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Best Practices For Enhancing Vendor/Reseller Relationships

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Best Practices For Enhancing Vendor/Reseller Relationships

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How do channel partners view their vendors? How do vendors view their partners? Is it a duel or a dance? How far can manufacturers see down the channel? Which incentives motivate partners and which don't? Based on a survey conducted by an independent research firm, the Silicon Valley Research Group, this eBook offers information and insights on all these questions, and more. The book provides foundational information to help with channel partner management and offers best practices for channel data management that can help you strengthen and improve your partnerships – resulting in channel sales growth.

How do channel partners view their vendors? How do vendors view their partners? Is it a duel or a dance? How far can manufacturers see down the channel? Which incentives motivate partners and which don't? Based on a survey conducted by an independent research firm, the Silicon Valley Research Group, this eBook offers information and insights on all these questions, and more. The book provides foundational information to help with channel partner management and offers best practices for channel data management that can help you strengthen and improve your partnerships – resulting in channel sales growth.

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Best Practices For Enhancing Vendor/Reseller Relationships

  1. 1. BEST PRACTICES: PART TWO Channelinsight ENHANCING THE VENDOR/RESELLER RELATIONSHIP
  2. 2. 2 TABLE OF CONTENTS INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SURVEY METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . 5 HOW VENDORS & PARTNERS SEE EACH OTHER: DUEL OR DANCE? . . . 7 SALES INCENTIVE PROGRAMS: MOTIVATE OR SALIVATE? . . . . . . . . 14 THE INFORMATION “CHUNNEL”: IS THERE LIGHT AT THE END? . . . . . . 33 SUMMARY & CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . 47 Channelinsight © 2014 Channelinsight | Propreitary & Confidential
  3. 3. BEST PRACTICES: PART TWO ENHANCING THE VENDOR/RESELLER RELATIONSHIP © 2014 Channelinsight | Propreitary & Confidential 3 INTRODUCTION
  4. 4. 4 INTRODUCTION © 2014 Channelinsight | Propreitary & Confidential Standing out from the crowd is a challenge for any business. No less so for a manufacturer wanting to distinguish itself among its many channel partners. Fanciful marketing programs with little substance no longer cut the mustard. For a manufacturer to stand as “hero” in a complex distribution channel, the first step is knowledge. What works, and what doesn’t? How do channel partners view their vendors? How far can manufacturers see down the channel to the end- customer? Which incentives motivate partners, producing revenue for both parties?This insight comes from a probing look into manufacturer/partner relationships. A survey conducted by an independent research firm, Silicon Valley Research Group, asked these questions and many more. The questions were put to CEOs, officers, directors and managers of Fortune 500 and mid-size firms in the IT space, whose business depends on channel partners. The results are telling. In this eBook we’ll explore what vendors and partners say about the complex dance between channel participants. Some of what we learn is conventional wisdom. But we also draw an unconventional conclusion—that fresh, accurate channel data can be the differentiator between a mediocre program or relationship and one that is highly profitable and mutually beneficial.
  5. 5. 5 SURVEY METHODOLOGY ENHANCING THE VENDOR/RESELLER RELATIONSHIP © 2014 Channelinsight | Propreitary & Confidential BEST PRACTICES: PART TWO
  6. 6. 6 SURVEY METHODOLOGY © 2014 Channelinsight | Propreitary & Confidential The survey from which our conclusions are drawn included a total of 295 Fortune 500 manufacturing companies, and 195 of their U.S. channel partners. All the companies were in the high tech industry, with average annual revenue of $848M and staffs averaging 5,859 people. Companies included an even mix of large and mid-size business-to-business firms, with sales, marketing, and channel operations throughout the Americas, Europe/Africa/ Middle East, and the Asia-Pacific region. Over half the companies derived more than 60% of their revenue from channel partners.Channel partners included a mix of Value Added Resellers (VARs), distributors, and direct marketing retailers. These firms averaged $125M in revenue and 75 employees. They sold systems, sub-systems, software, and components, and their vendors included companies such as HP, Cisco, Microsoft, IBM, Dell, and Apple. The survey was conducted among owners, presidents, CEOs, vice presidents, directors, and managers, and included both qualitative and quantitative methods. Qualitative, in-depth interviews provided insight and commentary, while the quantitative methodology provided results that can be projected to the larger population. The margin of error is +/- 9.7% at the 95% confidence level and +/- 8.1% at the 90% confidence level.
