TSO Tip # 28 Channel Sales FINAL

TSOS: Channel – Special Section
Our focus has been based on direct sales to businesses. Many companies also work with a channel – that is to say, independent third party businesses who promote your product as part of their go-to-market strategy.

A Direct Sales team, including both outside and inside reps is a channel – and most common. They are employees of the company and sell and support end users.

And your website is a channel – while “direct” your ecommerce has a different team that runs it. The web can be uses to address transactional business such as lower price or volume customers or support.

Other channels can be established to expand coverage, e.g., international, and/or address market segments, e.g., such as businesses already certified for government projects. Channel options include:

VARs – Value added resellers. VARs work with the prospects and often provide ancillarfy services in addition to your product. They place the orders to your customers. the VAR adds that value of bringing it all together and one throat to choke sort of thing.

Distributors: they typically stock your product (and thousand morw) and provide fulfillment to small oor independent or low volume resellers that you can’t afford to deal wioth directly.  This works great for products where there is a minimum of support required.

Integration partners: when services are required that is either a big project or where your product is just one part of the whole solution.

OEM Original Equipment Manufactured: an arrangement where your product is bought by a  manufacturer who has incorporated your product to provide key features. The end user  may or may not know that you’re part of the deal.

Each of the above channel options require different types of sales and support. You might have dozens of VARs but maybe only a few integrators or OEMs, if any. I’ll focus on the type of interaction management you should provide when working with VARs.

Typically a reseller channel requires sales assistance and business development. Your company will have set up what is called a “Channel Program” that describes the relationship with the reseller in terms of product training, marketing, trade shows, pricing, discounts. The program will usually set out where you can assist the partner in their lead generation and prospect engagements.

And indeed almost all channel programs have a separate team that focuses on channel support exclusively. It’s a different model.

The Channel MindSet
The first thing you have to understand is this:

The resellers ARE your customers. Yes, there is an end user downstream. Yes, you want to communicate with that end user to make sure that they’re using your product and getting support. But it’s the partner who’s placing the order.

Now you’ll notice a little shift here. We started out this conversation about “resellers”. That’s a pretty generic term. From here on out, we will refer to them as “Partners” because that’s the best way to consider your channel: as partners. Working with a Partner requires collaborative efforts and trust and respect: thus the designation as “partners”.

You will be most effective if you can establish a working relationship with your channel partners and help make them successful. Read that again.

Help your partners be successful.

You need to develop a good positive working relationship with your resellers so that you can get the advantages that are desired. A channel rep must have the ability to work through others.

Your company has established a program with resources such as presentations, training sessions, marketing collateral including  co branded literature. And maybe you ll have access tools for various marketing activities such as webinars, trade shows, and email marketing.

Use these channel resources to create momentum and leverage i.e.,  share info so they can close business without your having to be involved creates the leverage that the channel can provide.

• Let’s recap these points: You must have a different mindset to be a channel rep:
  • You need to work through others to be successful (having direct sales experience helps)
  • The partner IS your customer. Treat them that way.
  • They are not employees: you have to build a relationship based on trust as exhibited by your actions.
• Next make sure you understand the partner channel program. Understand the contract and specific rules such as territory, pricing,  Then look at all resources available to partners . these are your tools: product info, order processing, branding instructions, collateral.

Advanced channel program ideas:
What follows are aspects of a program that go beyond rep support. You may not have the responsibility to set up but you can suggest these.

Partner  Designations
Brand your channel program and let the partners use this to communicate their relationship with your firm.

• Most channel programs will have some sort of brand and categorization.
• At GoldMine we set one up where there were three simple levels:
  We started with the first level as Authorized for partners who have met your minimum requirements.
  Next we set up two levels based primarily on sales level: Premier and Premier Elite. The name established higher level for partners tied to sales, number of employees, certifications. Reward any thing that differentiates them (and gives them a goal to grow). Create names that convey status.
• Define specific rewards for their success such as increased margin, priority listing on the web site, joint marketing support.
• Create logos four resellers reflecting their earned status (I included the year for the highest tiers so they had to be updated every year).
• We had revenue goals that defined partner level: Premier Elites would have highest margins, top web listings, MDF etc; while Premiers would be next. Even the Authorized partners get their company listed (you want this to validate the partner. (encourage partners to get recognition and carry over web ponts by being listed n a site bigger than theirs thus increasing ctedibilty rankings).
• This creates a dynamic environment where partners are trying to achieve the best  margins and promotion from the vendor (your company) .

