The first day of Channel Focus North America with Channel Focus Latin America has concluded and it was a very full day of insightful presentations and workshops. Baptie &Company arranged some surprise entertainment during dinner this evening: a table-side magician. The magic act was an apropos choice to conclude the day given that many of the discussions revolved around business transformation which is shaping up to be a bit of “sleight of hand” for many in the channel. No one doubts that the channel and business models are changing. Channel vendors are hoping to transform their businesses and those of their partner ecosystems as effortlessly as the magician tonight transformed cards from one suit to another in front of our eyes. Both “tricks” – those of the magician and those of the channel – require practice and dedication to perfect. But unlike the magician carefully guarding his secrets, delegates at Channel Focus have been sharing information and insights to help the entire channel community grow.
Tomorrow is another full day of sharing and learning beginning with a breakfast keynote presentation on The State of the Channel. I’ll be shuffling through my deck of notes next week and while I may not pull a rabbit out of my hat, I hope to share some insights with you. Follow our hashtag #CFNA12 on Twitter for more updates from the conference.
I wish I had the magic bullet to “make revenue happen” but the title really isn’t as misleading as you might think. Transformation is rampant in the channel now as both vendors and partners try to adjust to the impact of cloud and services on the channel. As transactional, materials and goods-oriented business models give way to services-driven, recurring revenue models, the focus is shifting from business as usual to preparing the channel for this new way of life.
Vendors are addressing the issue in two areas – internal processes and external business model – and this requires that Vendors help their channel partners adjust as well. For the upcoming Channel Focus conference in San Diego, we are focusing on how to help vendors facilitate and support change for their partners. Two of the areas where we feel vendors can “make revenue happen” are in the areas of incentives and educating partners about cloud computing. Most importantly, the two aren’t mutually exclusive – each helps drive business transformation.
Cloud computing education and support covers a variety of areas, but vendors are key in helping their channel ecosystem make changes. Vendors can help partners with sales compensation, development of a wide variety of service offerings, marketing knowledge/tools and “financial re-engineering.” This last area requires serious commitment from vendors. Why? Because partners making the transition from a transactional to recurring revenue model will experience a gap in revenue/cash flow so vendors need to consider how commissions and contracts are structured to help partners through the transition period. This may mean providing incentives for subscription-based contract renewals, paying spiffs to sales teams for multiple year contracts, or providing other financial bridging compensation to select partners.
Vendors will need to look at their Partner base with a critical eye to determine which partners can successfully transform their business and be adept at the new business model – your Tier 1 partners just a few years down the road will most likely need different strengths and skills sets from current Tier 1 partners. In addition to (re)-profiling partners based upon business and technical skills required for the cloud computing model, vendors should integrate partner programs. This will enable them to analyze partner data across multiple programs and identify characteristics of successful partners.
Incentives are instrumental in motivating partners and driving the behavior changes that will help the channel transform. Incentives to drive transformation have to be targeted at more than closed deals and revenue targets because partners need to change behavior—and vendors should not just reward existing behavior and modes of business. A wide range of incentives – opportunity and deal registration, individual and team rewards, company level rebates, and MDF – can all be leveraged in ways to help partners transform their business and keep sales pipelines (theirs and the vendors) full. In a recent conversation with Tim Harmon at Forrester, we talked about deal registration and how critical it is to reward partners not just for closing deals, but for generating qualified leads. During this period of transformation, it is essential to ensure that all incentives help drive the wide range of behaviors that will benefit the channel in adapting to new business realities.
Channel Focus North America (with Channel Focus Latin America) is next week and hawkeye will be talking more about channel transformation and how incentives and cloud computing can help “make revenue happen.” I hope to see you there. If you can’t make the conference but are interested in transformation, check out our “Paths to the Cloud” webinar recording and presentation or some of our thought leadership on incentives.
Click here for our “Paths to the Cloud” webinar recording.
Click here for our thought leadership on Incentives.
