The Channel Technology Stack - Future of Channel Management

We have been witnessing an explosion of software vendors in the past 5 years. In fact, it has been the fastest growing segment of the technology industry and a big reason why the number of vendors will outnumber partners by 2025.

The go-to-market of these new software companies is very different than it was in the past. Before cloud and SaaS (software-as-a-service) industries became mainstream, software companies built foundational software which tended to have wide functionality and appeal.

For example, in heathcare, over 300 companies competed with Allscripts and GE for a slice of the EMR (electronic medical records) market. When Salesforce started it's meteoric rise in share of the CRM market, it also had about 300 competitors.

Once the winners started to emerge in each line of business (think Salesforce, NetSuite, Workday, Eloqua, etc.), a new phenomenon started around integrations and open API's.

This was the unofficial start of the stack concept. 

Layering highly targeted, narrow focused software tools together started to become the new normal. There was no way that wide platforms could optimize across different industries, geographies, segments, job roles and lines of business.

Example of Marketing Technology Stack:

Marketing, sales, finance, HR, customer success and operations were all early adopters of the technology stack. Channel and indirect sales groups have been laggards up till this point. The quality of software for channel professionals has been steadily improving.

With 72 key attributes of a strong program, no one piece of software can manage all the moving parts effectively.

A channel technology stack is a grouping of technologies that vendors leverage to conduct and improve their partner programs, compliance, revenue and loyalty. Often, the focus of channel technologies is to make difficult processes easier, and to measure the impact of multiple activities and drive more efficient spending.

The channel technology landscape is rapidly evolving, with dozens of different software technologies growing in an ever-increasing number of categories. With so many choices, it’s essential for channel professionals to have a clear understanding of which technologies are most fundamental to their business and program goals and to understand how technology can help.

The type of channel program you have will also impact which technologies you might find important, and how they should be organized. When assembling a channel technology stack, it’s important to know which technologies are foundational, and should be put in place first.

Here are some essential parts of the channel technology stack:

Partner Relationship Management (PRM) - Foundational software that manages the plumbing of a channel program. Partner management, portals, incentives, training, certifications and the like. Players such as Salesforce, Relayware, IMPARTNER and Channeltivity play here.

Partner Marketing Automation - The ability to score, nurture and have visibility to partner online behavior is critical to good channel management. On top of traditional marketing players such as Eloqua, Marketo, Pardot and Hubspot, there are channel specific options such as Zift Solutions, StructuredWeb and MindMatrix.

Portal and Content Management System (CMS) - technology that powers a partner portal, website, blog, or other relevant web properties where channel marketers want to engage their partners.

Mobile-first Partner Enablement - New mobile technologies that drive real-time communication, share selling and support tools, as well as driving partner motivation and loyalty are growing quickly in prominence. Companies like ChannelEyes are leading the way here.

Incentives and MDF Management - Focused tools that manage incentives, payments, compliance, fraud and ROI measurements. CCI is one of the leaders in this space.

Channel Data Management - Vendors that are generating mountains of transactional data are looking for new ways to analyze buying patterns, inventory controls and distribution effectiveness using modern data tools. Channel focused companies such as Channel Insight, Zyme and Entomo are leading this market.

Channel Social Media and Syndication - technology to monitor social activity, make social engagement easier and facilitate syndication of content is growing quickly as part of the stack. Companies such as Tie Kinetix, purechannelapps, ChannelRocket and Allbound play here.

There is a new part of the stack...

Channel Predictive Analytics, Data Science and Indirect Sales Workflow - ChannelEyes has developed the first ever Channel Sales workflow product that is based on advanced data science, business intelligence and channel analytics. It is called Optyx.

Replacing the spreadsheet, and sitting on top of the CRM system, this software-as-a-service product changes the game significantly. By combining different data sources, including transactional, point of sale, behavioral and external Big Data, this platform has the ability to predict, notify and prescribe the next best action with partners.