  7. 7. 7 HOW VENDORS & PARTNERS SEE EACH OTHER: DUEL OR DANCE? ENHANCING THE VENDOR/RESELLER RELATIONSHIP © 2014 Channelinsight | Propreitary & Confidential BEST PRACTICES: PART TWO
  8. 8. 8 HOW VENDORS & PARTNERS SEE EACH OTHER: DUEL OR DANCE? Is the relationship a duel? A dance? Or worse yet, is the manufacturer getting the cold © 2014 Channelinsight | Propreitary & Confidential shoulder? As noted in the survey methodology section, more than half the companies surveyed realize more than 60% of their revenue from their channel partners. That’s a nice chunk of change. So it behooves manufacturers to court those partners who put forth the greatest effort and generate the best results. But which ones are they?
  9. 9. 9 HOW VENDORS & PARTNERS SEE EACH OTHER: DUEL OR DANCE? “Manufacturers need be upfront, provide a timeline and then deliver on what is promised” – VAR Manager © 2014 Channelinsight | Propreitary & Confidential That’s the essential question that an effective channel data management program can answer. First, however, let’s look at what the survey says about the expectations that manufacturers and channel partners have regarding each other. There are certain characteristics that manufacturers expect from channel partners as a given: ••Technical Expertise ••Customer Relationships ••Local Market Knowledge Likewise, partners have their own set of expectations from manufacturers: ••Sales Leads and Best Practices ••Sales/Marketing Support ••Technical and Sales Training ••Market Research
  10. 10. 10 HOW TO CONTRIBUTE TO PARTNER SUCCESS The survey data took a deeper dive into the traits that partners consider important and effective to be successful. These traits are listed in Table 1 below. © 2014 Channelinsight | Propreitary & Confidential WHAT IS IMPORTANT? High Quality Products Vendor Reputation in Marketplace Competitive Pricing Sales/Incentive Tracking/Reporting Good Marketing Support Sales Training and/or Sales Materials Good Incentive Programs Technical Training Competitive Benchmarking Reports Breadth of Product Line Face Time with Vendor Personnel Sales Leads Social Media WHAT IS EFFECTIVE? High Quality Products Vendor Reputation in Marketplace Competitive Pricing Sales/Incentive Tracking/Reporting Face Time with Vendor Personnel Breadth of Product Line Technical Training Sales Training and/or Sales Materials Good Marketing Support Sales Leads Good Incentive Programs Social Media Competitive Benchmarking Reports Table 1
  11. 11. 11 HOW WELL DO MANUFACTURERS SUPPORT THEIR PARTNERS? © 2014 Channelinsight | Propreitary & Confidential When asked how well manufacturers support their partners (see Fig. 1), some activities and traits scored highly both in importance and ability to motivate, including: ••High Quality Products ••Vendor Reputation in Marketplace ••Competitive Pricing Good tracking/reporting ability held the middle ground, followed by: ••Sales Training ••Marketing Support ••Good Incentive Programs Social media was the outlier, ranking near the bottom in both importance and performance. However social media is on the rise with savvy B2B buyers who are turning to search and social media for business recommendations.
  12. 12. 12 HOW WELL DO MANUFACTURERS SUPPORT THEIR PARTNERS? © 2014 Channelinsight | Propreitary & Confidential 8,50 8,40 8,30 8,20 8,10 8,00 7,90 7,80 Competitive Benchmarking 7,70 7,80 7,90 8,00 8,10 8,20 8,30 8,40 8,50 8,60 PERFORMANCE IMPORTANCE High/Quality Products Vendor Reputation Competitive Pricing Good Incentive Programs Face Time Social Media Tracking/Reporting Marketing Support Product Line Breadth Leads Sales Training Tech Training Figure 1
  13. 13. 13 HOW WELL DO MANUFACTURERS SUPPORT THEIR PARTNERS? © 2014 Channelinsight | Propreitary & Confidential For a manufacturer, traits such as product quality, company reputation, and competitive pricing are what it takes to get into and stay in the game. Going beyond these traits, best practice in creating an effective manufacturer/ partner relationship involves setting clear expectations, aligning goals, and setting up rules for communicating regularly. As Debra Delaney, President and CEO at CCI, states in her post “What Makes a Partnership Work?” from her blog Channel Marketing Strategies for Success, “What does matter is that you have mutual respect, and that you support each other’s goals and values…. Best practice is to establish simple rules around how often you communicate to make sure you are staying on track and not drifting apart. … Equally important is establishing how each partner will be rewarded.” And that brings us to the issue of sales incentive programs.
