The Ultimate Guide to Channel Management

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The Ultimate Guide to Channel Management

What Is Channel Management?
The word “channel” indicates a passageway through which something flows.
Channel management is a discipline in management science in which a vendor
organization or “brand” creates, captures, and fulfills market demand via another set
of organizations who act as channel partners and ecosystem players for the subject
vendor. These channel partners act as a kind of mechanism that enables the orderly
“flow” or distribution of products and services from the vendor to the end customer.
In this article, we will expand on this basic view of channel management and attempt
to explain in more detail how it functions in real-life scenarios.
Any for-profit organization—and even some non-profits—that depend on providing
products and services to customers in order to survive, require two core functions:
sales and support. In today’s world, most organizations that sell products and
services also require a marketing function. The entire goal of a commercial
organization, in fact, is to find buyers, make them aware of the vendor’s products and
services, provide those products and services for a fee, and then, as a part of this
transaction, make a reasonable profit. Now, we all know profit is a function of
revenue minus cost.

If the cost to acquire, deliver and serve to exceed the revenue the company
generates, then it becomes unprofitable to serve a specific group of customers. This
is where a “channel” organization and channel management come into play by
enabling cost-effective sales and support for vendors on a larger scale than is
possible through direct selling alone.
The primary purpose of a vendor’s channel organization is to build relationships with
a set of other organizations that can resell and support the vendor’s products and
services. The core feature of this relationship between the vendor and the partner
organization is their mutual interest in increased profitability. For the relationship to
succeed, the vendor organization should be able to reach, acquire and serve a large
number of end customers at a relatively low cost compared to selling directly, and
the partner organization should be able to increase profitable revenue by providing
the vendor’s products and services, along with the other products and services the
partner sells.

With this as a backdrop, we can now see that channel management basically entails
five core phases, as outlined below:
1. Partner recruitment – The focus of this phase is to reach out to and build
relationships with potential organizations that are able to sell and support a
vendor’s solution.
2. Partner training – The focus of this phase is to ensure partners’ functional
teams are properly trained on how to market, sell, deploy, and support a specific
solution.
3. Partner enablement – This phase focuses on making sure the partner
marketing, sales, and technical personnel have the right tools to do their job.
4. Partner sales – The entire focus of this phase is to drive increased sales via
partner organizations via new accounts and partners’ existing customers.
5. Partner management – This phase focuses on introducing effective
performance enhancement incentives and programs tied to training, certification,
sales improvements, quota attainment, etc.

Channel management is a discipline all its own, but it also tends to build up all other
cross-functional areas of an organization, such as marketing, sales, operations,
finance, and legal. In the case of a channel organization, the traditional direct
functional disciplines must undergo adaptations to fit a specific channel requirement,
as follows:
1. Channel marketing – This functional group focuses on driving awareness in the
partner base to recruit and enable partners with new programs and initiatives.
This group also takes content from the direct marketing team and adapts that
content for partner use in end-user lead generation.
2. Channel sales – The focus of this functional group is to train and help a partner
close a new transition or grow an existing account. Unlike direct selling, where a
sales rep of a vendor directly calls up an end customer or prospective buyer,
channel sales activities are conducted through a partner organization.
3. Partner development – This group focuses on ensuring partners are properly
trained and certified to go after certain solutions. In many cases, the partner
development organization also manages alliances or other vendors who “white
label” a vendor’s solution.

4. Channel operations – The focus for channel operations is on managing
channel inventory, and this function relies upon supply chain management
capabilities, but traditionally the channel operations group focuses on the front
end of the channel—i.e., distribution partners—to make sure products are
available and returns are properly managed.
5. Channel finance – This function makes sure resellers who are buying on credit
have the right capabilities and credit rating in place to support a sales
transaction. In order to ensure proper payment and approve special pricing,
channel finance works hand-in-hand with channel sales and operations.
6. Channel legal – The focus of this function is to make sure there are always
updated contracts between a partner organization and the vendor organization.
In case of channel conflict, this function also mediates disputes.