The average Channel Account Manager (CAM) is only managing 10-20% of their territory effectively. In fact, over 50% of their Executives fear that they are not calling the right partners with the right messaging at the right time.

Optyx changes that equation. It can watch EVERY partner with built-in algorithms that trigger alerts and notifications. I am sure a CAM would like to know if one of their key partners D&B credit rating dropped or another partner is on a hiring spree with a new successful practice just launched. What if a competitor just gave an award to one of your partners? Good information to know.

There are hundreds of data sources on the public web, however the most powerful information doesn't tend to be free. Even researching one partner could take a full day sitting behind a Google Search bar.

It isn't about data though. It is about action. Specifically, a CAM's next best action.




Optyx is a workflow tool that takes these alerts and notifications and translates them into actionable and measurable activities. Calling, emailing, social selling and even on-site visits can be prioritized based on predicted outcome and then noted and tracked in the CRM system, whether it be Salesforce.com or other.

Another powerful feature is the Partner Dashboard. Having transactional, behavioral and external Big Data all in one spot will make for informed conversations with partners and significantly cut down on the time and energy in tracking what a partner is doing and how they are performing.

CAM's report that 20% of their time is building reports for management and collecting information for partner Quarterly Business Reviews. This is now automated and that one day a week can go back to selling.

Long live the Channel Technology Stack!

Running a successful channel program is a complicated endeavor. Trying to do it with antiquated tools and gut isn't enough anymore. The channel is in need of advanced purpose-built tools based on the latest technologies such as cloud, mobility, social, predictive analytics and big data.

The Channel Vendor 10 Commandments

When you dig further into the relationship between partners and vendors, there seems to be an infinite number of ways the relationship can sour. In fact, CompTIA reported in their annual State of the Channel study that 60% of partners report that channel conflict is on the rise in the last few years, with 21% saying it rose significantly. 

Looking further into the research, the most common reason partners leave a vendor include high cost, low margins, constantly changing requirements/benefits, insufficient support and lack of marketing support. An astonishing 80% of partner firms said conflict affected their business negatively in the past few years.

There are many reasons for this increased conflict. The shifting customer landscape has vendors shifting go-to-market strategies from indirect to direct sales as well as increasing their services arm. Other reasons fall into trust and transparency issues - including not honoring rules of engagement, deal registration policies, sales engagement and territory violations.

It is time for a set of common sense rules for Channel leaders to keep in mind around their programs. Thus, the The Channel Vendor 10 Commandments:

THOU SHALT BE HONEST, ALWAYS

Being completely honest with channel partners is the most important part of building a lasting, trusting partnership. One lapse can cause irreparable damage and can halt a promising alliance in its tracks. Partners are a resilient bunch, and while it may be painful in the short-term, bad news delivered straight and in a timely fashion will usually be forgiven.

THOU SHALT BE TRANSPARENT

Trust is built over time through consistency and honesty. With so many moving parts inside a vendor organization and the ever-changing business dynamics, it is hard for partners to know what is happening. The best policy is to have open dialogue and share more than before. Partners run businesses too and will appreciate hearing the opportunities as well as the challenges. This can have a positive effect where partners may actually help with the challenges or suggest how other vendors solved them.

THOU SHALT BE PREDICTABLE

One of the most common complaints a channel has is change. Not change for the better, but change for the sake of change. Larger vendors are guilty of changing up their rep coverage on a yearly basis and the partners are forced to re-educate new people constantly. This goes for programs too - when the average partner has over 10 vendors, keeping up with the changes can be a dizzying experience.

THOU SHALT BE COMMUNICATIVE

Most vendors think that they over-communicate. However, when they bring together their partner advisory council, a different story is heard. There are roughly 30 communication vehicles that vendors use today including email, newsletters, phone calls, field visits, webinars, tradeshows, social platforms, etc. In many cases, these vehicles aren't owned exclusively by the channel organization and partners are bombarded by every division and perhaps every well-intentioned product manager at the vendor.