Goals:
Usually a partner agreement has a target revenue

• Our strategic objective with goals was to promote revenue consistency quarter to quarter – rather than the feast or famine that is common
• I preferred quarterly goals to create a little urgency (otherwise partners will wait till year end).
• set revenue goals that are achievable and have some reward such as incrcreased margin on product and /or promotion, e.g., a higher ranking on your website
• there’s a little bit of modeling there. Wha is the run rate for partnes? What’s the partner done in the past? What’s typical number of transactions, size a deal, all those things
• Set the goal based on achievable revenue targets, evaluate ‘pipeline, and track progress through the quarter.
• Reward for goals: rtypicalk the most important reward is Mondy. I was able to offer tiered margins for resellers: base line fo the entry level, and then two other leveels offering 5% more margin. MDF or spiffs are common. And thing like priority wbsite listings were also  part of achieving the top status(s).
• When a partner “misses” a goal, I’d use this as a toime to talk and I’d help them try tpo get better. For large resellers who missed, they beg me – id offer some “amnesty” to have a second chance: by making up the difference, or getting a couple of deals in sooner. The idea was  not to punish but to create some urgency and focus.
• The over all feelonig should be how cool would it be to hit target.
• We would determine sales and any margin changes two days after the quarter.

So that was the goal program and it was just a great way to talk with the partner about their business and about their business for you.

Building a Collaborative Mutually beneficial Relationship:
The channel needs somebody to support them, to promote them, to work with them, to help them get the deal

• They are your customer. They are the ones who placed the order. They are the ones who call up and ask for pricing questions. They are the one who present all that to the ultimate end user of your product. But your customer is the partner. And that’s So what the reason why I stressed that is that yes, we want to know about the end user. But it’s the partner you have to take care of to get that deal done and through.
• They are Not an Employees:  They are your partner and you need to work with them as a mutual relationship to get things done. The reward for that is that they will do things on their own after seeing you do it, or they’ll repeat what they did the last time they won.
• BE known for beng a good channel organization: You’re probably differentiating yourself from maybe some companies where The their channel organization doesn’t talk to them or they’re not treated very well. So keep that keep that in mind.

Partner Revenue starts with leads.
First and foremost, you’ll want to see what they can do to bring in net new customers – maybe from marketing or from within their customer database. And of course you can distribute leads to them for follow up.

• A lead is a contact who has expressed an interest in your product/services.  a lead is something for follow up…leads are distributed based on certain criteria such as size of opportunity, vertical industry segment, govt, geography. No matter what the lead, you need rules to govern who owns the lead…why? multiple reps working on a lead…the same lead…or different leads in the same company.
• You’ll want to be sure that the rules are clear. For partners, once you give them a lead, you would interact with them as you would a sales rep.
  • Get confirmation they have the lead and have followed up; that they have confirmed the lead based on qualification criteria an d that the yhae next steps outline.
  • Part of lead management is to have the partner keep you up to date and establishes a target close date. Ideally, you’ll play “il’ll show you mine if you show me y ours.” That is, they should include information on leads they have generated. This part requires trust –
•  Your task is to see if they are adding to the pipeline and to be aware of the leads progress and potential opportunity.
• Set the expectation tfor the partner. And then I would call in to the prospect and say did you hear from them? Did you get the answers to your questions? I want you to know I’m behind this partner. If you need anything from us as the manufacturer, let me know, but work through them.

Economies of scale or 1 2  many:
This is where you leverage your channel.

• As you develop csmpsgins forone partner find awat to invlove all your partners in actvities tghat will benefirt everybody. You could do a training video: record once, send individually to all you rpartbners. If you do a product or end user even make sure you ask all part ers to drive traffi c.
• By doing these things across a broad group of people, right, you’re getting your message out on a repeat, repeat basis and that hopefully will generate the additional interest. They’ll follow you and the partners who get information and help from you.

channel Pricing:
Let’s talk about pricing and some guidelines with partners.

• I always listed things as a single user price, quantity 1.
• You would have to call me to get volume pricing. I need six of these or I need 1000 of these. “What’s the best I can offer the client?”
  That way I was made aware of the deal. I could ask some questions about how serious. It is time frames to make sure we don’t give away money that we don’t have to, that we’re not bidding against ourselves.
• With partners, we looked at their “earned” margi to get reseller cost. The end user price was a function of list less margn percent.
• My rules to address lower price:
  • If customer asked, I’d  use the single user price to start saying, “ for budget purposes use List –  qty 1.
  • Discounts were part of getting info and commitment from the the endf user Saying we will get better once we know first order size and toime frame:
     “I’ll gie a discount for a bigger order and/or sooner.. So getting time with them and the owner is is. You know, you got to be careful and good use, but you’re focusing on, on their growth, um. So, um. So it was always, I, I never liked deal registration systems to get a discount.

