Seven challenges in managing the channel

There are seven primary challenges when dealing with a channel and these must be carefully managed in order for relations to flourish:

* Critical mass
* Partners with competing products
* Managing global partnerships
* Managing forecasts;
* Skills urgency and capability
* Maintaining product awareness
* Incentivising partners

It takes as much effort to manage a low-yield partner as it does to manage a high-yield one, which makes it necessary to assess partners and focus energies on those that deliver the best returns. Regardless of whether or not business is booming, the sales cycle remains the same for non-commodity software items in particular. There are no shortcuts. The ideal situation is to have fewer partners that handle more deals rather than many partners that each land a deal now and again. Again, in an ideal world channel partners would focus purely on what you as the vendor are focused on, but in reality channel companies carry many different products, some of them competing.

Channel partners don`t necessarily have competing products in their stable by design; it is usually as a component of one product that it competes with another. Trust is an important part of the relationship as far as this is concerned, and vendors must understand what the real impact is on their product. The only time this becomes a problem is when the channel partner wants a best-of-breed product but punts another vendor`s product because they enjoy a higher margin.

This has occurred in the past; I solved it by taking another channel partner into the opportunity after explaining I would do so to the first channel partner. But that requires the vendor to be honest and understand that sometimes the competitor product is simply better for the customer.

Often local channel partners make use of local vendor skills, but when it comes to acquiring product they bypass you and go straight to the international principal. Unfortunately there is not much that can be done about a local customer with international offices placing the order abroad. You can decide to service them and at least make revenue that way, or compete with them and the skills they will acquire in servicing their own software.

Without the proper education, these people who represent you to the customers will not present the right picture.

Julian Field, MD, Centerfield Software

This activity is based on trust between vendor and channel partner and develops over a long period of working together. The best method for managing the forecasts is to speak to the salespeople at the coalface who are not trying to justify numbers and cover expectations. Also, sales managers are often reluctant to dish out forecasts because it means they must commit.

With new products there is always a need to educate channel partners, and ongoing education is the only method of ensuring salespeople are aware of the capabilities of your product. Without the proper education, these people who represent you to the customers will not present the right picture. Education also gains product mind share, which is critical when you have salespeople often dealing with multiple products.

Ensuring channel partners are always up to date with new products and soon-to-be-released products is also critical to ensuring clients are properly informed to make the right buying decision. Mind share again plays a critical role in ensuring your product, competing with so many others, is at the front of the queue. Demonstrations and information sessions are key to achieving this.

Incentivising partners becomes more critical as the market becomes more brand-aware. Incentives, such as offering greater margins for more signed deals, help to a certain extent in any market. But this must be performed at a business level and not with individual salespeople in the business. Offering the channel partner business incentives allows it to restructure these and offer salespeople a reward in turn.

These pain points can result in a rewarding relationship if they are properly managed in an environment that is constantly seeking to improve tight margins or low volumes, and can be a bit of a cutthroat business.