September 2010 Feature

Channel Program Modeling

Determining elements — and how to use them — for greater ROI

Channel Management Insights speaks with Dylan Charles, Partner at Crimson Consulting Group

Today, perhaps more than ever before, the money that vendors spend to increase channel sales has to pay off. And this includes programs intended to help manage partner relationships.

However, in many cases, the range of elements in these programs is fairly fixed, and the elements — economic incentives tools, benefits, funding, training and metrics incentives to achieve revenue goals — aren’t refreshed on a regular basis. The result? Programs that flatten out and fail to produce the desired results.

But according to Dylan Charles, a partner at Crimson Consulting Group, this trend can be turned around through modeling channel programs. He provides his insights on how this is done.

CMI: Why do many channel programs need better modeling?

Charles: Channel programs evolve over time, and different stakeholders pull on them and create new features without regard for the programs and their goals. Decisions on features and economic components are made based on research that doesn’t evaluate the trade-offs for partners or with whom they work and how.

CMI: What are some of the common problem areas of high-tech channel campaigns?

Charles: Economic components often don’t incent partners in ways vendors hope for based on their objectives. For example, vendors may focus on delivering a certain type of tool, such as marketing, and ignore other parts of the program, such as the return policy and contract lengths. These aren’t perceived to be as important as the other elements, but they can have a greater impact on partner decisions.

CMI: How can channel marketing professionals avoid these problems?

Charles: Channel marketers should work to anticipate the economic impact of implementing one element versus another. To do this, they need to evaluate all program components against each other to understand the trade-offs partners are making and their behavior (with whom they work and why). Programs are less effective if components are evaluated as stand-alones.

CMI: Why does an analysis need to be done for each channel program?

Charles: Program elements aren’t interchangeable, and lessons learned in one program may fail in another. Generally, vendors have a limited number of channel programs for which they spend huge amounts of money. The channel is becoming more important, so they must make sure they get each program right while achieving their goals and controlling their costs.

CMI: Are there common elements that should be included in every analysis?

Charles: Specific elements differ depending on the requirements of each program. But some things to consider are the different ways to engage with partners, such as how to go to market together, how to attract partners to your company and effective ways to communicate with them.

Other important elements to include in an analysis are enablement tools for training and analysis that help partners compare your products to those of your competitors; support elements that allow partners to design, install and implement your program; economic benefits (such as funding); and the infrastructure and tools for developing metrics and tracking.

CMI: How should evaluation elements be weighted?

Charles: That depends on the vendor offer and objectives. The economics are very important, but if the goal is to sell, and the product is complex, the enablement element is as important, if not more so. On the other hand, if the goal is outbound marketing, the vendor should focus on MDF funding. The elements must be weighted on goals to make sure the program aligns with them.

CMI: Are there ways channel marketing professionals can anticipate the economic impact of implementing one program element as opposed to another?

Charles: A conjoint or statistical analysis of program elements helps channel marketers anticipate the economic impact of implementing one program element as opposed to another. Conjoint modeling is a type of statistical analysis that gives respondents choices between alternatives. It helps vendors understand partner trade-offs and the values associated with them. It’s economic modeling that allows vendors to look at respondents’ interest in elements, as well as the cost to vendors and potential revenue.

CMI: What are the benefits of conjoint modeling?

Charles: Conjoint modeling helps vendors understand, across a basket of features, which are the most attractive and have the most impact on a program. With this type of analysis, channel marketing professionals can determine the value of each program element, deploy the appropriate elements to maximize channel revenue, and eliminate those elements that are too expensive or fail to generate an adequate return.

CMI: Do you have any examples of how Crimson Consulting has used analytics to help clients improve their channel programs?

Charles: There are a number of examples where we’ve seen significant results. For instance, we did an analysis of a vendor partner program where we looked at a potential 85 percent increase based on our advice, and the client saw a closely corresponding improvement in the uptake of partners.

In another case, modeling revealed a client’s need to change almost its entire channel program and implement new elements to provide the best return. The client realized an annualized revenue increase of 60 percent in the first program after implementing a new channel program based on our analysis — and became one of the top distributors in its market.

 

Dylan-Charles Dylan Charles is a partner at Crimson Consulting Group. Prior to joining Crimson, he was a partner at KPMG (BearingPoint) and The McKenna Group and has more than 20 years of strategy and planning experience in a range of industries, including high-technology, telecommunications, media and consumer products. His expertise includes market analysis and strategy development; positioning strategy; market infrastructure planning, including Web and customer/partner management systems; and operations strategy. He has a bachelor’s degree from Tufts University and an MBA from the Anderson Graduate School of Management at UCLA.