Why Channel Management Varies around the World

Published: May 16, 2016, 2:12 a.m.

b'Over the past decade or so, organizations that rely on channel infrastructure to reach their end buyers have been making significant investments in unified partner management activities. However, they seldom consider the fact that these channel management activities can vary quite a bit across countries\\u2014not only from a deployment perspective but also in terms of their effectiveness. Why is that? How can the organization recognize these differences and adapt accordingly?\\nBefore we answer those questions, let\\u2019s quickly review the areas in which channel management activities tend to do the same, regardless of country or region. There are several basic principles that apply across all geographies around the world:\\n\\n\\n \\tWhen a company sells through a channel network, they will generally sell through either a one-, two- or three-tier system. Yes, multi-level distribution (more than three tiers) exists, but that tends to be more for business-to-consumer products than they are for business-to-business products and services.\\n \\tVendors provide core solutions. Partners, on the other hand, are selling products or solutions as-is or perhaps extending them with their own capabilities\\n \\tPartners typically make most of their money after they sell the product, rather than from a specific transaction. A prominent exception is franchises, where vendors actually make money no matter what happens because they have a fixed amount of franchise fees coming in. So, while a franchisee may not be making large amounts of money, the brand that is franchising through a network can nonetheless generate a decent return if they have a good solution to offer.\\n \\tGenerally, the lower the price of a product the more transactional it is. With higher prices there tends to be more complexity, and this is where solution selling comes in. We see this consistently across all segments, whether it\\u2019s insurance, finance, manufacturing, or technology.\\n \\tWhen it comes to lead generation, partners are generally not very effective at generating demand. Around the world, a consistent challenge is the need for a vendor to focus on brand awareness, product and solution awareness, and even leads. There is no doubt that in certain parts of the market, partners may be capable of generating leads on their own, but that\\u2019s not a core competency that most partners have in all markets. Therefore, this is a common element a vendor needs to understand and address, especially in the context of demand generation.\\n \\tThe relationships in channel management generally are between companies rather than between people. What this means is that policies aligning the financial objectives of one or more entities that are actually forming the links between those entities. This tends to be fairly consistent around the world, independent of the market segment.\\n\\nSo what are the ways in which channel management varies?\\nThe first type of variation is the structure of the channel. This is something that varies greatly across global geographies. The differences are primarily a function of market maturity. Developed countries like the US, the UK, Germany, Japan, and Australia tend to have a one-, two- or three-tier distribution system. There is a high level of financial transparency, and tight financial controls to address corruption and other money-related issues, with sufficient laws, regulations, and enforcement mechanisms in place. In these countries, the channel generally behaves in a very mature way. \\nOn the other hand, when you look at emerging markets\\u2014places like Southeast Asia, certain parts of China, Eastern Europe, and parts of Africa\\u2014laws, regulations, and enforcement are inadequate to control corruption, especially with respect to intellectual property and financial regulations and controls, and channel management activities tend to vary quite a bit from place to place. As a result, there are important differences in how companies market and what they need to think about when doing ...'