  14. 14. 14 SALES INCENTIVE PROGRAMS: MOTIVATE OR SALIVATE? ENHANCING THE VENDOR/RESELLER RELATIONSHIP © 2014 Channelinsight | Propreitary & Confidential BEST PRACTICES: PART TWO
  15. 15. 15 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: © 2014 Channelinsight | Propreitary & Confidential “The most effective sales incentive program helps support a good product and vendor, and as a result, increases sales.” – Executive Director, Distributor
  16. 16. 16 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: When was the last time a channel partner drooled over your incentive program? The sad fact is that many sales incentive programs are largely ineffective. The survey probed both manufacturers and partners to determine what works and what doesn’t when it comes to sales incentives. Table 2 describes which incentive programs rank most important among partners. © 2014 Channelinsight | Propreitary & Confidential
  17. 17. 17 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: © 2014 Channelinsight | Propreitary & Confidential Which Incentive Programs Are Important to Partners? WHAT IS MOTIVATING? Big deal discounts Performance based MDF Short-term price-based SPIF Volume rebates Non-payment incentive WHAT IS EFFECTIVE? Performance based Big deal discount Volume rebates Short-term price-based SPIF Non-payment incentive MDF Table 2
  18. 18. 18 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: In the qualitative research, partners had a mouthful to say to manufacturers about sales incentive programs. Here are some dos and don’ts gleaned from these interviews: © 2014 Channelinsight | Propreitary & Confidential What To Do: We love it when you provide cash incentives. Cash is king. The more cash the better. ••Create progressive incentives. ••Make goals realistic and attainable. ••Pay consistently and quickly. ••Communicate program details and success tips clearly and simply. ••Respond in a timely way to calls and short shipping times. What NOT To Do: ••Don’t make incentives too small. ••Don’t overlook the need to market the program. ••Don’t create confusion with complexity. ••Don’t rely on prizes. They are not universally appealing and present tax complications. ••Don’t ignore outstanding partner successes. Doing so will hamper participation in future programs.
  19. 19. 19 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: Do Sales incentive Programs Really Increase Sales? When done properly, the answer is yes. You can change partner behavior with a well-designed program that incorporates the dos and don’ts noted above, especially these: © 2014 Channelinsight | Propreitary & Confidential ••Use cash, not prizes ••KISS (Keep It Super Simple) ••Clearly communicate program details and success tips ••Automate to ensure fast and accurate payments Which Incentive Programs Work Best? The survey probed respondents about program effectiveness by type (see Figure 2). Channel partners rated the following types of programs as most effective: ••Performance Based ••Big Deal Discounts ••Volume Rebates The programs most likely to motivate partners included the following: ••Big Deal Discounts ••Performance Based ••Market Development Funds (MDF)
  20. 20. 20 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: 7,60 7,70 7,80 7,90 8,00 8,10 8,20 8,30 8,40 MOST EFFECTIVE © 2014 Channelinsight | Propreitary & Confidential 8,40 8,30 8,20 8,10 8,00 7,90 7,80 7,70 MDF LIKELY TO MOTIVATE Volume Rebates SPIF Non-payment programs Performance Based Big Deal Discounts Figure 2 What kind of incentive programs are effective?
