Managing the Channel in Uncertain Times

As the press fluctuates between “doom and gloom” and “light at the end of the tunnel” scenarios, the only thing we can be certain of in the short term is “uncertainty”. And while the financial system is predominantly at the centre of this turmoil, the current global financial situation (coupled with the significantly lower and fluctuating Australian dollar) will have ramifications throughout the broader economy and the ICT industry.

The combination of less available (or expensive) credit with stagnant or even declining demand will hurt even healthy companies. On the demand side, companies are likely to cut back on new investments and expansion, which may have suddenly become more expensive due to the falling dollar. On the supply side, companies that want to invest may find available credit scarce or unavailable.

So what can you do in these uncertain times?

Don’t forget the channel

When the economy is uncertain, companies often first look inwards. Their focus and activity centres around “how do we protect ourselves” during this time. Processes are reviewed to see where costs can be cut. Headcount gets frozen till the uncertainty passes. Programs are put on hold “for a while”. The side-effect of this however, is that the channel and the customer can become neglected.

It’s times like this the channel becomes crucial. They are closest to the customer and are your “sales engine”. Partners respond to vendors who support them, especially when things aren’t going so well. Partners are also feeling the pinch, so vendors that defocus on them lose mindshare very quickly and could potentially be displaced by an alternative vendor.

Market shares are won and lost in times of adversity – don’t spend so much time looking inwards that you forget the channel and push them to your competitor.

Review your message

The messages you gave off as a company during times of prosperity may not be as relevant in times of slowdown. In boom times, vendors position their products as a means of driving new initiatives and increased growth. However, when things slow down, customers focus on reducing costs and improving productivity.

Make sure you review your message and value proposition to see if they are still valid today. If you have to increase your prices due to the fall in the dollar then do the calculations around not only the end user price point, but also on the impact to the channel margins, the ROI of your solution, and the partner’s value-add.

Therefore don’t forget you need three versions of your message – one to the end user, one to the channel, and one through the channel. They are aimed at different audiences, so tailor them appropriately.

Look for operational efficiencies

When things are good, no-one worries too much about inefficiencies, but when business slows down, this can make the difference between success and failure. Does the way you did things in time of growth still make sense when the outlook is uncertain?

Review your processes and look at how to improve productivity and efficiency, not just reduce cost. For instance do you have all of the required channel program documents, sales tools, technical documents, whitepapers etc online so that the channel is more “self service” rather than having to always call you?

Conduct an audit of your channel processes and engagement as you may end up killing two birds with one stone – reducing costs from your business, and giving your partners a better overall engagement experience.

Focus on the priorities
The challenge of focusing on priorities is not about knowing what to do – the real skill is deciding what NOT to do. And that may not be easy if you’re involved in the business, because there’s always going to be someone who is attached to a non-performing part of the business, just waiting on the possibility that things will turn around.

If you can’t let go, think about using an external facilitator to help you sort through the options. Make sure they have an understanding of the industry and the channel so they can bring some insight to the table, but you’ll find their objectivity will enable you to get clarity and develop an action plan more quickly and with less stress.

Optimise your channel program

Partners are potentially seeing their business shrink and feeling pressure on margins. They want the vendors they support to support them. You want greater loyalty, and a channel that promotes your product. Maybe it’s time to re-assess or re-categorise your tier (Gold, Silver, Bronze) requirements and the support you provide to each tier or even cull the lower (or non) performers from your program.

Are the benefits you are offering commensurate with the work that is required by the partner in each tier? Rather than just using revenue as a method of tier categorisation, why not look to a more “value” or activity based tier categorisation? Are the tier requirements an accurate reflection of the current business environment? What could you do to assist your partners profitability (eg. giving training/certification cost rebates linked to partner business development activities or objectives. Remember that profitable partners are loyal partners.

Prepare for the upturn

A downturn is a natural part of a longer term economic cycle, and will not last forever. Those vendors that been proactive during this period and have efficient channel processes, programs and partners will be in a much better position, than those vendors that haven’t, to capitalise on the upswing when it comes.

Channel Dynamics can help you review and optimise your current channel engagement and programs using our proven channel consulting and training tools and methodologies. Contact us before 15th December to make sure you’ve got your strategy in place for 2009.