Channel Management - International business conundrum

Ed Marsh | May 7, 2012

Black Magic or psychiatry

"Getting and sustaining the attention of someone else's sales force is a full-time job, since helping to sell someone else's product is an unnatural act that must be stimulated constantly."  
Geoffrey Moore in Crossing the Chasm via The York Group.

Maybe it's the constant stimulation that creates all the problems.....the fact is that channel management is one of the most difficult aspects of any business which sells through channel.  It has all the joys of personnel management but without the authority inherent in an employer / employee relationship.

Strong channels are built on mutual business objectives, respect and trust - not simply monthly excel spreadsheet pipeline reports!  It's not black magic, but it is hard, consistent work....and maybe a little psychology at least.  

Where's the breakdown

Too often the channel relationship is predicated on an opportunistic foundation.  A potential project seduces both parties to overlook easily anticipated warts and commit to an ill advised "partnership." 

Once that opportunity comes and goes the wait begins for the phone to ring with another opportunity while the channel team works on selling its core products.  Meanwhile the manufacturer starts to grow increasingly frustrated with lack of activity, pushes for more sales and restricts the support which they provide.

But it was never going to work.  It was a project collaboration, not a partnership - and completely void of proactive channel management which might have enabled success.

Lose / Lose

Channel partners have it figured out.  Either way they lose.  They've been down this road before and know how it works.  If they fail (and no one will ever agree on whether it is lack of ability, lack of effort or lack of proper support) they lose the program and squander the effort they have invested.

On the other hand, if they really succeed, they lose the program because the manufacturer decides to establish their own direct operation.

And along the way if the company is sold they may very well lose in the rationalization of overlapping channel.  The odds are stacked against them.  They have to run fast and generate the most/easiest money they can.

If you understand you can win together

But understanding these dynamics can make selecting partners for mutually beneficial long-term relationships more likely.  Establish your selection criteria and contractual arrangements to encourage rather than discourage strong fits.  And then implement a deliberate, proactive channel management program.

Train, travel and support generously early.  Establish activity targets and pipeline objectives - not just sales targets.  Learn the market so that you can judge objectively.  And be fair and honest.

Build friendships and long-term partnerships - and profits and success will come.  Opportunistic hook-ups though will fade at best and devolve into acrimonious disputes commonly.

Need help finding strong channel partners, or even determining what channel model is best for your business?  Contact Consilium Global Business Advisors to chat about how we can leverage our expertise to help your business.

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