What Is Channel Management?
The word \u201cchannel\u201d indicates a passageway through which something flows. Channel management is a discipline in management science in which a vendor organization or \u201cbrand\u201d creates, captures, and fulfills market demand via another set of organizations who act as channel partners and ecosystem players for the subject vendor. These channel partners act as a kind of mechanism that enables the orderly \u201cflow\u201d or distribution of products and services from the vendor to the end customer. In this article, we will expand on this basic view of channel management and attempt to explain in more detail how it functions in real-life scenarios.\nAny for-profit organization \u2014 and even some non-profits \u2014 that depend on providing products and services to customers in order to survive, require two core functions: sales and support. In today\u2019s world, most organizations that sell products and services also require a marketing function. The entire goal of a commercial organization, in fact, is to find buyers, make them aware of the vendor\u2019s products and services, provide those products and services for a fee, and then, as a part of this transaction, make a reasonable profit. Now, we all know profit is a function of revenue minus cost. If the cost to acquire, deliver, and serve exceeds the revenue the company generates, then it becomes unprofitable to serve a specific group of customers. This is where a \u201cchannel\u201d organization and channel management come into play by enabling cost-effective sales and support for vendors on a larger scale than is possible through direct selling alone.\n\nThe primary purpose of a vendor\u2019s channel organization is to build relationships with a set of other organizations that can resell and support the vendor\u2019s products and services. The core feature of this relationship between the vendor and the partner organization is their mutual interest in increased profitability. For the relationship to succeed, the vendor organization should be able to reach, acquire, and serve a large number of end customers at a relatively low cost compared to selling directly, and the partner organization should be able to increase profitable revenue by providing the vendor\u2019s products and services, along with the other products and services the partner sells.\nWith this as a backdrop, we can now see that channel management basically entails five core phases, as outlined below:\n\n\n \tPartner recruitment \u2013 The focus of this phase is to reach out to and build relationships with potential organizations that are able to sell and support a vendor\u2019s solution.\n \tPartner training \u2013 The focus of this phase is to ensure partners\u2019 functional teams are properly trained on how to market, sell, deploy, and support a specific solution\n \tPartner enablement \u2013 This phase focuses on making sure the partner marketing, sales, and technical personnel have the right tools to do their job.\n \tPartner sales \u2013 The entire focus of this phase is to drive increased sales via partner organizations via new accounts and partners\u2019 existing customers.\n \tPartner management \u2013 This phase focuses on introducing effective performance enhancement incentives and programs tied to training, certification, sales improvements, quota attainment, etc.\n\nChannel management is a discipline all its own, but it also tends to build up all other cross-functional areas of an organization, such as marketing, sales, operations, finance, and legal. In the case of a channel organization, the traditional direct functional disciplines must undergo adaptations to fit a specific channel requirement, as follows:\n\n\n \tChannel marketing \u2013 This functional group focuses on driving awareness in the partner base to recruit and enable partners with new programs and initiatives. This group also takes content from the direct marketing team and adapts that content for partner use in end-user lead generation.\n \tChannel sales \u2013 The focus for this functional group is to train and help a partner close a new tra...