THOU SHALT BE VISIBLE

Pre-sales, post-sales and 24/7 technical support are now table stakes for vendors. Visibility also extends to the marketplace - partners shouldn't have to bear the brunt of marketing, educating and selling the vendor's products. Communities are everywhere, and vendors must participate in the associations, peer groups, tradeshows and industry media that drive awareness.

THOU SHALT BE FAIR

As noted above, conflict continues to be a challenge in the channel. A published rules of engagement that is supported by upper management at the vendor (as well as escalation and mediation policies) are critical. Not every situation is unique, and vendors need to  have consistent and predictable responses to conflict situations as they arise. The results could be positive or negative for the partner - but as long as they are fair and consistent, then cooler heads will prevail.

THOU SHALT NOT OVER DISTRIBUTE

Vendors tend to work on a pendulum when it comes to recruitment. Every other year, a new VP will come in and put recruitment efforts in overdrive without a proper go-to-market strategy and capacity planning exercise. Current partners will feel the encroachment and suffer further competition in their geographies. At least till the following year, a temporary reprieve when focus will go back to nurturing and development.

THOU SHALT BE CONNECTED

Partners need their systems and business processes to integrate better with their vendors. Giving partners a dozen passwords for every different part of the program doesn't make sense and will cause abandonment of the behaviors originally sought. Careful thought should be put into the channel software stack and to make sure the labor doesn't get passed to partners.

THOU SHALT ENABLE PARTNERS

This may seem like common sense, but partners would tell a different story. Building a channel program isn't easy - especially with the permutations and combinations of industries, geographies, business models, lines of business and partner types are included. Persona based incentives, education and motivation techniques are needed by very rarely delivered - and it causes unnecessary friction.

THOU SHALT NOT BURN BRIDGES

It always amazes me to see vendors sweep in a new management team and want to fire the bottom 10% of their partners without studying why they are the bottom 10%. People have long memories and the industry is smaller than you would think. Yes, there are 160,000 partners in North America (which seems like a lot) but when you look at merger & acquisition statistics as well as people changing jobs, those faces can come back to hurt you later.

The average channel chief wears about 10 hats and drives 72 functional areas of channel management, sales and marketing. Lost in this complexity are the core reasons partners don't perform and sometimes leave. 

More often than not, following these commandments will have a bigger impact than forever tweaking 72 parts of the channel program. Try putting this on the agenda of your next offsite planning session.

Channel: Building a Modern Go To Market (GTM) Strategy

A lot has changed in the 20+ years I have spent in the Channel. New technologies, business models, communities, demographics, communication vehicles and customer behavior have created a whirlwind of change for vendors and distributors.

The one constant is the complexity of managing hundreds of thousands of partners globally, each with their own unique set of business practices, target markets, customs and values. Channel Partners know that to be successful, they need to carve out a niche – whether that be geographically, technologically, vertically and/or business model.

We come from the dreaded triangle methodology of segmentation. Largest partners by revenue on top, followed by some type of regional midmarket, then SMB transactional partners and finally the unwashed masses at the bottom of the triangle.

Because of the uniqueness of each partner, this completely missed the point of segmentation. Trying to build programs, training, incentives and coverage for partners lumped together based on historic sales of your product was faulty logic.



Enter the Persona.

The ability to dig a little deeper with each partner and ask the right questions has produced some breakthrough wins for some vendors. That small managed services partner in the U.S. Northeast who sells to healthcare and specializes in security solutions looks very different than the box-pusher across the street.

Building the right persona based segmentation plan will group like-minded partners around the country (and perhaps the globe) allowing the proper program mechanics to be developed. Above the obvious benefits of higher partner sales, satisfaction and loyalty with this type of focused approach, it is also a major cost savings for the vendor. Billions of dollars are wasted every year in programs that are not targeted and don’t drive behaviors.



So the dreaded triangle has been replaced with a hodgepodge of personas – now what?

It is somewhat of a herculean task to go back through your entire channel and start classifying partners in a new way. Not to mention the workload in revamping the PRM or CRM system to handle the new segmentation.

