOGIT; PROBIT; Hybrid; of program modeling, and analysis of results. Each analysis recommendsTOBIT; Discrete Choice Self which programs elements meet the business objectives, and which ones areExplicated Additive Models counter productive. While each analysis is different, we have discovered several themes that are common to many hi-tech marketing campaigns:SIMULATION ANALYSISMaximum Utility; AverageUtility (Bradley-Terry-Luce); • The decision to purchase based solely on brand may overwhelmLOGIT; PROBIT all other elements • Increasing discounts seldom matters to the channelSource: Scott Smith— • Returns processing time is inordinately importantThe Concept of Conjoint Analysis • Technical support is often cited in qualitative research, but seldom affects choice • Contract length can affect choice • Larger channel players often need custom programs 1 2 3 4 5 © Crimson Consulting Group. All rights reserved.
  5. 5. C R I M S O N C O N S U LT I N G G R O U P In one case, a major distributor found its industry amidst a shift from one type of channel program to another. It was imperative to learn if there would be enough potential sales growth to o set the market hit. In this situation, bankruptcy was a distinct possibility. Modeling with conjoint and logit analysis revealed a need to change virtually the entire channel program, and illuminated which new elements would provide the best returns. After implementing the new channel program, the client increased its annualized revenue by 60 percent in the first quarter. As a result, it went on to become one of the top three distributors in its market. Conclusion Your company may be looking to improve the e ectiveness of its channel programs. In today’s environment, it’s crucial to create correct programs, messages, value propositions, and go-to-market strategies. By so doing, these will help you to better engage your channel and partners, and enable them to sell your products. By using the same analytical modeling tools you apply to other areas of marketing, you can take control of these challenges and apply them to channel programs. With modeling you can optimize your channel programs with confidence— and know that you are deploying the correct elements that will reap the biggest benefits for lead generation and revenue growth. Crimson Consulting provides services to help you in this e ort. Crimson Consulting Group’s Channels & Partner Service is designed to help F100 companies improve channel and partner program results. Crimson is an end-to-end marketing consultancy. We specialize in Channels and Partners; Products and Markets; Interactive; and Lead Management. Our clients include Adobe, Cisco, eBay, Hitachi, HP, IBM, Intel, Microsoft, Oracle, SAP, Seagate, Symantec, and Verizon. Email Dylan Charles, Partner leading the Channels & Partners Service at Crimson Consulting Group: dcharles@crimson-consulting.comengage or visit our website at H E A D Q U A RT E R S Crimson Consulting Group, Inc. 4970 El Camino Real Los Altos, CA 94022 Phone: 650.960.3600 Fax: 650.960.3737 1 2 3 4 5 © Crimson Consulting Group. All rights reserved.