April 2012 Feature

How to Build a Channel Program that Scales

by Anna Johnson

Creating new channel programs from scratch can be tricky. Designing your program (and infrastructure) to support your needs for today may result in costly and cumbersome restructuring as your needs evolve. “Costly,” because of the time and money involved, but also in the confusion and inconvenience created for your partners making the transition.

April ImageSo how do you design a program right the first time so you can effectively scale it as your needs evolve? That is the $64,000 question facing many fledgeling channel marketers today. To answer this question, Channel Management Insights sat down with Carol Neslund, senior director of strategic accounts at Enphase Energy. Carol is currently going through the process of growing a new channel for Enphase Energy and understands the opposite side of the spectrum because she has experience managing more mature programs with Avaya, Seagate, McData and others. What’s more, Enphase Enegry is a clean tech company and the industry as a whole doesn’t have as mature a channel as high tech. This brings even more interesting challenges as she provides guidelines for starting a channel that is applicable to any industry.

Product or Partner Mindset?

New companies and new industries–like clean tech–sometimes, not always, are hyper-focused on their innovative technology or service without enough consideration about how and who will help them bring their product to market. “Instead of asking potential partners what they can do for you, ask yourself what you can do for partners,” advises Carol. “It maybe a very hard thing for a product-focused executive to hear but it’s not about what your technology can do, it’s about how your partner can benefit from going into business with you.” If you’re at a point where the channel is an afterthought in your entire business strategy, you’re already behind the eight ball. But if the channel is as much of your company mindset as your product or service, then you’re better equipped to create and communicate a compelling business proposition for your potential partners. You will also be able to foresee the challenges your potential partners face and can easily help your channel to navigate around them. Identifying and avoiding pitfalls from your partner’s perspective can be difficult, especially if the executive and product teams don’t have experience living in anyone’s shoes other than their own. Empathy, imagination, and listening skills help to shift a product-based company mindset into a partner-centric company culture that will be able to adapt to the changing landscape as time marches on.

A Pricing Model That Works For All

If distributors and partners show interest after a brief introduction to your solution, the conversation quickly turns to pricing and compensation. This is a great sign that you’re doing something RIGHT! “A company needs to think through a pricing model based on multiple routes to market both direct and indirect,” says Carol. “By creating a pricing methodology that incorporates all routes to market, you will be able to avoid channel conflict.” Preventing channel conflict is just one component of a good pricing model. A pricing model that is simple and straightforward will help accelerate sales conversations with partners, whereas complex and difficult to understand models will impede the sales process.

Flexibility Is Essential

Silver, gold, platinum, or any other variation of a tiered channel program can be commonly found in mature industries and companies. But is it important to have this when you’re just starting out? “It’s important to not over design a program when your channel is in hyper-growth mode,” says Carol. “At Enphase Energy we have more than 2500 partners. The partner program is still in its early stages of maturity so we are focused on rewarding commitment and loyalty while we are developing a more formal partner program.” Don’t get stuck in the program tier descriptions and benefits. Instead, recognize that partners come in all shapes and sizes and ask yourself, how will I reward partners based on their commitment level? Most likely many of your first partners are innovators, first-movers, early-adopters and in high growth mode just like you. It’s still beneficial to anticipate a structured tiered channel program in the future but hold off on investing a lot of time and infrastructure to implement it in the very beginning. Instead, refer to your partners to help you shape and define the tiered program as their business matures.

Operational Infrastructure

And finally, the puzzle piece that helps shape a scalable channel program is the infrastructure that can support it. There are three key building blocks for infrastructure – systems, people and processes. “For systems you need to be able to gather POS data as well as a good CRM to track conversations and milestones with partners,” says Carol. “Without these systems, it’s difficult to get visibility into your emerging channel program and make informed decisions.” Second, make sure a team is in place that can draw from a diverse set of experiences and skill sets. “The perfect team pairs people with deep technology expertise with people who know the characteristics of a maturing channel program,” Carol advises. Most company founders in industries like clean tech, medical, or high tech have a lot of domain technology expertise but less experience in developing a channel sales model. It’s important to address this by rounding out the team with a member that has channel experience so you can prepare for and solve any channel-related growing pains.

Once you have a good team in place, create processes that will follow your partners through each phase of the lifecycle, including: recruitment, on-boarding, training, and support. Also, be sure your escalation paths for all programming in each phase is clearly defined. Whenever you’re setting up new processes ask yourself two simple questions: “How will partners be affected?” and “How will they be notified?” Armed with these two questions, you will be able to develop partner-centric processes that enable you to be proactive instead of reactive, or worse, inactive.

Summary

Once you have a channel-centric mindset, common sense reins king when designing a channel program that scales. Keep things simple and straightforward, especially when it comes to designing your pricing model and compensation program. Be flexible and don’t implement too many rules too early. Invest in the right sales tracking and CRM system, people, and partner-centric processes so that you are prepared to meet the new demands of your channel program.