Don't Overlook Channel Sales as Part of Your Customer Strategy

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Channel sales have traditionally been a powerful, yet often overlooked component of a company's sales strategy. In many cases, channel sales may account for a majority of revenue, but it is often overshadowed by and takes a strategic backseat to internal sales functions.

A new study from Sirius Decisions and Blueroads, The Channel Survey: 2009 Priorities, shows that companies are slowly changing their attitudes about channel sales. In the past strategic decisions regarding channel sales were often efficiency-based; today top sales executives increasingly are focusing on effectiveness instead-and for good reason.

In the study of 1,000 channel sales executives, 80 percent of channel investments focused on tactical, efficiency issues like training, partner portals, and automation tools for partners. Only 40 percent of these executives reported an increase in revenue as a result of these efforts. By contrast, of the 20 percent of channel executives focused on effectiveness activities such as lead management, shared pipeline reporting, and deal registration, 62 percent reported increased revenue.

So if becoming more strategic with partners leads to more revenue, why aren't more channel chiefs doing it? Charles Watson, senior vice president of sales and marketing at Blueroads, thinks tradition and the nature of the indirect sales channel pose big challenges. "The indirect channel is seen as a black hole for leads," he says. "It's hard to prove incremental revenue." In many cases, companies don't have metrics in place to measure their channel partners' performance.

But Watson says that a strategic focus on channel sales is worth the effort. "In many cases, channels are the primary face to the customer," he says. "It's not OK to put partners on autopilot." He suggests that companies balance efficiency and effectiveness by measuring partner, lead, and opportunity KPIs, as well as generating high-quality leads for channel partners, instead of "throwing them the leftovers," Watson says. In addition, company executives should build a process for the rapid delivery of leads to channel partners, and create lead and prospect accountability on the part of channel partners.

Quantum's balancing act
One company working to balance efficiency and effectiveness is data storage firm Quantum. The $1 billion company conducts 35 percent of its business through 4,000 channel partners. The company is in the midst of transitioning from tape backups to disks, and its channel relationships are integral to a smooth transition. In addition, Quantum realizes the value of a strong partner relationship to foster a strong end-user customer relationship. "We have got to make sure that we have the right partners, and that they have the right information," says Greg Fredericks, Quantum director of channel marketing.

Working with Treehouse Interactive, Quantum created a partner portal in 2006 that features automatic lead transfers and deal registration programs. Quantum can also rank its partners by their capabilities and level of commitment to Quantum sales. For example, Fredericks notes that there are 12 elite partners at the highest level of both capabilities and commitment. Based on that information, Fredericks can interact with different partners differently. The company uses its partner portal to customize information including products, geographies, pricing, languages, contact information, and other levels of access for each partner level and location.

Quantum can track activity within the portal, to see what partners are most interested in. "We can sit down and talk with them," Fredericks says. "We can measure the ROI of partners and we can track how active they are in the program." In addition, partners can provide lead status and updates, making it a collaborative and shared environment.

Quantum plans to enhance the customization on its partner portal, to balance the efficiency of communication with the effectiveness of meeting partner needs, something the study predicts may help deliver even higher ROI in the long run.

EXPERT OPINION
EXPERT OPINION