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How Should Channel Chiefs Respond to Increasing Channel Complexity?

by David Johnson , Sr. Director Product Marketing September 19, 2018

Today’s Channel Chiefs are facing a market landscape that is nothing like even the recent past. The experiences consumers have with online brands and disruptive businesses like Uber and Lyft has resulted in a level of product and service delivery that wasn’t even possible a decade ago. These seamless consumer experiences have impacted expectations in all areas of commerce. Whether a consumer is at a local shop or making a purchase decision at their place of work, they expect a high level of service, a transparent price, and rapid delivery.

Channel Chiefs are working to meet these elevated expectations by investing in their channels. According to a survey by the 2112 Group, in 2018 80% of vendors are expanding the number of partners in their programs, 67% are increasing incentive budgets, and 60% are investing more in partner enablement. The net result of their investments is that Channel Chiefs are adding more types of partners and more layers so that they can deliver the right experience in a timely manner. While they may be improving the buyer experience, for many organizations these increased investments have led to a significantly more complex channel. Managing channel sales partners in this increasingly complex market can have a negative impact on revenue and margins due to an increased likelihood of incentive overpayments and price erosion through channel competition.

The good news is that there are organizations that have successfully managed to meet consumer expectations while simultaneously maintain revenue growth and margins. After taking up the effort to reinvent their channel strategies, these organizations have been able to reduce overpayments, respond more effectively to market changes, maintain stable prices, and grow revenues. In fact, some of them have been able to improve revenues by up to $50M on every $1B in sales. Chanan Greenberg, senior vice president & general manager for high tech at Model N, sat down with Business Reporters and discussed the challenges and successes that some of these organizations have had.

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