You’ve probably got a wallet full of rewards cards tracking points for your favorite coffee, clothing, book purchases and more. The concept of offering rewards in exchange for business isn’t new. But most manufacturers have failed to make the leap in logic that running a loyalty program (rewards to individuals) is not all that different from running a company-level incentives program.
The reality is that the goals of individual and company level incentives programs are similar enough to consider an integrated approach. In a business-to-business relationship your incentives programs are both structured to drive incremental channel revenue and profit, speed new product adoption with your partners, help in establishing competitive differentiation, increase partner loyalty and “share of wallet,” and ultimately, strengthen your relationship with your channel partners.
The most obvious benefit of an integrated approach is the overall cost-effectiveness achieved as a result of increased efficiency in programmatic operation, particularly with streamlined administrative needs.. An integrated approach also enables you to align global strategy across multiple regions while still allowing for local implementation. With a single global strategy in place however, it is possible to unify disparate audiences toward common goals.
My favorite approach – and benefit – of an integrated approach however is the ability to take advantage of a single, common points-based currency across your incentive programs. Programs that are points-based enable spending on non-cash rewards. While “cash is king” for many channel partners, there are non-cash rewards that many organizations find useful, including:
- Pre-packaged marketing plays
- Demo units
- Training and certification
- Marketing support, and
- Travel and gas vouchers
Cash has limited value promoting loyalty at the company level. For example, it isn’t always used to promote your products over those of a competitor. And normally, cash is used to pay for operations costs, not in generating more demand for you products and solutions. The bottom line is that cash – and the source of it – is often forgotten after the money is spent.
Non-cash programs at the company level target your “incentives” budget at promoting your products and solutions. Partners use the dollars to generate more demand – for your offerings. Non-cash rewards also motivate specific company behavior and help you establish a unique, competitive advantage. The spend of points-based company level incentives enables ongoing ROI measurement and insight that is completely lost when you pay out cash incentives. And finally, by integrating a points-based, company-level incentive program with a points-based, loyalty rewards program, you vastly improve administrative efficiency.
A single points-based incentives program – one that combines your individual rewards program with your company-level incentives program – offers unparalleled benefits to both manufacturer and partner.
Cloud computing adoption is continuing to see phenomenal growth. But the conversation has shifted gears in 2012 as businesses and their assessment of cloud computing reach a tipping point. The need for cloud computing is evident – and inevitable. But enterprise in particular is now pausing for a restorative catching of the breath as they begin to assess the appropriate use of cloud computing – what activities and data should best be stored in the cloud? What should be kept on premise? Who controls decisions about cloud computing in the organization? Rather than making a mad dash to jump on the Cloud bandwagon, decision makers are now circling the wagons and crafting formal IT plans that address the how, when, and what of cloud computing for their companies.
Likewise, the Channel is also taking a little breather – most probably to lace up our proverbial shoelaces to be ready for the serious marathon race about to ensue. HP’s announcement Tuesday about their reorganization combining the Personal Systems Group (PSG) and Imagining and Printing Group (IPG) is a perfect example of how manufacturers are positioning to consolidate resources and leverage opportunities farther up the stack. Vyomesh Joshi – who is now leaving HP – talked to Partners just last month about the need to move up the stack from hardware to supplies, to services, to solutions. This mirrors movement within the Cloud computing stack as well.
Forrester’s Holger Kisker presented information on Cloud trends and predictions earlier this month in which he discussed the movement within Cloud computing offerings as well. Commoditization is already beginning within cloud computing and we’ll see movement over the next 10-15 years as opportunities for higher margin try to stay ahead of the commodization curve. Forrester predicts the trajectory as moving from Iaas to PaaS to SaaS and finally to Business Processes-as-a-Service as the opportunities move up the stack.
For those of us working in the technology Channel, this means yet another paradigm shift. Vendors and Partners alike are seeking stable ground in the ever shifting sands. Channel revenues are shifting from transactional sales to a recurring revenue model. That means that Vendors need to not only make programmatic adjustments, but they also need to reassess the value of existing partners and target recruitment, coverage and capacity issues; the characteristics of a successful partner today may not pass the Darwinian test as the channel continues to evolve in as short a time as just a year or two from now. Vendors need to consider investing in key partners to help them transition their business – and partners likewise need to commit to vendors willing to make an investment.