While these six functions are not indicative of every channel organization, I use them
for illustrative purposes to make the point that channel management is very much
like business management, but it is conducted indirectly through a set of partner
organizations. So, while traditional direct functional teams may not be needed if an
organization’s focus is exclusively on a channel-only model, it is important to
remember that channel management itself is a cross-functional discipline and
requires all traditional business functions to be properly adapted for a specific
channel configuration.
Six C’s of Channel Management – How to Drive Growth?
When managing any team, you must have processes in place to support your
initiatives and help you streamline tasks more efficiently. This is especially true in
channel management.
Each type of channel’s lifecycle is essentially the same – recruit, onboard, enable,
transact, and manage. It’s important that each of these components is considered
when mapping out an overall channel strategy. After all, growth depends on the
success of distribution partners.

Here, we highlight the 6 C’s of channel management and how you should be
applying them.
1. Create: The first step of your channel strategy is to know who your target
partners are and how you’re going to create programs to support them. Channel
programs serve as a foundation – for both the product you’re trying to sell and
training. Consistently curating programs and relevant content can keep your
partners engaged, and most importantly, informed. Knowing that you’ll have the
latest information to aid in their efforts will undoubtedly keep them coming back.
Consider frequently including assets like web pages, documents, and videos.
Utilizing a platform to easily update and house these documents makes the
process of educating partners even easier. ZINFI, for example, boasts a content
library module in its partner portal platform that enables vendors to upload and
update any collateral as needed.
2. Communicate: Communication is two-fold in channel management. You need
to have both a communication strategy for new partner recruitment and existing
partners.

3. Recruitment Communication: To penetrate a market of new resellers, you’ll
likely have to rely on social advertising, online events, trade shows, etc. There
should be a concerted effort to target verticals that will market your product
directly to those most likely to become partners. You will need to know whom
you want to bring on as your reseller, and what would entice them to partner up
with you. Your messaging needs to focus on what business value you bring to
them, and how you will help them win in the marketplace.
Communication with Existing Partners
When you launch a product when you acquire a company, when you roll out an
incentive program, or when you launch a training program, you have to have a clear
set of communication plans tied to those activities, initiatives, and programs.
It may seem overwhelming to have communications in place for each, individual
initiative. But this is crucial to ensuring partners have the information they need to
sell. Many channel management teams make it easy by utilizing a partner marketing
automation platform that streamlines the process for you. Is it a social campaign? An
advertising campaign? A trade show campaign? A partner marketing automation
platform can enable you to create dedicated campaigns for each initiative and does
the communication for you.

1. Connect: You should be constantly keeping your partners informed. They need
to know what's new, what's changing, and what must get done, just like the way
you communicate to employees on a regular basis for a management
infrastructure–what the company goals are, what the quarterly objectives are,
etc. Consider connecting on a regular forum–whether it's an online event or
regular email communications. You can also invest in a channel management
platform, like ZINFI, that enables you to connect through mobile alerts and pop-
ups so you have multiple touchpoints with partners.
2. Cooperate: Cooperation means working with partners to create a plan so that
they can enter a market segment they may not be competent. These are large
partners that you’ll want to cater to as smaller partners may not produce the
results to make the time commitment worth it to build entry into new segments.
Remember, the point is that it needs to tie back to your overall channel strategy.
In the end, the entire goal of your channel management investment is to sell
faster and at lower costs.
3. Collaborate: While cooperation in channel management is about organizations
helping partners to create a contract and plan, collaboration is to do something
together (vendor and the partner). For example, to cooperate a vendor might
work with a partner to help develop their business plan or strategy to increase
sales.

Alternatively, when collaborating, a vendor will work with partners to go after the end
buyer (prospect or installed base). This might mean you're cultivating a joint
marketing campaign or running an event during a training program–you're
collaborating with them to do something together rather than guiding them to do it
alone.
4. Commerce: A channel, when it comes down to it, is about commerce – buying
and selling on a large scale. It’s important that you’re focused on making
communications applicable to whatever stage of the lifecycle partners are in –
the recruitment phase is different from the onboarding phase as is the
enablement phase and transaction phase–because it all comes down to the
management of commerce. Your communication should clearly tell the partner
what steps they need to complete for them to be able and successful in carrying
out transactions. The relationship with a partner organization is purely financial.
Whether you have a referral partner, sales partner, or service partner, in the end,
the partner organization is out there to make money. Therefore, all your
communication, training, incentives, deal registrations, service competency
development, and related channel programs need to constantly link back to how
the partners can make money from your products, services, and programs.

