Aligning Business and Channel Strategies - a very demanding task

Having meet so many Executives on my channel courses and trainings I have seen some of them that are very good at Channel Strategies, while others really can’t, and I have to be honest that I have wondered how it is that one can do it, while the other can’t ..…and another thing that interests me is how they do can do their channel strategies consistently good? So what I’m trying to do in this forum article/discussion is to stimulate your thinking about how to align business and Channel strategies and hopefully get a lot of good discussions and input from that.

I do realize that most senior business executives have growth, innovation, better protection against risks, cost control, resource efficiency and a stronger ability to cope with constant change as major business objectives for the years to come. However, we all know that a well planned and executed strategy to take products to market is the foundation of any successful company. And through the implementation of an indirect sales force, the vendors or distributors are aiming for higher market shares without raising the costs of the own sales force further (let’s face it, this is what channel sales is all about). Therefore the most executives view targeted investments in an indirect sales force as important elements in achieving their objectives. What is for me however very interesting, is that research reveals that about 75% of all channel initiatives fail to deliver the expected business value (Gartner Group - 2006).

Every one of us that works with channel strategies fully understands that, what sounds quite simple in theory can in reality, incorporate many different challenges and issue (I guess that is why 75% of all channel initiatives fail to deliver the expected business value). This leads us back to what I actually want to discuss; aligning business and Channel strategies. Let us take a look for what is needed when vendors and distributions around the world, create a strategic plan with focus on multi-channel revenue growth, they should not only take a look at best practice methodologies that have proven to work (you can read more on that in the best practice forum area), as well as you need to come up with some new innovative program with focus on identifying the important key initiatives that will differentiate your company and help you both gain growth and a competitive channel advantage.

By combining industry knowledge, research, as well as some channel best practice benchmarks and customer insight, you can now craft a channel sales strategy that aligns with your business goals. Typical questions you need to think about and addressed in the Channel strategy, include:

1) In terms of your Market Position:
• What is our current Channel SWOT position?
• Where are we in our Channel life cycle in terms of the “S-Curve”?
• How does our current Channel market share compare to our potential market share?
• How does our Channel Price-Quality ratio position us against our competitors?
• How can we strengthen our competitive differentiation in our Channel?
• What is our Channel innovation rate?
• How is our Channel brand positioned?
• Are we focused on the right Channel market segments?

2) In terms of your Financial Position:
• Which of our current Channel investments are delivering the most value to our business?
• What new Channel investments will deliver more value to our business?
• How do our IRR, ROI, ROS and relative cost structures position us in our Channel market?
• How do our Channel productivity indicators compare to market leading companies?
• What is our current level of Channel risk?

3) In terms of your Stakeholder Trust:
• How well are we meeting our key stakeholder’s needs?
• What stakeholder interfaces are building trust? Breaking trust?
• How can our Channel cope better with rapid, on-going change?
• What are our Stakeholder Satisfaction Indexes (e.g. Customer and Employee) telling us?
• How well are our value chain partners integrated in our strategy process?
• How are difficult Channel decisions taken?

These subjects and approach is not the strategy, however it aims at helping you better prioritize and align your Channel Strategy and thereby your channel investments – to realize those values that matter the most in reaching key business objectives – short and long term.

I hope this has helped or given you something to think about………and look forward to read some comments or new aspect or ideas to this discussion!

Regards your Moderator – Mark von Rosing