The document discusses effective channel management strategies and definitions, emphasizing the distinctions between channel sales, business development, and the roles of resellers and distributors. It highlights the importance of understanding partner incentives, appropriate pricing models, recruitment strategies, and ongoing support for channel partners to drive sales growth. Additionally, it provides practical tips for channel managers on developing strong relationships and avoiding pitfalls in channel partnerships.

1. Effective Channel ManagementCraig Justice, Alliance InternationalLecture 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&AA “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 repsExtend sales reach & accelerate growthMake it convenient (remove obstacles) for customers to buyPenetrate international markets

5. Channel Fundamentals 101It’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 LandscapeCourtesy of :ChannelSources

9. Multi-Channel Model

10. Considerations Before StartingExecutive management: growth objectives, margin, price control, resource allocation priorities, support, credit policies, cash flowOperations: channel manager, sales support, marketing support, resource allocation, budget, compensation policy inside sales, lead allocationWhat 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 PiecesPricing Considerations:Does your pricing reward partners who promote /recommend/demo your product? Order Makers vs. Order Takers“Deal Registration” Special Pricing to encourage huntingRetail price maintenanceMAP (Minimum Advertised Price)MSP (Minimum Sales Price)Channel Sales TeamIn-houseIndependent sales reps in field (5% - 10% commission)Recruitment StrategyDevelop profile, trade shows, telesales, in person calls, reseller sales sheets & resources (price lists, contract), eval programContract: key business issues: territory, exclusivity, price level, return policies, stock rotation, payment terms

12. You’ve Recruited Partners, What Next?In House ResourcesWho will provide training, answer questions, provide sales assistance, manage account?Out of sight, out of mind. 90% of life is showing up.Training: KISSRecorded webinars, videos, screen cast with incentiveTraining sheets, tests to become certifiedLive training over web, in personDevelop Territory Sales & Marketing Plan With VAR partners with goals & planned activities. Manage it!

13. Channel MarketingMarketing “kit” for partners containing resources (on line)Special demo pricing. Friends & family special. If reseller rep uses your product they will recommendProvide 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 catalogPay to be on their websitePay to participate in lunch & learnPay to participate in their vendor summitPay to participate in their show case to end usersPay to do direct mailing to their listPay to participate in their trade showsPay to support a funded head

14. SPIFFs & RebatesSPIFFs can be useful to stand out from crowd where there is competitionBut….Rebate program to reward VAR ownersRebate program (through distribution) for specific resellers as part of a marketing program

15. International ChannelsPlanning, prioritizing. Where is low hanging fruit? Which are largest, strategic markets?Regulatory requirements? Electrical, safety, power?Piracy, patent infringement considerationsLocalizationExclusivityPricing: should you price higher, lower, the same?

16. What They Don’t Teach You in SchoolChannel 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 directMislead / Lie

17. Case Studies: Risks of Foregoing ChannelInteractive Whiteboard IndustryU.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 IndustryInternet sales focused company ignores channel & remains small. Other companies starting at similar size built channels & grew 5 X larger.

18. Tips for Channel ManagersIt’s not about: “It’s the end of the month and you need to order.” It is about making money for valued partnersDevelop good relationship with accounting deptAvoid 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 commitmentIf you’re trying to build a VAR channel, be careful about over distributingBe responsive. Be straight-forward.