Sales Channel Performance- 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. Therefore, boosting Sales channel productivity is a key force-multiplier
Why Sales & Marketing Channels are important?
- 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.
What are the challenges with sales & distribution channels?
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.
These points are a partial list out of a wide range of benefits and risks of the Channel Partner network. A successful enterprise leverages the benefits and mitigates the risks.
Giving a higher partner commission for better performance is only partially effective. Here are 10 ultimate levers 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 you should serve him 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.
You need to have a reliable channel servicing infrastructure:
- Service Request- A partner can log an issue through the mail, website, telephone, or even SMS.
- Issuance of Service Ticket ID to the partner and tracking it to closure
- Service-level Agreements with a benchmark (say 95% issues resolved within agreed Turnaround time)
- A Channel Servicing Champion who should own the Channel Satisfaction
- Monitoring channel Partner Servicing Scorecard 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 workforce. 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. Thus an organization needs to invest in training its partner and its employees.
Action- You need a quick, low-cost, and effective channel training management system:
- A training manager providing training to partners’ employees. Training is given 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.
- You can give online access to a learning management system, to your channel partners.
Lever #3- Local Below-the-Line (BTL) promotion
The fundamental premise here is that you need to make it easy for a channel to sell your products. The easier it is for your dealer, the 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.
Large companies have monies to invest in media advertising. However, there is no alternative to local promotions around the point of sales. It becomes further important for a new channel, and in a locality where you did not have a presence.
- You need to have a ‘BTL Promotion’ Calendar for weekly/monthly BTL activities:
- Dealer Meets
- Banners and Displays
- Merchandise Distribution
- Walk-in Discount Schemes for end-customer
- On-Site marketing
- Cluster Blitz
You should back these plans with a committed budget, along with the details ‘when? How? and who?’
- After each BTL activity, you need to take the Channel Feedback on its effectiveness. This should lead to greater effectiveness over time.
Lever #4- Creative Sales Compensation Schemes
Money is an important driver, and high compensation works. However, throwing more money on your channel partner sets a bad precedent.
You need to maintain the right balance between channel performance and commission payouts. One can achieve this balance by giving higher commissions for:
- High-margin products
- Value-added services, like installation & configuration.
- Selling across the month instead of heavy month-end skew.
- Clearing of old models/stock to reduce inventories.
Essentially, you should link higher commissions to higher returns or savings.
Action- There are many ways to encourage sales partner and benefit the company.
- Multi-Layered payout 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
Once launched, you cannot take back compensation schemes. If they are too tight, they end up giving no results. 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 keep in mind that your sales partners will always look for better schemes year after year. So commission structures need to be just right to give great benefits with optimum
- Communicate schemes effectively- Your Sales partners need to clearly understand the sales schemes. You can create different scenarios of what they will earn for how much sales so that the maths sinks in them.
Periodically, you can 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.
Channel Performance Lever #5- Intelligent Sales Planning
The availability of goods at the right time is critical for channel performance. All sales commission schemes will be of no use if the sales partner does not get the material that he can sell. On the flip side, if you deliver more goods that he can sell, you will block inventory. Therefore Channel Demand forecasting needs to be as accurate as possible.
Action- One can never project sales 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 – production plans depend on how much-unsold stock exists in the system
- The unsold inventory lying at the point of sale
- Supply at the company warehouse
- Stock at production-center
- Expected Sales Demand (based on market conditions and demand history)
- Payments history 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 local conditions.
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 and large quarterly campaigns.
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.’
Action- You should make a sales campaign as a repeatable and continuous process. A company of medium size should be running 40-50 small/massive campaigns and contests. Each of them will need tools and capabilities, like
- Creative Campaign Materials
- Leads management systems
- Quick Order Processing
- Sales and fulfillment
- 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. You need to be a constant whirring machine to churn out one contest/special offers after the other.
Channel Performance Lever #7- Branded Sales Equipment
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 offer testing tools. In a way, this is an excellent 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.
Action There can be various approaches to investing in these POS Equipment:
- Equipment provided free to high performing channel partners.
- Given based on the performance in a campaign or contest.
- Loaned on easy installments to the partner.
- Provided at a high discount to performing channel partners.
- Given to channel partners who buy on ‘Cash’ and do not take sales credit.
Lever #8- Lead Generation Support
We have already discussed lead generation through promotions, Campaigns, and Contests. A company also needs an ecosystem that keeps on generating leads day after day for it partners. This ecosystem will need investments, but its money worth spending.
The easier you make the job of your sales partner, the more committed he will be. He will pay promptly, and he will be motivated to improve his channel performance.
Action- Here are the 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.
Channel Performance Lever #9- Bringing Sales Partners 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 partner becomes a sub-brand within your overall brand umbrella. So the ecosystem which we talked about in the previous technique will now be created for each partner.
Action- You can pick-up all your exclusive dealers and distributors. Create their website, get them listed in business directories, and promote their online presence. These facilities, 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 could replace a good old-fashioned connection with your partner. Your sales employees need sit with the partner. They should listen to partner issues, push him for business, train his staff, and discuss ways to increase channel performance.
Sales partners attach great value to relationships and trust. It would help if you treated them 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. We should not consider them just as billing points or a line item in your books. Leadership at all levels needs to understand and train for this. Many great CEOs visit their partners and give them the respect which they deserve.
- One needs to set-up the ‘Sales Channel Contact Standards. You can mandate the minimum number of visits to every channel outlet.
- Apart from this, there should be centrally driven sales Channel engagement activities. They can include off-sites, dealer meets, rewards & recognition, and senior management visits to points of sales.