Claudio Ayub and William Gilsing from our Channel Strategy team will be presenting a webinar on March 29th on cloud computing and suggestions for crafting a new cloud services channel engagement model. If you and your channel are struggling with these issues, we hope you’ll join us for the webinar.
Join us for the webinar
One thing we all have in common – we’re consumers. And as consumers we behave similarly and share many characteristics. We research online before buying things – like visiting Trip Advisor to check out what others are saying before we book our holiday. We probably then purchase that trip online through an e-commerce website that we have grown to like over the last 12 months.
Most of us participate in social media for work and play and pride ourselves in our publishing skills in our own little way.
Also it’s fair to say that we all seem to have less free time than ever and are less forgiving when we part with our hard earned cash! We expect anytime, anywhere, always-on information, thanks to the one thing that none of us can live without – our mobile phones.
My second bold claim is that most of you reading this article you are, in some way, part of the IT industry – more specifically you have an interest in indirect channels. That’s probably why you’re on this website in the first place. So far so good…
The question then is why tech companies operating channel programs often overlook or dismiss what is right in front of them: the hundreds or thousands of channel partners enrolled in your programs who are also consumers and therefore share a lot of the same habits and values. So, why is that familiarity of the consumer experience forgotten when you try to build a dialogue with your channel?
It is fair to say that when it comes to communicating with channel partners and driving real engagement, most companies are well behind the curve. Forrester does a good job of explaining the breadth of consumerization in the following quote: “At first glance, a vendor strategist might think consumerization is simply about using personal gadgets and online services for work – but it’s more than that. Payment models, self-service, intuitive user interfaces…” (Forrester, 2012). All of these aspects can come into play in a channel program. Who is providing a truly great online experience (that comes anywhere near what a consumer might expect)? Who provides anytime, anywhere communication accessible via a smartphone or tablet? And where’s the fun and creativity?
Channel teams (not just marketing people) need to start thinking of their channel partners as individuals, as consumers – instead of as sales reps or sales engineers, or worse still, treat them all the same.
Start by putting yourself in your reseller’s shoes. See how comfortable they are and then multiply that by 10 or 15 (other vendors trying to do the same thing)! Feeling inspired, motivated? I thought not. This is a great first step, not a comfortable one, but an important one to gain perspective. You’ll have a list of 10 things to change about your program right away.
Ask your partner contacts what they want from you and how they would like to be treated. Chances are you are doing a lot of things right but you’ll also discover 1 or 2 things that might make a big difference if they are changed. If 50% of your base say your MDF and co-marketing is too complicated, then you better give it your attention. If sales reps need to access content on the phone when they’re out with customers, then that might be a good use of your channel budget. Listening to your partners and acting upon their suggestions will go a very long way in building valuable relationships.
Finally, take note of the methods some of the big consumer companies are using to acquire, engage and retain customers, while turning them into real fans. Maybe you are even experiencing these things first-hand outside of the office. One trend that I’ve read about and experienced is gamification (applying techniques used in the gaming world to drive greater engagement with their customers). Adobe, IBM, Microsoft, Dell and others are already using it in their B2B marketing but it has great potential for the channel, as well.
Partner programs, like everything else in the world, need to keep up with the times. Thinking like a consumer and leveraging new approaches like gamification can help keep your channel program from feeling stale.Those that keep up, or better still, take the lead will be winners in more ways than one.
The calendars have been turned to 2012 and with the holidays behind us, it’s time to roll up our sleeves for a new year. I’m sure we are all looking forward to a prosperous year.
