Menu
Menu
Feature: New Products and Staying Ahead of the Curve

Feature: New Products and Staying Ahead of the Curve

Indirect sales channels are notoriously difficult to manage. As independent companies, resellers may sell product lines from several competing companies.

Since their salespeople typically work on commission, they aren't inclined to spend much time reading the marketing materials that arrive in box loads from your company. But when they do want information -- about configuration, availability and price, for example -- they want it immediately and will turn to a competitor if they can't get it from you.

Channel sales partners are as important as they are challenging. By extending a company's reach beyond those customers who buy directly or off the retail shelf, these partners are vital to maintaining revenues and gaining competitive market share. Consequently, it's no surprise that companies are increasingly investing in their relationships with value-added resellers (VARs) and other partners. They're exploring how new technology tools can increase the availability of marketing and collateral sales materials, quickly deliver information about sales promotions to the people who actually do the selling, get a firm handle on each partner's performance and shorten order turnaround time by making product configuration tools accessible.

For example, at 3Com networking and communications company, 90 per cent of its products are sold indirectly through channel partners. Leads are vitally important to drive those sales. They must flow smoothly to the sales representatives, and from them to local channel partners qualified to pitch and close the sales. Those sales leads used to go out by e-mail and disappear.

There was no way to manage the leads other than by phone, says Lee Phillips, 3Com's director of large enterprise marketing. Nor was there any way to analyze leads, trends and patterns.

To change that, Phillips contracted with ChannelWave Software for a Web-based sales-lead tracking system that ties together his division, its sales representatives and its independent reseller partners. 3Com posts leads on the Web site, and partners report status and results, allowing 3Com to track a marketing program's effectiveness and partner performance. "The system is incredible," says Phillips. "We now have an automated process that will give us insight into the pipeline of lead activity from beginning to end, including data about the activities of the channel partners."Making Managing EasierGiven the complex and often scattered state of most companies' channel management systems, arriving at informed decisions about partners is not easy.

The profitability of any given channel relationship is difficult to measure, making it challenging to evaluate ROI and allocate resources to support effective resellers. At hard-drive vendor Western Digital in California, for example, Director of Strategic Marketing Peter Quill recalls that when he joined the company two years ago, tracking the performance of individual channel partners was almost impossible because data was scattered across systems and queries couldn't be easily customised.

"Every time I asked for information," he recalls, "it took three phone calls and a week and a half to get the answer." That's no longer the case. Western Digital now manages its partner relationships using Partnerware Extended Enterprise, a software package from Texas-based Partnerware Technologies.

These packages are part of the emerging category of extranet-based partner relationship management (PRM) tools. PRM has roots in the automated customer relationship management (CRM) approach that has become popular in the past several years. But where CRM seeks to optimize a vendor's direct sales, PRM addresses the more complex challenges and different behaviors involved in acquiring, communicating with and supporting partners in a company's indirect sales chain.

The Web Steps In

If one key technology has enabled the development of PRM tools, it's the Web.

That's more than a little ironic, since in the early days of Internet development, there was no shortage of warnings that the capability of customers to buy directly online inevitably would mean the death of channel partnerships.

However, as Robert DeSisto, a Lowell, Massachusetts-based research director at GartnerGroup, notes, vendors exploring this possibility quickly found that partners were doing a good job of delivering local service of a kind that large, broadly based sales organisations weren't in a position to provide. Now, says DeSisto, we're seeing the flip side: Enterprises are forging new and stronger channel relationships and asking how they can be made more effective.

The prototypical PRM system will allow a reseller or other channel partner using any standard browser to log onto the vendor's password-protected channel Web site. Here he or she will be greeted with a customised page that offers a mix of vendor and product news, listings of relevant current promotions, new sales leads, sales statistics and the opportunity to update the status of current accounts, and links to marketing, product and other collateral materials in printable form. It may also provide access to a product configuration engine, inventory querying, online ordering or order tracking. In addition, an integrated online notification system will generate targeted e-mails with embedded URLs to alert specific resellers of timely information awaiting them on the Web site.

Tools from Startups

PRM tools have started to show up only in the last 15 months. They're coming from two sources: a handful of young companies working at the intersection of extranet technology and enterprise relationship management and some established sales-force automation vendors seeking to extend their suites into the PRM arena. These companies are doing much to define this category of business tool.

They include the following:

-- ChannelWave Software (formerly VirtuFlex Software) released ChannelWave 2.0 in March 1999. President and CEO Chris Heidelberger says the company is focused on opportunity management -- lead distribution and tracking, product configuration, price quoting and ordering, and sales forecasting. Santa Clara, California-based Nortel Networks has been running a ChannelWave system since October 1998. "I can go into the system today," reports Lisa Quaglietti, former director of customer development, "and tell you how much business has been generated as a result of a particular marketing program. And I can show how each partner is doing with what they've been given."-- Partnerware Technologies, a 3-year-old Texas-based company, is now offering version 2.0 of Partnerware Extended Enterprise. President and CEO Eric Hills says the product focuses on the softer side of partner relationship initiatives: communicating channel marketing opportunities and programs, managing leads and supporting team-selling involving both channel partners and internal sales personnel.

-- Webridge, a 3-year-old company in Oregon, released Mainspan, a Web application server platform with PRM components built in, in July 1998.

Mainspan has an object-based business rules engine to store program logic and six core components.

Craig Friedrich, CIO of InFocus Systems, an Oregon-based manufacturer of multimedia projection systems, cites Mainspan as both elegant and a good value.

He praises the fact that partners are greeted with customised pages and that the tool allows nontechnical business unit personnel to publish materials on the Web. Randy Boyd, technical manager at ProView, a VAR that includes InFocus products among its offerings, says the new system is efficient, eliminating a lot of telephone tag and paperwork. He likes it because online you can get answers; you don't have to talk to anybody in person.

-- In February 1999 Allegis (formerly Net-It Software) in San Francisco came to market with Allegis Sales Partner, which uses a Web platform architecture to support an application suite for life cycle management of an array of partnering relationships.

Justifying a PRM Tool

Cost-justifying a partner relationship tool is largely a matter of estimating the value of increased sales from targeting sales leads more effectively, of shortening the lag time for a sales promotion or a new product rollout by getting the word out immediately to the right partners, and of improving sales effectiveness by making collateral materials and configuration engines readily available.

Vendors have adopted a variety of pricing models, making comparisons difficult.

But according to Webridge Vice President of Marketing Gary Whitney, installations carry price tags from $US200,000 to $500,000.

At Executone Information Systems, the PRM value proposition is simple, says Tom Berry, director of marketing communications and channel management, who uses Webridge's Mainspan. He reports that a time savings of just a half-hour a week -- a sales partner not having to wait on hold for telephone information, for example, or to search paper files "translates into more than $5 million in increased annual revenues per salesperson.

Finally, there is one other issue to consider. Automating business processes may force you to examine how well those processes are designed. That can be as trivial as having to redesign forms or as profound as discovering, as InFocus did in talking to its sales partners, that communication was disjointed. "What our channel partners saw," says Friedrich, "was a machine-gun fire of random information constantly spewing from our company. One even said, 'You guys are killing me; it's too complex.' That forced us to address how we go to market with information."

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!

Error: Please check your email address.

More about 3Com AustraliaAllegisChannelWaveDIGITAL NOWInfocusInfocus SystemsNortel NetworksPartnerWareWebridgeWestern Digital

Show Comments

Market Place

Computerworld
ARN
Techworld
CMO