Companies today are more dependent than ever on partners as their extended sales and support teams. For these companies, building and managing a channel ecosystem is critical. This raises the stakes around channel management. It is not enough to seek operational excellence from your partner efforts. You must seek competitive advantage. Follow five channel management disciplines to make this happen.

1. Ensuring Your Partner Investments
Give You A Competitive Advantage
Five Disciplines To Drive Your Channel Management And
Improve Your Company’s Efficiency And Effectiveness
A WHITE PAPER FROM TOUCH BUSINESS CONSULTING

2. Executive Summary
SITUATION: A third layer of partners is the “long tail” of the market. They
conduct business on an almost incidental basis for the
Companies fail to leverage their partner assets into a vendor. It is the number of these partners that drives the
competitive advantage. vendor’s success. A slight increase in the frequency of
In the battle to win with customers, many companies are transactions can generate big results.
turning to partners. Partners are the key component in their
value chain. SOLUTION:
Often, partners are the company’s virtual sales force and the Five channel management disciplines drive maximum
only contact a company will have with most of its results.
customers. They provide premarket qualification, sales
Effective channel management focuses a company’s partner
generation and post-sale support. Without them, the
effort.
company loses scale and the ability to drive revenue.
Crafting a winning channel management strategy, involves
Companies do this to lower their SG&A expenses. But at
five essential disciplines. Failure in any one can jeopardize a
what cost?
company’s ability to effectively drive corporate objectives.
PROBLEM: A company must have visibility and direction for channel
management to be truly effective. Channel execution should
Many companies pursue the same set of partners not be static, but fluid to adjust with the market and win
with haphazard results. against the competition.
The same handful of firms are alliance partners for all the With these disciplines, channel managers are more likely to
major vendors. Many of these partners are equally better position themselves against their competition, and
comfortable selling any vendor’s offering as long as they win win with the right partners.
the deal. They have no loyalty to the vendor.
Each vendor then attracts a next-tier of partners. While RESULT:
these partners support fewer vendors, it is often a gamble Better ability to understand the impact and
as to whether they have the skills and capabilities necessary
effectiveness of your partnering effort.
to be successful.
Visibility and direction allow companies to manage their
channels more effectively. Line-of sight to desired business
Five Questions You Should Ask results will improve. Alignment of internal and external
resources will improve. Agility and simplicity in execution
1. Are your business objectives achieved through will improve.
your existing channel strategy?
For savvy channel managers, these five disciplines provide a
2. Who are the right partners for you? superior method of leveraging partners and generating
faster ROI from channel management efforts.
3. Do your investments drive the partner
behavior you want? Many companies rely on partners as their primary strategy
for how they go to market. Partners are how they connect
4. Does your competition offer your partners with customers.
more value?
Channel management is a critical competency to master and
5. Is your channel management execution these five disciplines provide a roadmap for that success.
effective and efficient?
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3. In Today’s Business Environment,
Winning With Partners Is Key To Winning With Customers
Companies today are more dependent than ever on Discipline 1
partners as their extended sales and support teams.
Manage your channel strategies methodically to
For these companies, building and managing a channel
ecosystem is critical.
align to specific business results.
Obviously, a company’s channel management efforts
This raises the stakes around channel management. It need to reflect the company’s corporate objectives.
is not enough to seek operational excellence from your Every successful business aligns its activities to its
partner efforts. You must seek competitive advantage. goals.
Sadly, many companies are failing to achieve this type But does everyone have alignment around those goals?
of success. By some estimates, as many as 70% of Is there clear accountability? Do people see how their
alliances fall short of
expectations for both the
channel partners and for
the companies selling
Many channel management efforts fail because they are run as
through those channels. an operational program rather than a competitive program.
But how can you tell if you
are one of these companies?
efforts are essential to the overall success of the
There are some tell-tale signs that a company’s company?
channel management is underperforming:
In many companies the answers are not always yes to
 Poor alignment between how sales, product these questions.
teams and the partner program define "best"
partners.
Channel Management Growth Strategies
 Weak performance by significant numbers of top-
tier partners.
 Unclear ROI due to a lack of understanding of how
partners deliver value.
 Unsuccessful attempts to drive new partner
behavior through existing partner relationships.
 Passive execution that reacts to rather than fuels
business outcomes.
Often, the root cause of a company’s channel
management problems is not its people or its
positioning, but its approach.
By adopting these five channel management
disciplines, these companies can reverse their situation
and become channel management all-stars.
You must approach channel management in a manner
that drives out this ambiguity. You need to document
your growth plan for each business objective:
 Recruit. Add partners or direct sales resources to
your existing routes to market.
The Five Disciplines of Channel Management | 3