Turning the calendar also means it is time for the annual round of predictions for the industry to surface. I’m working with members of our executive team right now as we polish our own Channel predictions for the year. As part of our upcoming webinar, we survey the landscape setting the stage for the Channel in 2012. These are the six elements that we feel will ground trends within the Channel this year:
- Economic recovery
- Mobile technology
- Social
- Cloud
- Data, and
- Consumerization
Watching the economic indicators and stock market on a daily basis is enough to give anyone vertigo these days. The reality is that economic recovery for the next year is uncertain although the last few weeks have been more encouraging than the rollercoaster of November and most of December. Forrester is predicting slow, but overall positive growth with Eastern Europe, the Middle East, Africa and Latin America showing the highest growth rates and Western and Central Europe lagging the most. The channel impact will mean that most companies will plan for slow growth with longer sales cycles and budgets that may be contingent.
In 1949, Popular Mechanics indulged in a bit of prediction and hazarded a guess that “computers in the future may have only 1,000 vacuum tubes and perhaps only weigh 1.5 tons.” What a shock the proliferation of mobile devices – many handheld – would have been! While mobile technology is affecting how we play, more profoundly, it affects how (and where) we work. Gartner estimates that smartphones will outnumber desktops and laptops – combined – in a mere two years (2014). The three verticals most heavily influenced by mobile technology right now are sales, healthcare, and education. And it’s the “sales” member of that trio that may be of interest for vendors in the Channel looking for innovative ways to work with their Channel. Your Partner sales teams are often engaging with customers where they can get the most traction – on site. And that means there are increased opportunities for partner engagement and communication using mobile technology.
One of my favorite bits of trivia making the rounds over the last few months concerns Facebook: if Facebook was a country, it would be the 3rd largest country in the world with a population somewhere around 500 million (China at 1.35 billion and India at 1.2 billion lead the way). The Channel has moved well beyond the question of “if” around Social and now vendors are more interested in “how” – to use Social. McKinsey reports businesses that maximize Social strategies enjoy a 24% higher revenue growth than less social businesses. Within the Channel, Social means that engagement shifts from thinking less about “Partners” and more about “individuals” – less about faceless, generic groups of companies selling your product, and more about the specific characteristics that make the persons on your Partners’ teams an important part of your extended sales efforts.
In 2001 Tom Siebel was talking about Salesforce.com and suggested “there’s no way that company exists in a year.” Another example of a crystal ball that probably needed a refurbishing. Cloud computing is driving a paradigm shift that is seen by many to be as pervasive as the introduction of the Internet. Estimates on growth vary, but all are aggressive with the global cloud computing market predicted to be somewhere around $150-160 billion by 2013 and as much as $240 billion by 2020 (Forrester, Gartner, Merrill Lynch). The Cloud is driving a huge shift in the Channel as Partners and Vendors alike are working to adapt to a recurring revenue model of business.
The proliferation of data raises a whole host of issues for the industry from security to MDM. Bill Gates had no idea that storage conversations would graduate so quickly to terabytes, petabytes, and zettabytes in 1981 when he said “640k ought to be enough for anybody.” Forrester estimates the growth of data at 800% in just the last five years and IBM believes that business email is growing 25-30% annually (no trouble believing that prediction!). One of the key issues with all this data is that it provides no insight if it is unorganized. Channel Management teams struggle to evaluate the success of their individual programs, communications, campaigns, etc. because they often have too much data and too little insight into what it really means. 2012 should see a greater commitment to analytics in the Channel and integration of programs to yield a “single source of truth” to facilitate program adjustments and maximize Channel investments.
Technology innovation used to flow from the enterprise to the consumer market. That has reversed dramatically in the last few years as the consumer market has become the wellspring for innovation. Today 45% of employees feel their personal computing devices and applications are better than what their IT departments provide. Contrast that with the much smaller 27% of executives who have a clear strategic vision for employee adoption of consumer technologies (Accenture). Employees also expect the same user experience in business that they enjoy using their own technology – from the shopping cart and reviews characteristic of an online experience like Amazon, to the “any time, any where” availability of information. The impact of consumerization on the Channel is Partners are often looking for a similar easy-to-use experience when interacting with Vendors that they get when they use technology in their private lives.
What trends do you see populating this Channel “landscape”? You can join me and our executive team on the 11th by clicking here to find out which trends we’ll be watching this next year.
