10 rules for channel success
Post on 18-Oct-2014
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A presentation given to the Vancouver Technology Indistry Association in 1998. These rules are still valid even now. Some of the technology to enable them has changed since then but the spirit lives onTRANSCRIPT
10 Rules & 1 Step to Channel Success
10 Rules & 1 Step to Channel Success
There is no silver bullet to guarantee success. You must There is no silver bullet to guarantee success. You must customize product, marketing, and support to meet the customize product, marketing, and support to meet the needs of a diverse set of customers. Make no mistake, needs of a diverse set of customers. Make no mistake, the channel is a strategic approach to business, not a the channel is a strategic approach to business, not a
quick fix for something you cannot sellquick fix for something you cannot sell
Paul Rickett, VARKETING!
19981998
Channel Experts Channel Experts ““Paul knows what he is talking about - listen to himPaul knows what he is talking about - listen to him””Bryan Nieder, VP Channels, Electronic ArtsBryan Nieder, VP Channels, Electronic Arts
Channel Experts Channel Experts ““Paul knows what he is talking about - listen to himPaul knows what he is talking about - listen to him””Bryan Nieder, VP Channels, Electronic ArtsBryan Nieder, VP Channels, Electronic Arts
18 Years channel experience; VAR, ISV, 18 Years channel experience; VAR, ISV, DistributionDistribution
Clients include: IBM, Dell, Great Plains, Siemens Clients include: IBM, Dell, Great Plains, Siemens Nixdorf, Digital Equipment, EDSNixdorf, Digital Equipment, EDS
Over 100 articles in VARBusiness, Software Over 100 articles in VARBusiness, Software Marketing Journal, SCO World, SI BusinessMarketing Journal, SCO World, SI Business
Seminar Series: Product Launch, 3Rs of Selling Seminar Series: Product Launch, 3Rs of Selling Through VARs, 10 Rules of Channel SuccessThrough VARs, 10 Rules of Channel Success
The ChannelsphereThe Channelsphere
CHANNELSP
HE
RE
Expansion is driven by Expansion is driven by technology change technology change
Attrition does not Attrition does not balance out expansionbalance out expansion
SegmentationSegmentation
V a lue
Siz
e
R e ta il
VAC
Software
OEM Retail DirectResponse
$20M
$1B
HardwareServiceSoftware
VAR QualitiesVAR Qualities
PLUSPLUS Brand LoyalBrand Loyal Creates whole productCreates whole product Technically capableTechnically capable Strongly influences Strongly influences
buyerbuyer
MINUSMINUS ConservativeConservative Profit drivenProfit driven Not amenable to Not amenable to
controlcontrol Weak in marketingWeak in marketing …….AND does not like .AND does not like
to be called a VAR!to be called a VAR!
Channel CalculusQuantifying the business propositionChannel CalculusQuantifying the business proposition
pp=v((pf*(rp*eos))+(lsp+lpp))pp=v((pf*(rp*eos))+(lsp+lpp))
VARS are profit rather than revenue drivenVARS are profit rather than revenue driven
RULE 1: Deliver a Quality ProductRULE 1: Deliver a Quality Product
Bugs kill….Bugs kill…. Differentiate VAC product from other Differentiate VAC product from other
channelschannels Product includesProduct includes
PackagingPackagingSupportSupportDownstream revenueDownstream revenueSales materialsSales materials
RULE 2: Keep Selling DirectRULE 2: Keep Selling Direct
Know how to sell your own productKnow how to sell your own product Demonstrates needDemonstrates need Channel leverages your activityChannel leverages your activity Provides better market intelligenceProvides better market intelligence
Channel should expand market not just reduce cost of salesChannel should expand market not just reduce cost of sales
RULE 3: Channel is a Strategic CommitmentRULE 3: Channel is a Strategic Commitment
Management must commit to channelManagement must commit to channel Invest in people to manage itInvest in people to manage it Set goalsSet goals Channel friction indicates positive coverageChannel friction indicates positive coverage Allow time for channels to rampAllow time for channels to ramp
