Hardly any organization can scale-up without Channel Partners. In a way, a network of high performance, loyal and committed sales partners is one of the MOST effective assets to create shareholder value. Here are top-5 reasons why a great sales channel network can transform the fortunes of an enterprise:
- Volume Scalability– You have the product and delivery mechanism. You can quickly increase your reach to the customers through ready Channel Partners.
- Low investment– Most of the Channel partners do not need any fixed retainer fee. They buy goods from you and sell them to end consumers. So you do not have to invest in offices and manpower. All commission and margins given to channel partners are variable.
- Market Intelligence– Channel partners as they are well-entrenched in their respective markets can give the level of detailed/micro-level input on customer buying behaviors, product innovations, and competition moves.
- Product Scalability– Once you have a solid channel partner network established, you can expand your product range, as you have ready outlets to sell a wider variety of offerings.
- Brand Building– Every Channel Partner becomes not only the ‘Point of Sale’, but also ‘Point of Promotion’. You can use a partner’s facility to have your banners, display and distribute sales merchandise.
At the same time, there are inherent challenges which come along with a Sales Channel Partner vs. Direct Sales Teams:
- Limited Influence: As Channel partners are independent entities who are not on any fixed compensation, you cannot direct or use authority to get your work done. As a stand-alone business, they pursue their own interests which may or may not be aligned with yours.
- Potential Risk to Reputation: A Channel partner can be a ‘Make or Break’ for your brand. A partner who does not act, sell or promote as per the ethics or standards of your organization could spoil your brand.
- Receivables Defaults: A Channel Partner having taken Sales Credit from you, is a risk to your financials. Even if your product is selling well, but he is not doing well as a business, your partner could default on the payments.
- Lack of Predictability: A partner being a stand-alone business will push your competitor’s products if they are easy to sell or he is getting a better commission. Therefore a high performing channel partner could lose traction in a short time due to shifting loyalties.
- Working Capital-Inventories blockage: Channel Partners could take-up your stock, but take time to sell. This means that you sometimes are not able to give your good to partners who need it and sell it faster.
The above-mentioned points are a partial list out of a wide range of benefits and risks of the Channel Partner network. A successful organization is one that leverages the benefits and mitigates the risks of a sales channel.
While you can throw money in the hope of getting better performance from a Sales Partner, but it is effective only to a certain extent. Here are 10 ultimate Techniques to Develop High-Performance Sales Channel Partners
Lever #1- Channel Partner Servicing
A Channel partner is your ultimate customer. He is the one who is buying and paying for your goods. So he should be serviced with as much sincerity and effort as you will service an end customer. All the points mentioned in the blog are related to how well you are able to serve and support your partner.
So you need to have a solid channel partner servicing infrastructure, which should have the following components:
- Multi-Source Service Request- A channel partner (or salesperson on his behalf) can log in an issue through the mail, website, telephone or even SMS.
- A Service Ticket ID to be issued to the partner and it is tracked to closure
- Service-level Agreements to be established and monitored with a benchmark (say 95% issue resolved within agreed Turnaround time)
- A Channel Servicing Champion who should own the Channel Satisfaction
- Channel Partner Servicing Scorecard is monitored at the management level.
- Channel Partner Satisfaction is part of Management’s KRAs.
Lever #2- Channel Partner Training
Your Dealer/Distributor will be mostly small or medium-sized businesses. They will not be able to hire high quality/high-cost manpower. At the same time, you need them to be powerful sales reps for your business. Apart from that, there is generally a high employee turnover in small businesses. Therefore an organization needs to invest in training its partner and its employees.
You need to establish a quick, low-cost and highly effective training management system, in the same way as you will do with your employees:
- A training manager who is constantly on the move and providing training partner’s employees, on subjects like Selling, Product Usage, and Demonstration, Product installation,
- Billing, documentation and end-consumer schemes.
- Providing Product Demonstration and Technical Manuals
- Sending Daily/Periodic tips on various topics,
- Training helpline to provide any immediate response to an urgent question.
- At the next level, you may also think about giving access to the online learning management system, where people can get access to online content.
