Channel programs' Seven Deadly Sins

As an analyst and consultant, I get a great view of how network vendors direct, and often misdirect, their channel programs. Nothing can take the wind out of a good technology's sails - or limit the customers' ability to leverage that technology - like a poorly planned or executed channel program. Here are some common mistakes ...

As an analyst and consultant, I get a great view of how network vendors direct, and often misdirect, their channel programs. Nothing can take the wind out of a good technology's sails - or limit the customers' ability to leverage that technology - like a poorly planned or executed channel program. Here are some common mistakes:

Pinball pricing. Avoid the temptation to swing prices up and down to meet the needs of a particular deal. To sell products proactively, the channel needs to know that the numbers will be in place longer than a Keno drawing.

Faulty operations. Key operations such as order acceptance, shipping, forecasting, manufacturing and return-merchandise authorization processing need to run smoothly. If a marketing communications kit is promised, it should be delivered.

Over-reliance on direct sales. Many vendors must rely on their own sales force until the product catches on and the channel sees value and can take the volume higher. By this point, the direct sales force often has become someone's fiefdom. If this person feels threatened, he may not admit he's strung barbed wire around the perimeter, but that stinging sensation is a clue. This problem often translates to reserving all the best accounts for the direct sales force or paying direct reps less money when the channel is engaged.

Patterning too closely after dominant vendors. "If Cisco does it, shouldn't we?" Not necessarily. You're probably trying to expand your number of channel partners. But Cisco is not. Different circumstances mandate different strategies.

Not balancing regional and worldwide strategies. Many companies want to build worldwide market share. Yet it's hard to centralize all processes and build a program that makes sense for all geographies and all cultures. Regional considerations must be made.

Go sell it; we'll wait here. Reaching deals with distributors and value-added resellers (VAR)/integrators is much closer to the beginning of the process than the end. Vendors continually must work with channel partners to build sales strategy and maintain partner mindshare in a highly competitive environment, even after the initial deal is done. The problem is most common at small engineering-focused companies, where channel marketing budgets are expected to quietly evaporate.

I love my product and assume you do, too. This one is for those Little League parents who can't understand why Junior is not automatically in the lineup. Don't worry, Coach; they're like this at work, too. Just like Junior, the products have to earn partner confidence because, until then, not much is going to happen. Distributors, resellers and VARs have many companies vying for their attention, and adding new products is inherently costly. The vendor's clout in channel relationships corresponds to end-user demand, market share and partners' ability to generate a profit. Until these three attributes are clearly in place, the vendor is just another player vying for a spot on the roster.

Presti is research director of IDC's Network Channels and Alliances service. He can be reached at kpresti@idc.com.

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Copyright © 2005 IDG Communications, Inc.