4. Are You Approaching Scale The
 Develop. Establish a new route to market either
Right Way? through new or existing channel and direct
resources.
Channel management is about leverage and  Grow. Expand and extend the capabilities of
therefore always needs to scale. But existing partners and direct resources to extend
channel management can scale in three product or customer offerings.
different directions based on the type of  Prune. Increase efficiency and effectiveness by
relationship sought between vendors and redirecting resources from low performing
their partners. elements to higher performing elements.
A successful channel management plan has five
Strategic or alliance relationships require imperatives:
the ability to scale executive commitment.
As more alliance partners are added,  Identify which company objectives rely on channel
management.
executive attention and participation thins,
relationship management gets passed down  Assess your current route to market strength.
the organization and strategic commitment  Understand your ability, and need, to scale across
weakens. multiple dimensions.
Depth or managed relationships scale  Define your growth strategies for each desired
through field-based coverage and support. business outcome.
It is possible to optimize commitments and  Cascade accountability throughout your
goal management through standard organization.
program structure, but ultimately the Creating a robust channel management plan provides
relationships fail when account the foundation for channel management success.
management and joint sales activities
become strained.
Discipline 2
Breadth or programmatic relationships are Manage your ecosystem to maintain the right
supported through operations efficiency but mix of partners.
truly gain scale through shared value. These The partner ecosystem represents the extended reach
partners need to be self-sufficient and self- of a company.
serving. This requires constant
With successful channel management this reach can be
communication and motivation. As value
broad and effective.
diminishes, scale fails, partnerships become
unpredictable and return rapidly diminishes. Through four levers, channel managers can create an
almost infinite set of adjustments to their ecosystem.
Vendors can scale across one or more of Understanding these four levers is critical.
these relationship types but each adds a
unique set of resources and extra  Partner coverage. The number of partners by
segment. Ecosystem capacity is influenced by the
requirements to a company’s channel
mix of partner types, number of partners in each
management effort. segment, and partner attributes such as customers
served, business models, and solutions offered.
How effective is your ability to scale?
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5. Building An Ecosystem Model  Map necessary credential program for full
ecosystem training and enablement
 Create a predictive model for program investment
 Validate partner business propositions across
necessary partner segments
The ecosystem model forms the roadmap for all
channel management activities.
Discipline 3
Manage your partner business proposition to
gain competitive advantage.
The partner business proposition is the value a partner
receives from selling your company’s products and
solutions.
 Partner capability. The required knowledge to sell They provide the competitive filter a partner will use
and support the company's offerings. Without this when determining which vendor they will sell and
knowledge, partners cannot be effective in the support with their customers.
market. Surprisingly, a large number of companies fail to
 Partner capacity. The velocity of sales per partner develop a core competency in this area. They focus all
per year. It is a function of the size, frequency and their efforts developing a powerful customer value
number of transactions the partner completes proposition and spend little time thinking through why
each year.
 Partner commitment. The percentage of
partner deals that include the company's
offerings. Most partners work with
multiple vendors, so partner loyalty is a
key determinant of channel revenue.
Channel Managers need to fully understand
the resulting ecosystem model. However the
model needs to be more than an academic
exercise.
The model should inform specific channel
management activities including the following:
 Create actionable, data-driven targeting
models for partner recruitment and
development
 Ensure balanced engagement based on
business models, partner motivations, and
different performance requirements.
The Five Disciplines of Channel Management | 5