Automation is Key
In order for a channel organization to drive profitable growth, they need to
consistently and efficiently manage its network of distribution partners. This means
having processes in place beyond excel spreadsheets and quarterly in-person
training. To scale fast and with purpose, you need to automate. That’s where ZINFI
comes in.
A leader in through-channel marketing automation and partner relationship
management, ZINFI is a state-of-the-art platform enabling vendors to expand their
partner relationships and quickly scale. With the ability to choose the features they
need most, organizations create a custom partner portal that is rich with content and
functionalities allowing them to recruit, onboard, enable, transact, and manage
partners with ease.
Read this article to know more about channel management software.

What Is Channel Management Software?
Over the past decade, we have seen the rise of channel management software. The
primary buyers of channel management software have been large enterprise
organizations, and they have invested enormous amounts of time and resources to
customize channel management tools in order to better manage various sets of
channel activities.
Most recently, there has been a rise in the deployment of more purpose-built, easy-
to-use channel management software systems from providers like ZINFI, as well as
a few other players in the marketplace. This new generation of channel management
software comes with a whole new set of capabilities. In this article, we will define
what today's state-of-the-art purpose-built channel management software can do.
But before we go into more detail about what today’s channel management software
can do, let me first explain what channel management is all about. Here is how I
have defined channel management elsewhere:

Channel management is a set of activities—including resource allocation—in which
an organization defines and manages marketing and sales processes, people,
policies, and platforms to deliver goods and services indirectly through partner
organizations. The goal of these activities is to maximize revenue at the lowest
possible cost.
Now, channel management tends to focus on a set of five core activities: partner
recruitment, onboarding, training, demand generation, and performance
management. State-of-the-art channel management software must be able to
address all of these activities.
The core purpose of channel management software is to increase productivity by
managing a set of channel partners, which involves enabling, training, and engaging
partners in a better way to drive higher revenue at a lower cost.
With this in mind, it’s clear that any state-of-the-art channel management software
must have a toolset that a supplier selling through the channel can use to recruit
partners, train them, and drive demand generation activities using various integrated
marketing tools. The channel management software system should also come with
performance management tools for activities like lead management and deal
registration, as well as incentives management tools like market development funds
(MDF), co-op, and rebates.

The future of channel management software is quite exciting. ZINFI is the leader in
the Unified Channel Management (UCM) segment and currently provides three core,
completely integrated solutions: partner relationship management, partner marketing
management.
Each of these solutions focuses on one or two core sets of activities. For example,
the partner relationship management solution is focused on providing partners with
the latest news about a supplier’s channel programs, its marketing and sales assets,
and so on. This channel management tool also helps organizations manage the
distribution of leads. On the other hand, a partner marketing management solution
focuses primarily on generating demand by enabling partners with a set of integrated
marketing tools. A partner sales management solution tends to focus on enabling
partners to sell and close opportunities.
It’s worth repeating: The future of channel management software is quite exciting,
and it is rapidly evolving. ZINFI recently launched a fully mobile application that
allows partners to run their business by accessing content and tools on the go. A
native mobile app like ZINFI’s gives partners faster access to data and content, as
well as offline access, unlike a mobile-responsive partner portal or tool. A fully
featured mobile app can have a considerable impact on partner productivity and
satisfaction.

Channel management software continues to evolve. In addition to becoming mobile,
it has also become extremely intelligent. ZINFI's latest channel management
software comes with a business intelligence application that allows users to build
predictive models and develop actionable insights that will drive profitable growth. All
of these enhancements are making it easier—and more profitable—for companies to
conduct business in the channel.
For more information read these articles:
Channel Management Metrics Best Practices Unified Channel Management Best
Practices Channel Management Best Practices for Transacting Partners:
Collaboration Data Sharing and Mobility New Channel Management Strategies for
Collaborating with Partner Ecosystems

Automating Profitable Growth™ www.zinfi.com
Automating Profitable Growth™
ZINFI Technologies, Inc.
6200 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588
sales@zinfitech.com

The Ultimate Guide to Channel Management

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