Conflict is a common ingredient between enterprises and their channel partners. A web search of “Channel Conflict” generates many articles, most of which are generally related to pricing issues with, or between, channel partners. However, channel conflicts can occur in a much broader spectrum in the channel, and many manufacturers aren’t even aware of the conflicts. The consequences of ignoring “hidden” conflicts can rob a company of a significant portion of its ROI.
For instance, maybe you hear your partners say things like this:
- “Why is it necessary to have so many websites, usernames, and passwords to get the information I’m looking for?”
- “How can I get my new employees trained? Where can they go later when they need instant information?”
- “We feel like we’re the only ones out here. How do we get in touch with other people – either an expert at the company or another dealer – who can help me?”
Or maybe, your people say things like this:
- “Why do my partners let the good leads we give them go dry?”
- “Even my own people are frustrated with our current partner systems.”
- “Our partners don’t possess the brand loyalty we think they should have.”
If you’ve heard these questions or comments from your dealers or your own staff, then you know there is more than just price conflict in the channel, and you know there is a cost associated with this conflict. And if you haven’t heard them, maybe you should ask.
Research shows there is often a significant gap between how managers at the manufacturer level perceive how their partners feel about the level of support they receive and how the channel partners themselves perceive how they are being supported. In one study (Abistar Group, 2010), the gaps were shown to be significant. In a key area of Partner Management, Marketing and Communications, managers scored what they thought their partners’ satisfaction to be at 77% while the partners scored it well below that, at 59%. Similar gaps were noted for Training and Certification, Performance Management, and Collaboration.
These gaps produce friction between the enterprise and its partners. This conflict can eventually lead to reduced revenue, slower growth, and higher administrative costs. Likewise, resolving this kind of channel conflict can improve ROI.
PRM Systems Can Reduce Channel Conflict
Companies have reduced channel conflict by incorporating a Partner Relationship Management (PRM) system in the channel. PRM systems are web-based software solutions that unify all facets of managing a distribution channel into a single partner portal. In conjunction with continuous improvement programs and the application of best practices, companies have been able to increase channel productivity and lower costs using a PRM system. These initiatives, when combined, make it easier for partners to do business with the manufacturer. Let’s take a look at some specific ways ROI can be increased using the same four partner management activities assessed in the survey.
Marketing and Communications
Effective channel partner marketing is critical to the success of any company selling through an independent channel. Partners need to see clear, understandable communications coming from one source. They need alerts, reminders and announcements about product introductions sent on a timely basis. And they need to be able to quickly find past communications. A PRM system allows a company to successfully synchronize all business communication activity within a channel. If you communicate your products and brand effectively, your partners will be more informed and enthusiastic about your company, and more likely to effectively sell your product, increasing ROI.
Training and Certification
Today’s PRM technologies manage and deliver online training, classroom training, assessments, webinars and other e-learning activities. This provides employees and their managers the ability to create, manage, and view a defined learning plan and certifications for specific job roles. This kind of well-balanced, channel training can contribute significantly to reducing partner ramp-up time and costs, and increasing individual performance, delivering a positive impact on a business’s ROI.
Measurement is an important key to successful enterprise performance because it helps managers make more effective decisions. Today, most channel management technologies include a reporting dashboard for managers to access information about the people and organizations they manage. Having good information at your fingertips helps you make good decisions and increase ROI, particularly as an enterprise scales up and adds more partners.
Given today’s acceptance of social media, employees are “expecting” to be able to collaborate with others in their channel. A PRM system can provide a good forum for this to take place, where it can be overseen and managed to the benefit of the enterprise and its channel partners. This peer-to-peer communication can help resolve current issues by providing a repository for best practices. Companies who just a few years ago were trying to stifle this kind of communication today are embracing it because they know it produces more informed, more effective, and more brand-loyal channel employees. As the level of information shared by many people increases, so does ROI.
Channel Conflicts Can Be Resolved
Instituting a web-based PRM system can increase ROI. The most successful companies using PRM systems have combined them with a continuous improvement and measurement program, along with instituting business strategies based on the best practices found in channel management today. When all combined, this strategy can reduce the cost of managing and administering the channel, and eliminate many of the causes of the conflicts themselves, improving the company’s return on investment for the long term.