6. a partner should sell their great product. The result is sale, the required investment costs and all benefits
slow or lack-luster adoption by the channel, frustration received through the relationship.
within the company with partners and sluggish success
It is unusual for a single company to have strength in
in the marketplace.
all areas of the business proposition. All companies will
These companies need to create partner business have soft areas within their business proposition with
propositions with three main elements: some partner segments.
Understanding your company’s strengths and
weaknesses is key.
But not enough. You must also understand your
competitor’s business proposition.
A truly effective business proposition assessment
benchmarks a company’s business proposition relative
to its key competitors with each targeted partner
segment.
This will avoid costly missteps in channel management.
 If you have poor market momentum, then you
must either reposition your core offering in the
marketplace or greatly enhance the partner
economics or joint alignment to offset your
market position.
 If you are recruiting partners with poor alignment,
your targeting or messaging is ineffective and your
efforts are unlikely to yield the desired results.
 If your partner economics are weak with partners
but better than your competition, then running
rebates or other margin programs may not add
much to your business proposition, but will cost
you profit.
Tuning your competitive position and conducting
 Market Momentum. Partners naturally migrate to
regular business proposition assessments is critical to
products and services that are in high demand by
driving effectiveness in your channel management.
their customers. A company's market momentum
is composed of customer demand, market share
and leadership position. Discipline 4
 Joint Alignment. Partners seek companies that Manage your investments to drive specific
complement their strategic objectives. Partners behaviors.
assess alignment based on vendor fit against their
Every channel management investment you make
strategic objectives and the reputation, either
should be for the explicit purpose of driving partner
experienced or perceived, of the potential vendor.
behavior.
 Partner Economics. Partner economics is the
financial return a partner can gain from the vendor
relationship. It factors in the profits around the
6 | Touch Business Consulting

7. You should measure the success of each investment Relevant behavior can be categorized into four buckets:
based on its ability to drive desired behavior in an
 Focus. Are partners concentrationing on the
economical manner.
customers and solutions you want?
 Performance. Are partners driving the business
The Four Levels Of Execution Excellence results you require?
 Action. Are partners meeting your requirements
and receiving sufficient rewards to stay satisfied?
 Retention. Are you securing your best partners with
benefits that keep them, and their customers,
loyal?
The architectural and operating elements of a channel
management program, such as incentive structures and
performance measures, should compel desired partner
behaviors.
A company needs to engineer its partner program to
drive these behaviors in a consistent, predictable and
measurable fashion. The program must also be flexible
and responsive to changing market conditions.
This is often a significant challenge as partners want a
program that is stable and constant, and companies
The Five Disciplines of Channel Management | 7