The good news is that like-minded people tend to gravitate towards each other. Whether that is face to face in peer groups, digitally in forums or using social media, these communities are some of the best ways to define personas and actively build recruitment plans.

I wrote a blog about the size of the IT Channel.

We know that executives at ultra-large partners such as CDW do not tend to hang out with Larry who runs a small storefront in the strip mall down the street. Larry hangs out with other people just like him. Behaviorally, what Larry reads, what events he attends, and who he follows says more about him than the average questionnaire could gather.



Why are communities important?

Gartner Group conducted an interesting research piece where peer networking, associations and communities are the highest ranked ways that small and medium businesses learn, form opinions, and in the end, make decisions.

IDC reported the same finding when they were digging into healthcare. In fact, 4 of the top 5 reported resources for Electronic Medical Record (EMR) selection criteria involve associations, affiliates, colleagues, and buying groups.



With Google at our fingertips, why do partners choose communities?

During this time of growing “electronic ubiquity”, the need for trusted and expert sources of information has increased significantly. The amount of competitive choices for products and services, combined with vast information on the internet and endless buzz through social media, has created a scenario where cutting through the “white noise” has become one of the most important skills.

Communities offer a smaller group of like-minded people (perhaps even competitors), sharing similar experiences and challenges, the ability to collaborate and improve decision making. The feeling of belonging is strong, as well as the affinity of membership. There is a feeling that communities are more democratic as they are built by the membership, and participation is encouraged and celebrated.



Who starts these communities?

Tracing back some of the more popular IT Channel communities to the beginning, the sources are:



1. Connectors

Malcolm Gladwell does a great job of explaining the concept of connectors in the Tipping Point. These are people that you would recognize, even dating back to grade school, that seem to be the center of the universe. Another way you can recognize connectors is in a place like Facebook. You seek out this person, and they are 1 degree of separation from everyone in your school, company, neighborhood, etc. 

In the business world, many connectors have translated this skill into organizing and building a strong following. They have also recognized that vendors will pay top dollar to participate in these already established communities. There is also a feeling by these connectors of altruism, or “giving back” to the industry or geography where they do business. 

You may think that connectors are the most extroverted and charismatic people, but in reality, not always.

I recently wrote a blog about Paul Revere and the super-connector phenomenon.



2. Industry verticals

Several communities start as a result of a new technology or sub-industry. An example in the IT industry is Virtualization, Cloud Computing, Electronic Health Records or Managed Services. When the needs of a group are not being met by larger or non-related peer groups, new communities form organically from members as they branch out.



3. Traditional Media 

Trade magazines and event promoters have been quick to recognize the communities trend, and have formed powerful groups under their trusted brand. Having a strong subscription or attendee following, makes the transition to community a logical step for these organizations.

There are about 16 major magazines in the IT Channel. This doesn’t include technology derivatives (Print, Point of Sale, Pro Audio/Video, etc.), industry derivatives (healthcare, government, hospitality, retail, etc.), geographic derivatives (UK, Canada, Australia, etc.), and business model derivatives (managed services, cloud, mobility, iOT, etc.).



4. New Media – Social Media

The fastest growth of communities has occurred with the explosion of social media. Whether Twitter, Facebook, Linkedin, or the dozens of other purpose built community tools, the cost and complexity to start a community is approaching zero. Many connectors started as bloggers who have built a loyal and passionate following.

Many bloggers have evolved into connectors and community leaders.



5. Distributors and vendors

The fact is that some companies get it and some don’t. Several organizations now recognize the power of communities and have built organizations around persona/community marketing. It is becoming more common to hear the title Chief Community Officer in vendor organizations. In fact, I could drop a number of names of the super-connectors in the industry and they come from this fold.

Organizing a community goes far beyond marketing and advertising however, with product development, pricing and programs all tightly connected.



How do these communities interact with their followers?