  21. 21. 21 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: “We want MDF funds that we can use for custom programs.” – Manager, Retailer © 2014 Channelinsight | Propreitary & Confidential
  22. 22. 22 MOTIVATE OR SALIVATE? SALES INCENTIVE PROGRAMS: Manufacturers were also asked to rank their rebate programs on the basis of four criteria (see Figure 3). 93% of manufacturers rebate programs are performance driven. Figure 3 95% 90% 85% Manufacturers favored performance based programs, for example, those using metrics such as year-over-year growth or sales quotas. An example of an objective based program is one using new customer acquisition as a metric. Programs that allocate MDFs are an example of activity-based programs, while a ranking system such as Platinum/ Gold/Silver describes a program based plan. © 2014 Channelinsight | Propreitary & Confidential 93% 89% 89% 86% 80% Performance Objective Activity Program
  23. 23. 23 PERFORMANCE METRICS When manufacturers were asked how many of their incentive programs met or exceeded their revenue performance goals, 86% said that “All, Most, or Some” of their programs did so (Fig. 4). However, Only 28% could answer “All or Most.” Figure 4 86% of incentive programs meet or exceed incentive goals. How many of your incentive programs meet or exceed revenue performance goals? © 2014 Channelinsight | Propreitary & Confidential 4% 24% 9% 6% 58% All Most Some Few None
  24. 24. 24 SALES INCENTIVES MEAN REVENUE AND PROFIT The survey indicates that sales incentives programs contribute significantly to channel partners’ sales and profits. Incentives can boost both these metrics as high as 40 percent (see Figure 5). In fact, channel partners depend on various types of incentive programs for revenue (see Figure 6). Incentives Can Add 40% To Partner Prots © 2014 Channelinsight | Propreitary Confidential Figure 5 25% 20% 15% 10% 5% 0% Partners Incentives Can Boost Sales By 40% Incremental Sales 40% 30% 20% 10% 0% Partners Incremental Prot
  25. 25. 25 SALES INCENTIVES MEAN REVENUE AND PROFIT © 2014 Channelinsight | Propreitary Confidential Channel partners rely significantly on incentive programs from the manufacturer for revenue. * Average Impact on Revenue Figure 6 Back-end Rebates 18.4% Revenue Rebates 17.3% MDF 16.6% Deal Reg 14.8% Co-Op 14.0%
  26. 26. 26 LATE PAYMENTS CAN DAMAGE THE RELATIONSHIP Partners want prompt and accurate payment for fulfilling their end of the bargain in an incentive program. Yet only 7% of manufacturers pay incentives in less than 14 days (see Figure 7). Additionally, only 40% of manufacturers calculate and process incentive payments automatically all or most of the time. 7% of manufacturers pay incentives in under 14 Days What percent of incentive payments are calculated and processed automatically? © 2014 Channelinsight | Propreitary Confidential Figure 7 8% 32% 27% 16% 17% All Most Some Few How many days does it take 45 40 35 30 25 20 15 10 5 to process and pay partner incentives? 0 None 0 10 20 30 40 50 60 70 80 90100110120 # Respondents # of Days to Pay
  27. 27. 27 LATE PAYMENTS CAN DAMAGE THE RELATIONSHIP © 2014 Channelinsight | Propreitary Confidential Resellers are likely to remember late payments. And they may perceive “late” differently than the vendor because of the time difference between claim submission and payment. For example, if it takes 45 days to get a claim submitted and processed, and another 45 days before that claim is paid, that’s 90 days. In the reseller’s mind, that’s a late payment, which may feel like a burr under the saddle of the relationship.
  28. 28. 28 AVOIDING INCENTIVE OVERPAYMENT The survey found that respondents run an average of 21 channel incentive programs annually, costing on average 11% of their annual channel revenue (see Figure 8). Among survey respondents, this figure amounts to $31,800,000. The survey also found that 6% of channel incentives were believed to be overpayments (see Figure 8), costing vendors approximately $2.1M. Figure 8 Average Incentive overpayment is 6% 45% 40% 35% 30% 25% 20% 15% 10% 5% Average 11% © 2014 Channelinsight | Propreitary Confidential 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average 6% 0 - 9 10 - 19 20 - 29 30 - 39 40 - 49 50 - 59 60 - 69 70 - 79 80+ 0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 40 % Respondents % of channel incentives believed to be overpayments 0% % Respondents Incentives spend as % of channel revenue
  29. 29. 29 AVOIDING INCENTIVE OVERPAYMENT These survey results indicate that an otherwise successful incentive program could be overshadowed by a number of administrative problems, such as: ••Program abuses ••Duplicate claims ••Partner frustration due to slow payments © 2014 Channelinsight | Propreitary Confidential ••Slow manual processes ••Late program analysis ••Calculation inaccuracies The results further emphasize the need for a fully automated system to gather timely, accurate, and reliable data to manage incentive programs effectively.
  30. 30. 30 IMPORTANCE OF INCENTIVE PROGRAMS How do manufacturers know what they are getting out of their incentive programs? The survey indicates that 38% of manufacturers calculate ROI on their incentive spend (see Figure 9). Figure 9 38% of manufacturers calculate ROI on Incentive Spend Are You Getting the Most Out of Your © 2014 Channelinsight | Propreitary Confidential 38% 52% 72% 73% 80% 60% 40% 20% 0% Calculate ROI on incentive spend Test programs before launch Pay on NET Revenue Required to submit claims Channel Incentive Programs?