8. require significant time and effort to change underlying occur but are not always effective. Staff generally
systems and processes. follows defined process, but not always.
Knowledge is compartmentalized within teams.
The key is to architect a set of “levers” into your
partner program:  Functional. Standard processes are identified and
followed. There is a regular rhythm of the
 Segment. Allows clear identification and outreach
business. Structured corporate planning exists but
for specific partner types. Optimizes all channel
is often disconnected from individual or team
communications and engagement.
commitment setting.
 Expertise. Documents and tracks partner
 Robust. Processes are followed and documented.
enablement activities. Allows for tight alignment
A culture of learning is pervasive with deep
of company sales resources with competent and
feedback collected along essential processes. The
capable partners.
focus of execution excellence has shifted from
 Requirements. Provides performance "are we able to execute" to one of continuous
measurement against specific goals. Creates and improvement. Strong alignment exists between
maintains essential executive alignment around goals, investments and commitments.
channel objectives.
Channel management execution excellence is easily
 Rewards. Establishes and delivers against partner benchmarked and should be measured and managed
expectations of the relationship. Provides an ROI in seven areas:
framework for driving retention activities.
 Governance and organizational design. Where are
A well engineered partner program provides a stable decisions made and how do you get them to stick?
and predictable operational framework for channel Do you have alignment with all stakeholders? Do
management activities, while allowing agility and you operate as a cross-functional group or in silos?
responsiveness to changing market conditions.
 Metrics and scorecard. Is a single set of measures
used throughout the channel management
Discipline 5 process? Is business intelligence and data-driven
modeling the basis for decision-making? Are
Manage your team to drive execution excellence.
revenue and cost projections modeled or guesses?
Strategy defines the right things to do. Doing things
well – execution – is what sets companies apart. The Four Levels Of Execution Excellence
Most senior managers have an intuitive sense of how
effective is their execution.
What is often missing is an objective scale against
which to reference that intuition. There are four
distinct levels of execution excellence:
 Unstructured. There may be some successes and
some losses. The approach is relatively haphazard
and often dependent on the strengths of
individuals. There are few, if any, standard
processes. Organizational intelligence is poorly
documented and erodes as individuals leave.
 Basic. There is a basic operational structure in
place. Regular meetings and communications
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9. Failing to view channel management as
a competitive selling strategy weakens
the leverage a company would normally
gain through partnering.
 Compensation and incentives. Is field
compensation linked to partner performance and
requirements? Are the critical activities required
to meet corporate objectives rewarded? Are
compensation and incentives structured to give
line-of-sight to causes and effects? Is deal
registration for partners required?
 Systems, processes and tools. Are systems, The Bottom Line
process and tools aligned to company strategies
and objectives? Is there adequate change
management during times of large transition?
Have agility and flexibility been built in? Is data
quality sufficient to drive insight?
If companies are ineffective with partners, they will never be
 Communication and feedback. Are best practices
as successful with customers as they could be.
identified and shared? Is execution feedback
collected and acted upon? Is information It is the channel partner’s drive, capabilities and skills that
communicated and understood effectively? will determine whether customers buy and how they will feel
about you.
 Territory design and account management. Are
rules of engagement between direct sales, Unfortunately, the traditional approach to channel
partners and cross-channel clearly defined and management has been to run it as an operations program.
enforced consistently? Does account management “Cost-to-serve” and “how-to-scale” become the important
map to the guidelines of the partner program? Are mantras. While operational elements remain important,
responsibilities between customer and partner companies cannot afford to continue with this approach. As
reps well understood? dependencies on partners and alliances increase, winning
 Project prioritization and implementation. Is with partners becomes the key to winning with customers.
there a process for prioritizing and sun-setting
projects? Do projects maintain momentum or This requires effective channel management to approach the
stall? Is accountability for success shared and problem differently. Channel management must drive
understood? performance around company objectives, through the right
partnerships, in a manner that guides behaviors, creates
Ultimately, channel management execution value, and is operational for the company.
excellence becomes a keystone in the company’s sales
operations model. The sales operations model must With the right approach, channel management is not only an
define the company’s management system and set asset, it can be the key to competitive success.
the rigor required for execution excellence.
The Five Disciplines of Channel Management | 9

10. Concluding Summary
Following five channel management disciplines increases
your ability to compete and win with partners
We Are The Experts
Are you satisfied with your level of success with partners? Touch Business Consulting is an
expert on building and managing the
Your channel management investments should be about how you will channel.
win with partners in a competitive context.
Our clients have one thing in
Follow a five discipline plan to make that happen: common. They want to gain business
advantage through partners. They
 Create a channel management plan. Manage your channel include Fortune 100 firms like
strategies methodically to align to specific business results. This Microsoft, Novell, Dell, Starbucks and
provides the foundation for channel management success. others.
 Build a partner roadmap. Manage your ecosystem to maintain the Our unique approach of collaborative
right mix of partners. The roadmap lays out the roadmap for all consulting works with your team to
channel management activities. form strategy, implement operations
and drive communication.
 Conduct business proposition assessments. Manage your partner
business proposition to gain competitive advantage. This drives We listen. We apply discipline. We
competitive effectiveness with your channel management. focus. We deliver results.
 Architect your program to drive behaviors. Manage your In other words, we help you become
investments to drive specific ecosystem actions and results. You more successful.
need stability and predictability while enabling agility and
responsiveness. For more information, please visit
Touch Business Consulting at
 Define a channel sales operations model. Manage your team to www.touchbc.com.
drive execution excellence. This defines the company’s
management system and establishes rigor applied to execution
excellence.
For more information on how you can use competitive-oriented
channel management in your business, please visit Touch Business
Consulting at www.touchbc.com. About the authors,
Ray Rasmussen, Chris McCall and Richard
Flynn are the Principals of Touch Business
Consulting and are based in Redmond,
Washington.
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11. Touch Business Consulting
Visit www.touchbc.com to find out
more about how Touch Business
4016 148th Avenue NE
Consulting can help you generate
Building N
better results from your channel
Redmond, WA 98052
management.
888.732.6777
email: info@touchbc.com
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