POR: I
It was always important to me to have a Partner of Record indicated so that you can cross tab your database by partner to verify leads, forecast and let other s  in your company indicate this customer/prospect is associated with a partner. That helps us to know who they are working with? There it is in the CRM system, it says they’re Partner of Record, but it also helped do some things that we could do for marketing.

Persistent Partner Ownership:
 So we I was very proud of this one aspect for our channel partners and that was I had our website, partner website designed and our website so that a partner would get a vanity URL that they could pass to their customer.
So that when the customer came through. The corporate website that carried through that partner and we could refer the lead back to the same person they were working with without the customer ever entering in the information. That was something we did for them to help keep continuity and allowed me to leverage my existing corporate. Info with the partner, because otherwise the partners would sit there. “I’m not driving them through your website. You’re going to steal them. It’s going to go through like lead processing.”

• I had my company list partners on the cotporate  website, tso custoers could fined a partner. he partner website where we provided training and inside scoop information.
  • we had a vanity URL for each partner that when a partner clicked on it or a customer clicked on it, it would take them to the content from my website but refer them back to the partner of record. Very very important partner of record that we implemented along with goals.

If you can get it this is a powerful way to reward your partners.

Deal Registration:
 Some programs required deal registration. The intent is to keep track of who the partner is working with and typically offers greater incentives the sooner you register the deal.

• However, partners like to sandbag, that is to wait unitl the last minute.
• Very often companies would look at the registered deals and start calling in directly on their ow.
• But often the direct team would callin without collaborating with the partner – jeopardizing the relationship, confusing the prospect, and even jeopardizing the deal they were trying to protect in the first place.
  • “Wow, look at what these partners did. let me give the partner a call and find out what’s going on at the at the customer.” That’s acceptable.
• What would happen though, is the partners would become wary of the direct sales reps pushing too hard. So they would register the deal only in later stage. thus missing some of the our ability to help you sell through the reseller.

• Partner cobrand:
  put the partner’s name on a letter that we send out using our e-mail system or give them pre printed brochures with their name on it and your brand:
• Leverage your companys brand/value prop:
• In order to get leads, I required that they add a landing page to their site. This link would present my brand and even have the same colors for look and feel – as opposed to using the partners home page as it might have other info, including info on competitors.

Collaborative:
Well, you have to have a true working relationship. Keep in touch to respond, reward, and move the deals to the next steps.

• As we talked about, I worked on not necessarily every week calls very religiously, but I tried to touch base with my partners as needed during the month and at least talked to every partner. Once a month if I I do at least once 1/4 for sure made a minimum.
  • But the idea was to keep just to keep in touch and not only and here’s one other thing. When you get on the phone with them, it’s not the demand something and it’s not the brow beat them. It’s to find out how things are going here.
  • You got three accounts that you’re working on. How are they looking? Anything else we can do here or anything I can help you bring to the table?
• Have the partner show  you their demo and presentation

Collaboration Story 1 Building Partner Trust – AT&T: Early in my career a channel partner asked me to attend a trade-show. My company set me up with a booth and I flew to Ohio. My company sent the usual trade show set up. I had a separate booth area with our banners and table tops and brochures. As I was setting up my booth, I notice that my partner was across the aisle. So it looked like we were working as competitors. But I knew many of the show attendees were there from my partners invitation. And I also knew that I would give them the leads after this show for follow-up. They’re not going to be happy if I do anything with those leads other than give them back to them.  So I did this. I closed my booth, took my banner down, went across to my partner and combined our material and set me up to help – “Meet the manufacturer”| turn it into a special event.. I got to hear from their customers and put in a good word. I got to see how the partner handled prospects. I got to put in a couple of things I knew or new things that were coming that helped enhance the relationship and I it was a great positive experience. By my combining forces I helped the partner with leads and we both were able to see each other in action.

Side note: I used the opportunity of the show to thank my partner and the team for a good show, and offered myself as a resource to help them with prospects. I thanked individuals who had recently won deals. I even helped them pack up an dbought a beer.

My partner said , “now this is how you run a partnership. We’re going to do a lot of business together.” And we did. They did hundreds of thousands of dollars of business for me every year based on the relationship we started at this trade show. I built trust, rapport, and leveraged my channel partner.