  31. 31. 31 IMPORTANCE OF INCENTIVE PROGRAMS When asked about the importance of various criteria relating to their incentive programs, respondents rated the following as somewhat or very important (see Figure 10): © 2014 Channelinsight | Propreitary Confidential ••Testing and modeling of incentive programs before launching (64.7%). ••Real-time visibility into the performance of incentive programs (81.4%). ••Ability to compare performance against pre-set program goals (85.3%). ••Identification of over/ under performing incentive programs (78.4%). ••Speed of incentive payment (64.7%).
  32. 32. 32 IMPORTANCE OF INCENTIVE PROGRAMS 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 However, only 34% of respondents on average were somewhat or very satisfied with their ability to meet these criteria. This discrepancy between importance and satisfaction spells opportunity for manufacturers who can put automated information systems into place to improve satisfaction levels. © 2014 Channelinsight | Propreitary Confidential 1,0 1,0 2,0 3,0 4,0 5,0 Importance Satisfaction Testing and modeling of incentive programs before launching. Real-time visibility into incentive performance Compare performance against program goals Identify over/under performing programs Rapid incentive payment Figure 10 Incentive Programs - All Respondents
  33. 33. 33 THE INFORMATION “CHUNNEL”: IS THERE LIGHT AT THE END? ENHANCING THE VENDOR/RESELLER RELATIONSHIP © 2014 Channelinsight | Propreitary Confidential BEST PRACTICES: PART TWO
  34. 34. 34 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: Preposterous! That’s how the idea of a tunnel under the English Channel was first received. It’s also the way some manufacturers may think about their ability to see down the sales funnel to the ultimate end-customer. Survey respondents were asked about their ability to identify the end-customer in their indirect sales channel, as well as market segmentation data concerning that end-use customer (see Figure 11). Figure 11 Only 34% of Manufacturers have actionable-end customer data Can you identify the end-customer market segmentation in your indirect sales? 5% © 2014 Channelinsight | Propreitary Confidential Can you identify the end-customer in your indirect sales? 39% 6% 28% 22% 4% Always Usually Sometimes Rarely Never Always Usually Sometimes Rarely Never 18% 10% 34% 33%
  35. 35. 35 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: © 2014 Channelinsight | Propreitary Confidential From the 67% of respondents who reported that they can “Usually or Always” identify the end-customer, 51% of those can usually or always identify the end-customer market segment (see Figure 11). This means only 34% of manufacturers have actionable end-customer data, meaning the ability to know not only who made the purchase, but also what was purchased and where.
  36. 36. 36 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: Among respondents, 87% were confident in their ability to identify their channel revenue by partner type. However, 54% could not segment their channel partners by the market segments they serve (see Figure 12). Can you organize your channel partners by the segments they serve? © 2014 Channelinsight | Propreitary Confidential Can you segment your indirect sales revenue by channel partner type? 8% 2% 4% 33% 54% Always Usually Sometimes Rarely Never Never Rarely Sometimes Usually Always 0% 10% 20% 30% 40% Company size Vertical market Figure 12 54% of Manufacturers know where their partners are, but do not know who they serve.
  37. 37. 37 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: As to the source of their information, manufacturers rely heavily on self-reporting or their own internal research to identify end-customers (See Figure 13). Figure 13 54% of manufacturers rely heavily on self-reporting 57% on costly What is your source for end-customer segmentation information? © 2014 Channelinsight | Propreitary Confidential 57% 54% 28% 60% 50% 40% 30% 20% 10% 0% Internal team research End-customer self-description 3rd party service internal research to identify end-customers
  38. 38. 38 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: Given the variety and complex nature of today’s sales incentive and rebate programs, and the millions of dollars being paid out to channel partners, manufacturers cannot afford to rely on partial or inaccurate data. Nor can they afford the cost of manually processing data, which leads to problems such as the following: © 2014 Channelinsight | Propreitary Confidential ••Calculation inaccuracies ••Resource intensive claims processing ••Incentive program fraud and abuses ••Inability to adjust course while a program is underway ••Inability to guarantee accuracy when paying earned rebates or MDFs to partners ••Inability to ensure timely payments to partners
  39. 39. 39 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: Best practice dictates an automated data gathering system that ensures accuracy, timeliness, and transparency for both vendor and partner. Figure 14 43% rely on POS from the partner 24% from a 3rd party © 2014 Channelinsight | Propreitary Confidential 74% 61% 43% 24% 80% 60% 40% 20% 0% Channel partner self-description Internal team research POS transaction 3rd party service What is your source for channel partner segmentation information?
