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| | The Marketing, Channels/Partnership & Sales Execs Network is not currently active and cannot accept new posts | | Channel Compensation Plans | Views: 1274 | | Jul 22, 2005 12:01 pm | | Channel Compensation Plans | # |
SoftwareSalesMarketingGuru | | Guys,
I am looking to revamp my compensation program from a direct model to a channel sales model. We are in the process of building new partners in the print media space for a great software solution that analyses demographic trends and plans the media buy.
Would anyone have ideas, examples or any information sources?
Thanks all,
Chris Private Reply to SoftwareSalesMarketingGuru | | Jul 25, 2005 9:21 pm | | re: Channel Compensation Plans | # |
Carol Stemple | | Hi Christine,
Sounds like business is growing ... congrats! I would like to mention some of my frustrations with channel marketing... in hopes that you'll set yours up a little better.
I was a Channel Partner for a major company with a new product. They gave me a designated territory i.e... I was not to go outside this area; when leads for my area came in they would send them my way.
My website was fairly successful and I received inquiries from everywhere. I promptly passed these leads on to the appropriate rep, but never got any referrals for my area?
Turns out, other CP's from across the country were going ahead and filling the orders that they should have sent to me. The company "punished" them with a smack on the hands and said "don't do that again." In the meantime, these CP's were increasing biz for themselves and for the company. The company viewed these CPs as having a better sales record and "helped" them develop their biz further. Then they asked me why sales weren't up? OK ... I was very green and didn't know any better and played by the rules.
Bottom line ... if you set this up with policies and regs ... be nice and don't sell out to the guy that breaks the rules just because he made a nice sale. The good guys will appreciate it and reward you with loyalty.
Good luck!Private Reply to Carol Stemple | | Aug 31, 2005 2:20 am | | re: Channel Compensation Plans | # | 
Dan Lorenz | | Hi Christine:
You're question is a little short on respondents so I thought I would weigh in. My experience is not in the print media industry so my opinion may not be well informed however I have been on both ends of the channel sales model in the computer networking industry so here are some generalities to consider:
As a vendor you want channel partners who know the target customer's business. It's helpful if they know software too but what you really want from them is their contacts and feet on the street. You can teach them the software.
Channel partners will want a few key things from you. First is margin. If they can't make a profit, they won't bother. Find out how much they make selling other products and offer them enough to get their attention. It's usually done through their discount but it is also done via minimal channel conflict. In other words, if everyone is selling it, everyone will discount to sell it, margin will get squeezed, nobody makes money, everyone stops selling it.
Another thing a channel partner will want is exclusivity or at least a limited number of partners. Again, channel conflict is the concern here but you want to balance their needs with your need of market penetration. Too few partners and they're not getting it to all of the prospects. It's also helpful to prospects if they're hearing about your product from multiple partners. Must be something to it if everybody is talking about it.
Also key to this channel strategy is that you do not compete with your channel. If you are taking orders direct they will drop you in a nanosecond. Invariably it will be some prospect that they courted for six months and then you got the order direct. If you commit to a channel program then you must have religion for it. No direct orders at all. If you must handle some accounts direct then name them up front, before the channel partners invest any time on that account.
Finally, don't give up your other marketing. Don't think that signing up a bunch of partners is going to bring in a huge surge in sales. It takes time. You still need your advertising, direct mail or telemarketing to drive demand. Your pull-through marketing.
Channel sales brings more salespeople to the fight, more buzz, and more prospects than direct selling can but you give up a lot of direct contact with customers, profit margin and control in how your product is sold. It's great for some products, not great for others plus you need a salesforce that is geared to sell to salespeople, not endusers. It's a different way of moving product.
I'm getting long winded here. I'd be happy to talk with you further. Please PM me if you'd like to talk and good luck with your program.
DanPrivate Reply to Dan Lorenz | | Sep 05, 2005 8:48 am | | re: re: Channel Compensation Plans | # | 
Pranav Rachh | | I agree with all that Dan has to say. These are the basics required by any channel partner - and for a channel sales strategy
I however like to add that Return On Investment - ROI is a concept that is more in tune with what the channel wants. depending on the place, the investment could be space if space is expensive, or labour or money. For eg: what is the revenue per sq foot of his shop that you will give to them or if you give low margins, but he is still able to rotate his inventory faster, then the ROI is high . if the margin is 10 bucks on a product worth 100 bucks, his margin is 10%. If he invests 1000 bucks to buy 10 pieces, then he earns 100 bucks. not much. but if he sells 40 pieces every month, then it is 400 bucks of profit a month, 4800 a year. on an investment of 1000 ! ROI is 480 % though the per piece margin was only 10%. Even if the margin is 5%, the ROI is still 240% .......