Gratitude:
The Partner should get the praise for bringing the deal to the table, for working it with you, and for getting it done

• Partners want recognition. Give it to them. If they said something great in the meeting, point it, say that was nice, that was awesome. focus on some positives.
• If you got some negatives or comments from the partner. “Hey, would you mind if I made a couple of notes for you?”
• give them some praise. Thank them.
  • Certainly when an order comes in, thank them. “You did a great job. I loved working with you. We had a great team effort. I appreciate being able to be there”
  • Offer thanks that is specific, “Thanks for letting me be there. That call that you organized with Steve took us so far”
  • With gratitude Reinforce the behaviors and things that were effective not only for you, but for the the customer and the partner. Remind them of that.
• Most partner organizations have a recognition for the quarter. If it’s your partner’s make sure you’re there to present that award with your partner.one that you’re up on the stage with them or on the call or wherever you have to be that you get a quote in for you, remind them that you’re there. That you are acknowledging their success.
  • Give them a quote they can  use in a news letter.
• Gratitude Story:.  I had a quarterly meeting coming up and I was to handout partners of the quarter awards and we noticed one that was misspelled. And so I called the company and requested a correction but it wouldn’t be In time for the session. So I had them give me a print out of the design of the award. I would at the meeting. And go through the normal steps, I  gave him that piece of paper as a place holder. I had slipped it into a plastic kind of display stand and had it printed on some heavy

stock. It was like a certificate. But in any event, I gave him the reward and said, “I’ve got the replacement on order”. Couple weeks later I was at the partner’s office and  I knew that the award had been shipped and received by the partner . I’m in his lobby and I don’t see it in the display case that they had. I asked,”
“hey, didn’t you get th replacement?”

He replies,”I got that in my office.”

“Well, you know, you could, you could put it in the case to replace the paper one.” And he goes, “ohh, no, that’s what the one YOU gave me.”
That’s the power of recognition. Its personal.
I’m reminded of a song by Alan Parsons. I robot. Don’t let it show. No matter what you do, we know you’re a good sales Rep. We know you know your product….but give the reseller the public recognition. Focus on the reseller. You’ll get more leverage out of that than you will of saying, “hey, what about me?” you have to sublimate your ego a little bit and let them be the star of the show, which I think they should be

Respect:
Show respect to the partner  because it’s hard running a business based on hourly sales. Resellers are independent and need regular product and service sales to survive, Channel reps work in offices wit salaries abds benefits…be humble.but you have to work, focus on profitability, show some respect for that and especially if they’re smaller reseller. You can make a smaller reseller, they’re toiling anonymously, Maybe there’s real smart and they’ve got a good customer base, but they’re kind of techie and they’re kind of weird. Yeah, they may not be your biggest revenue producer, but maybe they’re good to have out in the field. I ask guys like that to do a little tech session for me. the other thing is if they have sales teams tech teams The other thing is if they have sales teams and tech teams, try to encourage them, Hey, that was a great deal you worked on or I had talked to your customer. It was very unhappy. You made them very happy. They happened to call me back something, something like that, but acknowledge what they’re doing for you every day. And so make sure you reward the team as well as the owner and always. Meet the owner with a great deal of respect because it’s, it’s a very hard, very hard, you know, business and you can’t spread enough praise around in my, in my mind. You know, we, we,

• I always buy lunch if I go to the office and try to get the team out for some reason on a quarterly basis, get them out for a moment andnhave a little laugh, share a story from the field. And offer thanks.
  • If you meet for drinks, have a cocktail and let everybody go home and be with their families, but they get a chance to say hello.

Competitors:
Let’s talk about competitors. You’re going to have resellers who represent other competitive products.

• I made it clear to my partners that my customers and leads were mine and they while I would entrust them to the reseller,
• if you came across something where you didn’t want to go with our product, you had to give it back to me and we could decide. S
  • So in some cases. I said, you know what, you’re right, I can’t service that. Customers need and will never will. So you can run with it.
  • Giving the partner a lead like that, it’s like, whoa, instead of hanging on to something I knew I couldn’t win or that we couldn’t win, you, you give it to somebody who could. I helped his business and in that, that one act, whether he won or lost.. I used to do that periodically because it came up it made the the relationship less contentious.
• But the minute they did something to flip a lead, I got on the phone and I let him know and say, dog, every dog has one bite. This is your bite. You cannot do this again. So don’t risk it. And I’ve gone through wholesale watch wholesale dismissals of partners who had. Up in poaching is as it would be called. So don’t do that.
• And you may have it tough discussion and sometimes and take on a perspona:
  • You have to be Julie the director on The Love Boat or Spock  OR
  • Tony Soprano and have to do a little arm twisting.
• But you all have to do it deftly and with respect. But you have rights, you can be candid.
• Read some books like Mahan Khalsa about difficult conversations that you have to have.