  40. 40. 40 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: © 2014 Channelinsight | Propreitary Confidential For channel partner segmentation data, 74% of manufacturers rely on self-description by channel partners. Also, 43% of manufacturers depend on channel partners for point-of-sale (POS) transaction data (see figure 14). Traditionally, the manual processing of claims and rebates has placed a huge burden on the partner. To claim benefits, the partner must track sales and submit claims with proof of performance. The manufacturer must then manually verify these claims. This often leads to requests for more information and delays before claims are finally paid out.
  41. 41. 41 IS THERE LIGHT AT THE END? THE INFORMATION “CHUNNEL”: Best practice in gathering POS data to support incentive programs calls for an automated approach that can accomplish the following: © 2014 Channelinsight | Propreitary Confidential ••Automatically evaluate POS data to determine which transactions meet eligibility requirements for each rebate program ••Automatically calculate rebates across all programs ••Automatically process claims without the need for partners to submit paperwork ••Automatically eliminate errors that are inherent in manual processing ••Eliminate the need for “shadow” accounting by channel partners, leading to improved relations Automation ultimately leads to reduced costs by eliminating overpayments and mistakes, and by reducing administrative costs. The result: more dollars available for programs.
  42. 42. 42 PARTNER SEGMENTATION AND TIERING What do manufacturers think about the value of tiering or classifying channel partners? On average, 66% considered end-customer and partner segmentation issues as “Important or Very Important” (Figure. 15). © 2014 Channelinsight | Propreitary Confidential 5,0 4,0 3,0 2,0 1,0 1,0 2,0 3,0 4,0 5,0 Importance Satisfaction Compare end-customer segment growth to industry benchmarks Target incentive programs to specic end-customer segments Determine optimal partner coverage by market segment Prioritze channel partners to drop Figure 15 Partner Tiering – All Respond ents
  43. 43. 43 PARTNER SEGMENTATION AND TIERING Following are the reasons that manufacturers value tiering: © 2014 Channelinsight | Propreitary Confidential ••Prioritize channel partners to invest in (47%) ••Prioritize channel partners to retain (46%) ••Prioritize channel partners to drop (40%) ••Determine optimal partner coverage by market segment (42%) ••Target incentive programs to reach specific end-customer segments (31%) ••Compare end-customer segment growth to industry benchmarks (29%) However, only 39% of respondents on average were somewhat or very satisfied with their ability to do so.
  44. 44. 44 PARTNER SEGMENTATION AND TIERING Craig DeWolf also notes: “Assuming you have a means for measuring performance at the partner level, you have the basis for your partner scorecards.” In other words, once criteria are established, measurement is the key. Here again, best practice calls for an automated system to gather the needed data reliably, accurately, and in a timely fashion. © 2014 Channelinsight | Propreitary Confidential
  45. 45. 45 PARTNER SCORECARDS Setting up a partner scorecard is a best practice that can address many if not all the reasons noted above. What goes onto the scorecard depends entirely on the nature of the manufacturer’s business and that of the channel partners. According to CCI Global Channel Management, below are the top ten scorecard metrics: © 2014 Channelinsight | Propreitary Confidential 1. Total Sales Revenue 2. Technology Expertise 3. Operational Efficiency 4. Mindshare 5. Sales Metrics 1. Current Revenue Model 2. Vertical Expertise 3. Company Health 4. Business Plan 5. End-User Satisfaction For more information on Scorecarding, please see: Key Scorecarding Practices for Channel Success | Top 10 Scorecarding Metrics”
  46. 46. 46 PARTNER SCORECARDS Some basic information to consider is provided in a post by Craig DeWolf entitled “Creating Partner Scorecards” from the CCI blog, Channel Marketing Strategies for Success. His list includes the following criteria: © 2014 Channelinsight | Propreitary Confidential ••Minimum number of new deals registered per year (per sales rep) ••Utilization rate for Co-op/MDF spending ••Close/Win ratio of all deals registered ••Average time to close for all deals ••Close/Win ratio for all leads distributed to the partner ••Minimum attachment rates for specific products or service packs ••Year-over-year revenue growth ••Support calls received, or received without escalation ••Average gross margin per sale ••Average deal size/value
  47. 47. 47 SUMMARY CONCLUSIONS ENHANCING THE VENDOR/RESELLER RELATIONSHIP © 2014 Channelinsight | Propreitary Confidential BEST PRACTICES: PART TWO
  48. 48. 48 SUMMARY CONCLUSIONS Following is a summary of highlights from the research regarding channel partner and end-customer segmentation: ••Only 34% have actionable end-customer © 2014 Channelinsight | Propreitary Confidential data. ••54% rely on self-reporting for identification of partners and end-customers. ••87% can always or usually segment their channel revenue by partner type. ••54% cannot identify partner market segments. ••66% believe it is important, or very important, to use partner and end-customer data in planning and decision-making. ••Only 39% are somewhat or very satisfied with the data available. Regarding incentive programs, these highlights emerge: ••93% of Rebate Programs are performance-based. ••38% calculate ROI on incentive spend. ••Fewer than 7% pay rebates in less than 14 days. ••6% of incentives are overpaid. ••75% consider incentive program Best Practices to be important or very important. ••33% are somewhat or very satisfied with incentive program Best Practices implementation.