Lever #3- Local Below-the-Line Promotion
The fundamental premise here is that you need to make it easy for a channel to sell your products. Easier it is for your dealer, more he will sell and lesser monies you have to pay him a commission. A channel partner’s work gets easy when a customer can relate to your brand. While large companies have monies to invest in media advertising, small & medium enterprises generally rely on local (what we call as BTL- Below The Line) promotions on or around the point of sales. Based on the size of the market and the current level of your brand visibility, you need to invest into local promotions. This becomes further important for a new channel, and in a locality where you did not have a presence.
- Just like a business or sales plan, you need to have a ‘BTL Promotion’ Calendar where you have a weekly/monthly plan for various BTL activities:
- Dealer Meets
- Banners and Displays
- Merchandise Distribution
- Walk-in Discount Schemes for end-customer
- On-Site marketing
- Cluster Blitz
These plans should be backed by the budget, along with the details ‘when?, how? and who?’
- After each BTL activity, you need to take the Channel Feedback on its effectiveness so that you can fine-tune it for maximum cost & benefit.
Lever #4- Creative Sales Compensation Schemes
Money is an important driver, and high compensation definitely works. However, throwing more money on your channel partner sets a bad precedent. After all a channel partner is an aggressive business, and if they sense that they can extract more money from you, they will.
Therefore a company needs to be creative to maintain a good balance between driving high channel performance and commission/margin payouts. This is achieved by making sales schemes which pay higher commissions for:
- High-margin products
- Additional Value-added services from a channel like installation and servicing.
- Selling across the month instead of heavy month-end skew
- Selling old models/stock which the company wants to clear.
Essentially, higher commissions should be linked to higher returns or savings for the company.
There are multiple actions which can be done for promoting win-win schemes which encourage sales partner and benefit the company.
- Multi-Layered Schemes:
- Base Schemes which run month on month
- Special Seasonal Campaign schemes near festivals or high demand windows
- Special objectives schemes- Like stock clearance, beginning of month sales schemes
- Financial Analysis for Abuse-Proof Schemes
Sales compensation schemes once launched cannot be taken back easily. If they are too tight they end up giving no result. If they are too liberal you could end up spending more money than what you will earn. So you have to rely on detailed diligence on payout vs. benefit for different scenarios. Please remember that your sales partners will always look for better schemes year after year. So schemes need to be just right to give maximum benefit with minimum cost.
- Communicate Schemes Effectively
Your Sales partners need to understand the sales schemes clearly. You need to create different scenarios of what they will earn for how much sales so that the maths sinks in them. Also on a periodic basis, you need to tell them the incentive they have earned, and how much they will make if they sell up-to their target. In short- Keep the buzz on.
Lever #5- Intelligence Channel Sales Planning
One key success factor for high channel performance is the availability of goods at the right time and in the right quantity, at the point of sale. All sales commission schemes, training, and other support will be of no use if the sales partner does not get the material that he can sell. On the flip side of it, if you deliver more goods that he can sell, you will be blocked inventory and payment delays from your partners. Therefore Channel Demand forecasting needs to as accurate as possible.
No doubt, one can never project sales demand to perfection, but if you have an intelligent and data-driven process, you can take it to near-accurate over time. The sales planning process should include the following factors:
- The product-mix that you want to sell
- Stock Status (the production and delivery plans depend on how much-unsold stock exists in the system(
- The unsold stock lying at the point of sale
- Stock at the company warehouse
- Stock at production-center
- Expected Sales Demand (based on market conditions and demand history)
- Payments and default history/status of your channel partner (you will not sell or sell less to partners who are not paying)
- Any campaign planned which could spike-up the demand.
- Demand forecasted by Channel Partner based on his own local conditions.
You need to get the data from each Channel Partner and put it on an excel (or more sophisticated)-based model. Post that the sales forecast for each channel partner can be manually reviewed/confirmed. Based on the final sales forecast the production, supply chain, and delivery logistics can be worked out.