This is usually how the channel looks at the new products and brands. thats why they ask how much are you going to promote the new brand / product. Also what are the ancillaries that he will be able to sell with your product - because the ancillaries also bring in additional revenue, usually at a higher margin than the main product
Regards
PranavPrivate Reply to Pranav Rachh | | Oct 04, 2005 10:54 pm | | re: re: Channel Compensation Plans | # |
Mike Fine | | Hello, Christine!
Dan made some great points. Like Dan, I also am not experienced in the print media industry; however, I thought I would share some of my thoughts with you regarding channel strategy.
My first thought when I read your post was, "Why does she want to move from a direct model to a channel model?" There are obviously good reasons for doing so, I just hesitate to give advice without understanding your motivations and objectives.
That being said, some key points that I would like to share are the following:
1) Channels partners typically expect support - both pre and post sales. Be ready to explain how you plan to support your channel partners.
2) Channel partners love to get leads - so having a good lead generation program will be another big advantage into gaining traction with channel partners.
3) Do not underestimate the importance of training. The better your channel partners understand your product and understand how to position and sell it, the more they will sell, period.
4) Understand every detail about the profile of your ideal channel partner and be selective. Choosing the right channel partners can make all the difference in the world. Quality can be much more important than quantity, especially if you don't have the resources to support non-productive, ineffective channel partners (which can get very costly).
Great topic and great question. I hope some of these thoughts were helpful.
Regards,
Mike Private Reply to Mike Fine | | Oct 05, 2005 9:10 am | | re: Channel Compensation Plans | # | 
Where The MIND is Without FEAR | | HI Chris,
Congrats on you moving from direct sales to Channel sales,
lemme give you a few benefits of doing sales through channels,
a. you get o have a wide coveragre in the market
b. you can increase your business rapidly through channles
c. you get to choose the business , since you can afford to choose, as you should be having a string of leads.
d. you get to have a chance to compete directly with the BIG BOYS in the industry , and you can chalk your own plans to join the league
e. you create a brand equity very fast
f. you can focus on your core competance areas, theerby delivering A class products /services
Since there are so many advantages, theer are bound to be as many disadvantages in the CP system
a. You get to depend on a third aprty for your business
b. you have to share a portion of your margin to your CP
c. At times( almost all teh times), the CP behaves in an uncontrollable fashion( plzz do not forget, the channel partners , who are an extension of your business, are INDEPENDENT BUSINESSMEN)
d. Control and monitoring of these CP is a herculian task
e. Conflict management among CP is a great headache( at times it might occupy a major portion of your time)
f. Do not expect loyalty from a CP ....
and the list goes on.....
and so where do you stand,
a.have a selection criteria, for the CP based on your business and appoint them ,
b.focus on training , as it hapens the most important factor for the succcess of your business
c.Transperancy should be maintained with the CP, for a long lasting relationship
d. look for a long relationship with the CP instead of short term benefit
e. conflict manaagement should be done at very frequent intervals
f.See to their growth, which is nothing but your growth....
All the best ,
just inc ase you need any further details , feel free to drop a word,
karthik Private Reply to Where The MIND is Without FEAR | | Oct 10, 2005 4:35 am | | re: Channel Compensation Plans | # |
Rakesh Jain | | hi
I am agree with Dan regarding the aspect of channel marketing. At the same time one need to understand the competition and their offerings. If you are in Push type of product / Services you need to give better margins to the channnel partner as compared to the competitor. so that they push your product/Services on your behalf. And if you are in pull type then channel partner will automatically lined up at your door step.
regards
rakesh jain
Private Reply to Rakesh Jain | | Nov 18, 2005 5:10 am | | re: re: Channel Compensation Plans | # |
Ali Rampurwala | | Hi Friends,
I have just started in the channel partner vertical and would appreciate if any of you knowledgeable people could help me out with the terms and conditions in an exclusive reseller agreement.
Can anybody send me a sample copy of an exclusive agreement, will appreciate any help in this regard.
Regards,
Ali Private Reply to Ali Rampurwala | | |
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