If you’re going to survive in the wilderness, you’d better have a guide. And right now, managing data in the channel is the Wild West. Or, to borrow a phrase from The Wizard of Oz, “Toto, I have a feeling we’re not in Kansas anymore.”
What’s changed about the channel is access to data. Mountains of it. What hasn’t changed is the ability of channel chiefs to analyze and use this data to better understand their channel partners and end customers, and act on the insights gleaned from this knowledge.
In our last post, Getting from Big Data to Real Value, we pointed to research revealing that only 4% of mid-sized and large enterprises were taking full advantage of the huge quantity of data they were collecting.
We also noted in an earlier post, Limitations of Excel and Access for Channel Data Analysis, that a majority of channel-dependent companies continue to rely on internal channel data management systems to collect information from their channel partners.
These legacy spreadsheet or database programs were simply not designed to process the vast amount of point-of-sale (POS), inventory and sales-in/sales-out (SISO) data generated in the channel. So, people using these non-specialized systems, no matter their analytical skills, are typically working with stale and inaccurate information, even as the market may be shifting under their feet.
It’s no wonder that channel chiefs are experiencing frustration and anxiety as they try to get a handle on the effectiveness of their channel programs—whether incentives, marketing, recruitment or whatever.
That might help explain the high turnover rate besetting channel chiefs today, as documented by Michael Kerman in his recent blog post, The Latest Endangered Species: The Channel Chief.
Kerman identifies four key challenges facing channel chiefs today:
- Increasing partner engagement
- Reducing the total cost of sale
- Insight into channel performance
- Driving revenue growth
Overcoming each of these challenges requires having a system in place to manage large volumes of information effectively and efficiently.
As Kerman notes, partners want to work with manufacturers who not only offer quality products at a competitive price, but who are easy to do business with. Vendors with outmoded channel data management systems create administrative and paperwork hurdles that work against the ease of doing business.
When it comes to reducing total selling costs, the same applies. Ineffective channel data management systems create “confusion over programs, eligibility, endless special pricing requests, escalations regarding rebate claims, and payment delays,” as Kerman writes. Dealing with all these issues thwarts the ability of channel chiefs to lower total selling costs, putting them under the microscope of higher management scrutiny.
Gaining insight into channel performance also suffers without accurate, timely channel data. Lacking this insight, channel chiefs can’t know which incentive programs are working, why some partners are successful and others not, or how to migrate lesser partners into better performers.
Finally, there’s the challenge of revenue growth. As noted in a 2014 report by Accenture, Improving the ROI of Indirect Channel Incentives, “…as much as 10 percent of the typical high-tech company’s indirect channel partner incentives are overspent, or are generating an insufficient return on investment.” But how can a channel chief know which programs are producing a ROI without a constant flow of timely, accurate data being analyzed on the fly?
Kerman concludes that the answer to overcoming these challenges lies in “an integrated channel management platform that provides a consolidated view of partner, product, and program performance and ensures the accuracy of all channel-related transactions.”