MANY companies sell their products through intermediaries - distributors or resellers, commonly called channels. A channel provides a more cost-efficient route to market.
Often, the channel also sells complementary products that enhance the "total product" offering, or provide a buying experience that adds to the overall selling process.
A company that sells through channels must manage challenges at strategic and operational levels. Since it is dealing with a separate entity, and not a branch office or subsidiary, the most obvious challenge would be that of aligning the channel's business goals and directions with the company's own. Only with the right degree of alignment will there be business synergy, channel loyalty and success for both parties.
Showing up, and throwing up
The channel salesman who manages your channel plays a significant role in this alignment effort.
Nine times out of ten, when your channel salesmen meet their resellers, the conversation revolves around what the latest product is and what the channel's sales targets are, or solving operational issues. While these discussions are a necessary part of daily business operations, they do not help to foster business synergy.
Channel owners and senior management are not interested when a channel salesman shows up and "throws up" the latest product features and marketing initiatives. The company that provides strategic value to the channel will stand apart from the slew of competing products the channel already resells.
It's not about revenue
The most common mistake is the assumption that your channels are concerned about revenue. They are not - you are.
A successful channel manager will focus on showing the channel the opportunity to grow revenue instead of just pushing for sales figures. This could be in the form of planning co-marketing programmes, and showing them the marketing and advertising support that is in place to support their selling efforts.
Channels want help to win new customers and get new business from existing customers. Given the same net revenue, channels are more interested in a deal that gives a sustainable, recurring revenue stream rather than a one-off big project. For them, it is about cash flow and the ability to finance and manage risk.
Looking beyond profit margins
Channels have a longer-term horizon than most quarterly-driven channel salesmen. As a result, they look beyond just revenue and profit margins. Their real focus is a return on capital. The value of the channel grows when return on capital exceeds the cost of capital.
Channel salesmen must have an understanding of how the channel manages working capital - policies that involve managing current assets, short-term financing, inventory turns, receivables, and so on.
Seize opportunities to help channels improve their return on working capital by providing differential credit terms, improving their sales turnover, helping to manage inventory and obsolete items, and reducing financing risk.
A means to an end
Channels care about skill development more than you think. But developing and upgrading their sales teams are simply a means to an end as the channel's real goal is finding and retaining the right employees.
Many channels who have 50 or fewer salesmen typically do not invest in sales training or skill upgrading in an organised way. They rely on the principal to provide product updates, soft skill courses and external training.
A strategic channel salesman uses these training resources to work with the channel management to motivate and retain the channel's employees.
Standing apart from competition
Your channels want you to help them differentiate themselves from their competition, which is typically the other reseller down the street. However, competition can also come from elsewhere, you included.
Many companies adopt a hybrid approach - they sell through resellers, yet sell directly to some larger customers, whom they deem as strategic. To manage conflicts of interest, companies should establish clear rules of engagement and set the right expectations to ensure the channel does not waste resources chasing after the same customers.
Channels are obsessed with operational efficiency. A strategic channel salesman should make an effort to be familiar with the channel's business operations, and to help it by improving the supply chain and increasing velocity and sales turns.
Make it easy for your channel to do business with you. Creating a web ordering system, a less bureaucratic warranty returns process, setting up a channel care line and streamlining after-sales support will help improve the channel's operational efficiency.
Remember, your channel is selling your product only because it adds business value to them. They are not in it just for revenue and profit. Learn how to effectively help them build their business and be a more effective channel manager.