know your partners
 The first thing you need to know the capabilities of your partners:

• How  many employees? Their Skills.
• The partners largest customers and their business model and any profile info on customers marketing.
• Any special business terms such as no Purchase orders.
• Do they have minority contracts?
• Are they government approved?
• Are they in a geography that you can’t get to ?
• Do they have a certain technological expertise that the custeomr will value?
•  I have some partners that were very polished and handled big projects; and then In had other partners that were a little bit more modest, a little bit more economical.
• For purposes of lead distribution and services, I would try to match the personality. I don’t know that I was always right, but I tried to give the customer two choices that I thought would be a good cultural fit and I would always make that clear along with my willingness to discuss their experience.
  • “’I’m going to recommend xx to you, “I think it’s the best one. If you like them, go forward. If not, come back to me and we’ll talk about other choices.
• Be aware of partner credit limits so they wont have a deal get held up.
• After distributing a lead or an existing customer might call you. Whenever you happen to work with a with a customer directly, make sure you tell the partner about it and then discuss who should respond.
• If you have a three way call or meeting (prospect, partner, you) make sure you have a role to defined – and review what will be discussed: what addl info does the clinet need, do you need?
  • “What would you like me to do?”
    Do you want me to talk about the company?
  •  I’d let the partner take the lead in the meeting.
• Never talk badly about your partner: they WILL find out about it.

Direct vs. Channel:
 A channel can be helpful – but there are pitfalls that need to be discussed to avoid “conflict” – that is, the problem when your direct team and the channel are working on the same deal.

Direct sales reps by their nature want ownership of the accounts and sales process. They are not inclined or geared to “help” partners sell. So, your partner program should have well defined territories be they geographic, size of business or vertical market.

Now, lets address the “elephant in the room”. Channel conflict.

• When can you take a channel lead direct? NEVER.
  “but Paul, they said they want to deal direct…”. NEVER.
  • You take one deal direct and the partner will never trust you – and not just for that lead. You’ll get less info on forecasting and the phone wont ring to keep you involved.
  • In this situation, stress the value of the partner – ask what the issue is etc and then engage with the the partner.
• There may be situations where going direct makes sense –
  • for example, a company is about to make a large purchase and the partner doesn’t have the credit rating to carry the order.
  • Or the end user wnats to talk wiht product management directly.
  • Both are reasonable but your first step before any action is to talk with the partner so you can get their perspective and then craft a solution that keeps the partner in the game — everything you do is to help the partner —  not to exclude them.
• Direct reps are built to own accounts, set strategy etc –Get your help from other resources within the company. Involving a Direct Rep in a channel deal is not recommended.
• Conversely, A direct rep might want to have a partner get involved because of their expertise. This situation is a great way to buld a relationship woth the direct team. Discuss the need and specific steps the rep and aprtne want to address. THats great to foster – and here the account is ownded by the rep and the partner is partn of the team. Just get everything in writing.. 😊

BONUS

If you run a channel with big box outlets like cdw, Insight you can get what is known as “sell through” reports where they list units moved by each of their customers. I’d ask for that and the skim for big name companies that were buying a few copies of my software. I’d then call those companies to see why they pciked us and what the potential was. I then created a “free” trining session on some of themost used fatures and how to custolmize (withtheir brand, titlem etc. I had dozens and the end user managers attended as well as purchasing. I generated $250k with two deals (AMOCO Chrystler)

Conncllusion:
As you can see, being a successful channel rep requires diplomacy and a deft handling of egos.  Work with them with that POV and I know you’ll find the channel to be dynamic. It allows you to do a number of things such as marketing, sales support and organizing classes and so forth to make to help them be successful. But that is part of the fun.

And that’s the final thing I want to end with.

The channel is not there to make you successful –

You are there to make them successful.

Summary Quick List

• Understand what is required of partners as detailed in the partner agreement.
• Understand all tools and resources that are available to partners: Use them and implement activities for all partners to create economies of scale.
• Try to establish partner goals for each quarter to build a more consistent revenue stream.
• Hae partners demo and do a presentation to you.
• Have partner create a landing page within their site – this page will have info on your product and avoid confusion with the partners home page.
• Understand your partners capabilities and use this knowledge to select a partner for an end user.
• Have regular calls on lead status.
• Make follow up calls to leads to make usre partner has followed up and also to get the end users perspective on how iti is going.
• Show thanks to partner and his employees: congrats for an order.