Lever #6- Special and Seasonal Campaigns
There is a saying in Sales ‘There should always be some buzz to excite channel partners and employees’. A company should keep on running small monthly campaigns (in some cases, expenses co-shared with channel partners), and large campaigns on a quarterly basis/around seasons. This keeps the interest alive, keeps everyone on his toes, and helping in giving spikes to sales. In other words, an organization should always be in ‘Sales Campaign Mode’
Sales Campaign has to be made as a repeatable and continuous process. A company of medium size should be running 40-50 small/large campaigns and contests. Each of them will need tools and capabilities, like
- Creative Campaign Materials
- Leads management systems
- Quick Order Processing
- Sales and Fulfilment
- Below and above the line promotion
- Digital Promotion
- Change in the IT systems to set-up special discounts, pricing and commission rules
Each campaign is a project in itself, and a company needs to be a constant whirring machine to churn out one campaign after the other.
Lever #7- Branded Sales Equipment
Irrespective of the type of sales you do through your channel partners, you can supply your partners with the point of sales equipment and tools. For example, FMCG companies give display shelves and cold storage. Consumer Goods provide repair and installation kits. Auto-Parts manufacturers give testing tools. In a way, this is a good way to lock in your channel partner. Also, it provides a good branding. These POS equipment give real value-add to the partners and make his work easy.
There can be various approaches to making an investment in these POS equipment. Here are the possible models:
- Equipment provided free to high performing channel partners.
- Equipment is given based on the performance in a campaign or contest.
- Equipment is given on easy installments to the partner.
- Equipment is given at a high discount to performing channel partners.
- Equipment is given to channel partners who buy on ‘Cash’ and do not take sales credit.
There are many ways in which you can handle. I would recommend that you make it an important part of your channel model.
Lever #8- Lead Generation Support
We have already discussed promotions, Campaigns, and Contests, which can generate leads for your channel partner. Apart from that, a company needs to establish an ecosystem that keeps on generating leads day after day/week after week and forward them to your partners. This will typically need investments, but its money worth spending. Remember- Easier you make the Job of your sales partner, more committed he will be, more prompt will be his payments and less he will push you for higher commissions.
Here are various ways you can create an ‘ongoing’ lead generation ecosystem for your partners-
- Continuously running ads on digital media (Facebook, Google, B2B Platform)
- Using B2B Platforms (like Alibaba, India-Mart) and ensure that you are high on the listing.
- Email Marketing
- Promoting your Website through search engine optimization, so that you get website inquiries.
This is more applicable in B2B sales and in the initial period post channel appointment. Your sales team can reach out to the companies to which your channel partners sell, and generate inquiries.
Lever #9- Bringing Sales Partner Online
You can take it to the next level by bringing your ‘Exclusive’ Sales partners online. In this way, you provide them a tremendous jump on their brand and visibility. In this way, each channel partner becomes a sub-brand within your overall bran umbrella. So the ecosystem which we talked about in the previous technique will be now created for each partner.
You can pick-up all your exclusive dealers and distributors- Create their website, get them listed in business directories, B2B platforms and promote their online presence. This, of course, can be done in various models:
- You provide services at discounted rates to the partner
- You can connect partner with a service provider with whom you can do a national level deal
- You can create subdomains of your partner within your website.
Lever #10- Close Partner Relationship and Contact
All said nothing can replace good old-fashioned connect with your partner. Your Sales employees need to go, sit with the partner, discuss weather & politics, family, market situation, listen to partner issues, push him for business, train his staff and so on. Sales partners typically attach great value to relationships and trust. They need to be treated like a larger family of your company. An emotional connection can resolve more than half of your problems.
- A company needs to develop Channel Engagement and Relationship culture. They should not only be considered as billing points or a line item in your books. Leadership at all levels needs to understand and train for this. Many great CEOs/Managing directors visit their partners and give them the respect which they deserve.
- One needs to set-up the ‘Sales Channel Contact Standards’, where based on the Criticality of a sales partner, you can mandate the minimum number of visits to be made to the partner.
There should be centrally driven sales Channel engagement activities, which can include off-sites, dealer meets, rewards & Recognitions and senior management visits to Points of sales.