Thursday, July 7, 2011

Time to Change the Channel?

I saw a message today from one of my LinkedIn groups pointing to a McKinsey report by Richard Rumelt talking about how bad strategy is starting to run rampant in business. It's a great read for anybody developing product, company or go to market strategy.  I especially liked the example of International Harvester not identifying it's own strengths and weaknesses in its strategic plan.  The report even comes with a diagnostic kit to help determine if your strategy is on the right track. Yes, you do have to register with McKinsey to get it but the free reports make it well worth it. 

It got me thinking about a conversation I had last with the Sales Engineering director at an accounting software company regarding their plans for growth and competing in a fragmented market.  A big part of their growth strategy is dependent upon leveraging channel partners/resellers.  He was lamenting the fact that his biggest hindrance to channel growth was the cost of enabling resellers. 

Accounting software is a complex beastie and you typically have to have debits and credits in your DNA to be able to sell and support it effectively.  State of the Art Software (now Sage) brilliantly pioneered the use of CPAs as resellers back in the early 1980's and the model is still in use today.  Any number of accounting vendors compete for the attention and love of CPA firms and private practioners.  Some firms are big enough to have practices around several different vendors, many are lifestyle businesses where the owner looks to employ no more than 30 people or so and complains when anything interferes with his regular Thursday golf game.

It's those lifestyle firms my acquaintance was complaining about because he claimed they cost the same to enable as the larger firms but are only going to produce 10% to 20% of revenue as the big firms in a year.  I pointed out that more and more we are known by the networks/communities we belong to rather than the business we work for and perhaps there were communities out there they could turn into profitable and cheaper partner networks.  He seemed to be stuck in thinking the current model was the only model, both in the channel itself and how they enabled their partners because he wasn't receptive to that thought. 

We didn't have time to discuss it further but I came away with a bunch of questions for him that may help him find ways to change his channel:
  • Who else other than CPAs or CPA firms have the expertise, contacts and interest in selling accounting software?  Where do they congregate?  What are their needs (what would they want to get out a partnership)?  What would they need to be successful?
  • In your market segments, where else do your buyer personas go for advice?  Who do they trust and why?  What kind of advice do they need?
  • When was the last time you took a microscope and scalpel to your partner plan and enablement systems?  Do your tiers or segments still make sense?  Which segments are you missing?  What tools are useful?  What do you need?  What do partners REALLY need from your program in terms or resources, materials, etc.?
  • What assumptions about partnering have you validated recently?  How many do you really need?  Do you have the right tiers?  Do need more or fewer?  How can you automate the acquisition and enablement of your partners?  Which existing partners are paying their way?  How many are resource-drains and why haven't you dumped them?  Do you have a plan or procedure for dumping them?  Why not?
A lot of these questions are really for your channel folks but are also core to what us product marketers should be doing.  Our responsibility is to ensure we have the right channels and tools to reach the customers we want.   If you're not thinking this way, your strategy may be flawed.  If you're not regularly asking these questions your channels are not running optimally.

Key Take-aways:
  • Always question the value and efficiency of your systems.
  • Regularly review the assumptions that went into your plans and validate them 
  • Be open to accepting that your assumptions may be wrong or things may have changed to make them no longer valid.
  • If your channel isn't right, change it.

Next Up: Another Grumpy-gram for our Consumer Packaged Goods brethren

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