  49. 49. 49 BEST PRACTICE RECOMMENDATIONS © 2014 Channelinsight | Propreitary Confidential For Partner Tiering ••Develop reliable end-customer segmentation data. •• Segment resellers based on POS transaction data. ••Use segmentation to prioritize partners to invest in. ••Compare end-customer sales to industry benchmark. •• Target incentive programs to specific end-customer segments. ••Determine optimal partner coverage by market segment. •• Prioritize channel partners to drop. •• Prioritize channel partners to retain. For Incentive Programs ••Calculate ROI on incentive spend. •• Speed incentive payments. ••Validate accuracy of incentive payments. ••Gain real-time visibility into incentive program performance. •• Identify over/under performing programs. ••Compare performance against program goals. •• Test and model incentive programs before launch. For Both ••Rate your importance and satisfaction for each practice on a scale from 1 – 5: •• Importance Scale: 1 Very Unimportant; 5 Very Important •• Satisfaction Scale: 1 Very Dissatisfied; 5 Very Satisfied
  50. 50. 50 MOVING FORWARD This independent survey sheds invaluable light on the current state of affairs between manufacturers and their channel partners in the high-tech arena. One might reasonably assume that similar results could be derived from vendors and resellers in other industry segments. One insight gleaned from the survey is that respondents seem aware of best practices regarding sales incentives and partner segmentation, but don’t always have the means to practice them! Satisfaction levels lag behind performance on a number of criteria. The antidote: fast, accurate, timely, reliable channel data to help manufacturers better manage and enhance their partner relationships. © 2014 Channelinsight | Propreitary Confidential
  51. 51. 51 CLOSING NOTES The content presented in this eBook is intended to provide foundational information to help with channel partner management, as well as provide best practices for channel data management. To assist your effort further, this information can be supplemented by other best practice white papers offered by Channelinsight including: 1. Best Practices in Channel Partner Data Collection 2. Best Practices for Using Data To Drive Channel Sales Growth 3. Best Practice in Channel Point-of-Sale for Timely Incentive Rebates Additional reference materials may be found at www.channelinsight.com About Channelinsight Channelinsight the industry leader and pioneer in channel data management, delivering a cloud-based application and enablement services provides manufacturers with visibility into every partner and every end-customer in every transaction, in real time – allowing them to gain the insight necessary to drive sales and optimize inventory. Channelinsight collects “raw” POS and inventory data from tens of thousands of channel partners globally, and processes over $120 billion in channel sales transactions annually. Customers benefiting from this 7x24x365 solution include: HP, TE Connectivity, AMD, Sharp Electronics, Microsoft, Smart Technologies and more. Channelinsight is backed by Rho Ventures, Sequel Venture Partners and Vedanta Capital, and is headquartered in Denver, CO with offices in Palo Alto, CA, as well as globally. © 2014 Channelinsight | Propreitary Confidential
  52. 52. Channelinsight CORPORATE HEADQUARTERS 1875 Lawrence Street, Suite 1200 Denver, CO 80202 Phone: 303-293-0212 855-5-Ci-Data Fax: 303-293-0213 Email: info@channelinsight.com Web: www.channelinsight.com

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