A dizzying array of new marketing vehicles have popped up in recent years. Traditional media such as magazines and events are very important in communicating to a community, but new media allows innovative ways to extend and enhance the message. From webinars, podcasts, vodcasts, blogs, tweets, Linkedin groups, to virtual trade shows, community groups are using as many as 30 different marketing vehicles to be pervasive within the group.

I wrote a blog about this new channel marketing phenomenon called Dandelions and Blowfish.

The challenge with these marketing vehicles is different than in the past. The main inhibitor to effectively marketing was money, today it is effective content and delivery. Many of the vehicles I mentioned above are free or cost very little compared with traditional media. Keeping content fresh, abundant and delivered daily takes resourcing beyond the marketing department.

Media savvy Executives who can keynote an event, tweet about it offstage, promote the message to the media gathered, and then write a blog about it later on is the new model for the future. Messaging that would have required triple-checking through legal a few years ago, needs to be just-in-time and delivered on a daily cadence.

I have always followed the mantra “be visible everyday”.

Finally, community members have very effective personal spam filters. Anything that doesn’t add value to the community will be rejected and have a negative result for the organization delivering. The old days of PowerPoints and product spec slides doesn’t cut it. Active selling into a community is an invitation to be ignored or kicked out.



Why are communities important to your GTM strategy?

Beyond the human requirements of personal interaction and belonging, communities provide tangible benefits to all involved. Unfiltered information based on common experience will always trump random white papers and case studies posted on the internet. The give/get relationships within a community inspire openness and, in most of the communities I have seen, a level of bluntness that is refreshing.



Some key advantages of communities:

1. Cost of entry low as compared to traditional media and other marketing opportunities. Very much a “grass roots” feeling.

2. Ability to communicate and receive value is high. Tons of touch points, combined with a high degree of passion.

3. Trusted source – community members have likely experienced your challenges, or will shortly. The feeling you can “steal with pride” best practices and contribute your own successes.

4. Ability to enter new markets or industries. Opportunities to network, build like-minded connections and potentially drive business development opportunities.

5. Credibility that comes with “member of” status. Make the affiliations and partnerships that make your organization seem larger and more connected. Getting published or quoted as an expert or thought leader is invaluable for your organization and personal brands.



What is the future of communities – and why now?

Based on the data from analysts, combined with the relentless growth of information available across the internet and the behavioral habits of people, communities will keep growing. Exponentially growing, in fact.

Specialization will continue to expand as well, driving more need for these groups and subgroups. There is an upper limit to the size of a community where the point of diminishing returns kicks in. The point at where coordination of the group and the generality of messaging outweigh the benefits listed above.

Smart communities will organize sub-groups before the fringe members go off and launch a competing community. The permutations and combinations of geographic, technology, industry, line of business, solution and business model specializations is endless.



Are you saying I should join thousands of communities?

No. Without some level of focus, you would stretch your organization too thin and not add value anywhere. There are, however, about 30 different master communities around the world that will give you access to roughly 80% of the total partner population.

As an IT Channel vendor, names such as CRN, CompTIA, Channel Partners, ASCII, Microsoft Partner Network, ChannelPro, Business Solutions Magazine, Vertical Systems Reseller, SMB Nation, ChannelE2E, ChannelInsider, SearchITChannel.com, Redmond Channel Partner Magazine, VAR Guy, MSPMentor, HTG, Connectwise IT Nation, Autotask Community Live, Microscope UK, ITEuropa, MSP Alliance, Channelnomics, Computer Dealer News, eWeek, ITWorld, Infocomm, ChannelNext, ITExpo, ITEX, Interop, Channel Visionaries, Channel Focus and Channelline should all be in your vetting process.

Go to Market strategies by vendors need to be highly-nuanced. New technologies, business models, communities, demographics, communication vehicles and customer behavior have driven the need for new thinking around partner relationships. Engaging on a personal one-to-one level with partners is more important than ever, understanding that their business practices, target markets, customs and values are different. 

The majority of channel partners know how to be successful or they would not have survived the 2008 economic meltdown. Vendors need to enable them to carve out their niche with the right mix of education, support, incentive and community support.