RULE 4: Allow for Multiple Strategies RULE 4: Allow for Multiple Strategies
ADDADD Product opens new marketopportunitiesProduct opens new marketopportunities
COMPLEMENTCOMPLEMENT Product adds value tosomething already soldProduct adds value tosomething already sold
DISPLACEDISPLACE Product substitutes for anexisting oneProduct substitutes for anexisting one
These may run concurrently with different VAC segmentsThese may run concurrently with different VAC segments
Relationships Change over Product LifeRelationships Change over Product Life
Use VARs to work the bowling alley
Fulfillment stage. VARs notdifferentiated by your product
Pioneers tend tobe either very largeor very small. Selfselection is im portant
.Product loyalty declines
Larger VARs lead this stageUse certification tocontrol demand
Adapted from Geoffrey Moore, “Inside the Tornado”Adapted from Geoffrey Moore, “Inside the Tornado”
RULE 5: Execute WellRULE 5: Execute Well
More ImportantMore ImportantActual ProfitActual ProfitNFRNFRTraining Training Tech SupportTech SupportDeliveryDelivery
Less ImportantLess ImportantDiscountsDiscountsCollateralCollateralSPIFFs/RebatesSPIFFs/RebatesSales SupportSales Support
RULE 6: Minimize Pain FactorRULE 6: Minimize Pain Factor
Terms of businessTerms of business FulfillmentFulfillment ResponsivenessResponsiveness SupportSupport
Good exception handling is a great loyalty builderGood exception handling is a great loyalty builder
RULE 7: Use VARCOMRULE 7: Use VARCOM
Communicate directly to channelCommunicate directly to channel Customize to segmentsCustomize to segments Cover entire spectrumCover entire spectrum Co-market like crazyCo-market like crazy Clearly state value propositionClearly state value proposition
Reach the influencers in the VAC selection processReach the influencers in the VAC selection process
RULE 8: Get CommitmentRULE 8: Get Commitment
Qualify & CertifyQualify & Certify Money commitments mean actionMoney commitments mean action Train themTrain them Have mindshareHave mindshare Product buy-in favours sell-through effortsProduct buy-in favours sell-through efforts
Use commitments to raise entry barriersUse commitments to raise entry barriers
RULE 9: Profits come from Repeat BusinessRULE 9: Profits come from Repeat Business
80/20 Rule rules80/20 Rule rulesTier programs for recognition and Tier programs for recognition and
rewardrewardKnow your cost and payback Know your cost and payback
metricsmetrics
Mindshare is everythingMindshare is everything
RULE 10: Constantly EvaluateRULE 10: Constantly Evaluate
ListenListenAdoptAdoptAdaptAdapt
A sales is not a sale until you know who the customer isA sales is not a sale until you know who the customer is
Rule RecapRule Recap
1. Deliver a quality 1. Deliver a quality productproduct
2. Keep selling direct2. Keep selling direct3. Channel is a strategic 3. Channel is a strategic
commitmentcommitment4. Allow for multiple 4. Allow for multiple
strategiesstrategies5. Execute programs 5. Execute programs
wellwell
6. Minimize pain factor6. Minimize pain factor
7. Use VARCOM7. Use VARCOM
8. Get commitment8. Get commitment
9. Profit from repeat 9. Profit from repeat businessbusiness
10. Constantly re-10. Constantly re-evaluateevaluate
VAC Success is not MagicVAC Success is not Magic
Bend the rules when appropriateBend the rules when appropriate Multiple channel strategies will co-exist Multiple channel strategies will co-exist
simultaneouslysimultaneously Pay attention to segmentationPay attention to segmentation Have sufficient stamina to stay the courseHave sufficient stamina to stay the course Execution is everythingExecution is everything
STEP 1: Put VARKETING! on your TeamSTEP 1: Put VARKETING! on your Team
Channel strategies don’t come Channel strategies don’t come from a bookfrom a book
Experience and diversity countExperience and diversity countTake the AuditTake the Audit