Challenges of Channel Management
Introduction\nChannel management is complex primarily because of what it tries to manage. The word \u201cmanagement\u201d implies some level of control to achieve performance from an individual or from a team, either through inspiration or through some level of enforcement. The meaning of \u201cmanagement\u201d varies greatly when it comes to an organization\u2019s structure\u2014depending on whether it\u2019s a startup, a more mature company, or a governmental organization like the military. However, in every one of those instances, there is a direct relationship between the manager and the subordinate employee or team member. In the case of a reseller network or a partner network, that relationship is very different, and it presents some unique challenges. Let\u2019s take a moment to explore those challenges. \nChallenges\n\n Channel partners are companies, not people. Ordinarily when we talk about management, where there is some level of control over employees, consultants, or contractors, we are exerting some level of control over people. But when we talk about managing a channel, the level of control is much lower: first of all, because it\u2019s an indirect sales force and, second, as I\u2019ve already noted, we\u2019re managing companies, not people. Of course, those companies are made up of people \u2014 salespeople, technical people, marketing people\u2014but in the end we\u2019re trying to manage an entity rather than individuals. That\u2019s an important difference that creates a huge amount of complexity. \n Channel partners do not report to vendors. In the case of a direct sales force, there is a hierarchy. You have a manager who reports to a director who may report to a VP, but with a channel organization, you have a company reporting to a channel account manager or a partner business manager. That reporting relationship is indirect. If some partners don\u2019t perform over one, two, or three quarters, they don\u2019t get fired for missing their mark. They may miss some incentives, but they don\u2019t get fired for poor performance. Eventually, if a partner doesn\u2019t perform over a long period of time, that partner may be replaced, but it doesn\u2019t happen as quickly as it would when you\u2019re managing a direct sales force.\n Channel partners have their own priorities. The challenge here is that those priorities do not necessarily align with the priorities of a vendor. If a vendor is trying to promote a specific product or trying to penetrate a specific market\u2014say, verticals like manufacturing or healthcare or whatever\u2013it may or may not be in the interest of the partner to carry out those activities. So it\u2019s crucial for the organization to understand what the priorities of those partners are instead of randomly pushing programs and deploying resources.\n There are different types of partners, and they require different engagement models. Some partners sell to small and medium-sized businesses (SMBs), some partners sell to midmarket organizations, some sell to enterprises and some sell to all or a combination of two or more segments. For an organization to align behind the needs of various types of partners, have appropriate programs, and make them meaningful requires a significant level of thinking and homework which, a lot of times, companies skip. Therefore, many of the initiatives that are rolled out in the channel don\u2019t really have an impact. In addition to differences in types of partners\u2014what we might call practices or areas of focus\u2014there are also differences in relationships based on revenue. Partners who are larger\u2014larger in the sense that they carry a bigger portion of a vendor\u2019s revenue\u2014tend to be more important to the vendors than those partners who don\u2019t carry a lot of products. Aligning the appropriate level of resources with high-velocity and high-volume partners vs. low-velocity, low-volume partners is critical, and that can make channel management quite complex.\n A partner\u2019s loyalty is driven by financial motives. Just like in a startup environment,