The channel management process is a cost-effective way to expand a business globally by partnering with aligned organizations to sell your products and services. The channel management process involves some level of control over the performance of an individual or team as your partner. While managing these channels, there may be some challenges that your business may face to ensure a mutually beneficial relationship.
If you are also a business looking to manage different channels, this post will walk you through the common challenges in the channel management process. You’ll also learn how to overcome those challenges in an effective way.
Challenges of Channel Management Process
1. Channel partners are companies, not individual persons. While talking of management of employees, consultants, or contractors, there is some control over people. However, when talking about managing channels, the level of control is comparatively much lower. This is because it is an indirect sales force, and channels are companies instead of people. Although those companies consist of salespeople, technical people, and marketing people., the companies are entities rather than individuals. This implies that the amount of complexity involved is huge.
2. In the case of a direct sales force, there is a hierarchy. Channel partners don’t report to vendors. There is a manager who may report to a VP in a company, but with a channel organization, it is not the same. This is because there is a company reporting to a channel account manager or partner business manager in channel organizations. This reporting relationship is indirect, and if some partners fail to perform over one or two subsequent quarters, they don’t get fired immediately. They sometimes may miss incentives, but firing doesn’t take place as immediately as it would while managing a direct sales force.
3. Channel partners, at times, have their own sets of priorities. These priorities may not align with those of vendors. If a vendor tries to promote a particular product or penetrate into a specific niche market - say, manufacturing or healthcare or any other, your partner may not find it valuable.
4. Different types of partners require different engagement models. Some partners sell to small-size businesses, some to mid-market organizations, some to enterprises, and some others to a combination of two or more segments. For an organization to align with various partners’ needs, there is a need to have appropriate programs that require a significant level of thinking and homework. Further, there are also differences in relationships based on revenue each channel partner gives. Sometimes, vendors tend to give more importance to the partners who yield more revenue than to those who yield less revenue. Aligning the suitable level of resources with high-velocity and high-volume partners and low-velocity and low-volume partners is complex.
5. By and large, financial motives drive a partner’s loyalty. Like in a startup environment, where a belief or cause of inspiration motivates people, the prospect of financial gain drives the relationship in the end. As the expectations change or the path toward the financial gain is not clearly defined, it can cause friction and complexity.
6. A channel partner’s success depends on the competencies in an ecosystem. Chances are rare that a partner - especially in the technology or solution domain - sells only one product. For instance, if a partner sells to the construction industry, technology sector, or manufacturing, the partner may have two, three, or more vendors. A partner’s competencies play a crucial role in determining its interest in a particular set of solutions. Understanding those interests and aligning with those competencies is critical and complex.
7. Forecasting is very tough when it comes to running large businesses. One of the toughest challenges in the channel management process is developing sales forecasts, especially when a company is in its nascent stage. In cases of a revenue business like a retail or franchise business where the revenue doesn’t change much every quarter, predicting demands within a few percentage points is easier. However, if the economy is in distress or some particular product categories are growing faster, working with the partner base to come up with an accurate forecasting model can be one of the major challenges. This is where understanding different types of partners and their sales velocities holds importance. Without proper systems and processes in place, businesses may find it extremely challenging to develop these forecasts.
Solutions to Overcome Challenges in Channel Management Process
Now that you know the major challenges that businesses face in the channel management process, let’s look at the solutions to help you overcome these challenges.
1. Structured Channel Program - Every company requires its channel program to be structured. It should not be just a single program but a set of programs aligned behind different types of partners based on their verticals, competencies, sales mix, locations, etc. Developing a channel program as per partners in a systematic way can help reduce waste and friction between both parties involved as you try to grow your business.
2. Ease of Doing Business – Ease of doing business is a major factor in channel management on both the partner and vendor sides. Often the account manager spends more on-time fielding emails, phone calls, etc., from partners. Therefore, it is important to address this problem through a proper structure. When larger organizations acquire smaller organizations, they tend to roll the acquired organization into their existing structure. Even though this integration may look even on the surface, supporting infrastructure may be falling apart on the inside. This may lead to the failure of the merger. This is why a proper structure to optimize the acquisition is necessary in place beforehand.
3. Systems for Partner Relationship Management and Partner Marketing Management - Businesses should deploy structured partner relationship management and partner marketing management systems. With a proper partner portal in place, a business can realize significant returns, reduce labor costs, enhance ease of doing business, and increase the efficiency of partner management.
CRMJetty - Your Key to Managing Channel Partners Effectively
If you are looking to overcome the challenges in channel management and streamline your channel management, our partner portal can help you with that. Our portal is a ready-to-integrate portal solution that you can always configure as per your business logic. It has some features that make it an ideal partner management solution, as below.
1. Lead Management
For businesses with a high volume of incoming partnership requests, our portal helps make workflow smooth. It helps create a workflow as per your business logic and automate the process of management of partnership requests.
2. Role-Based Access
Providing access to CRM entities is crucial for any business. But there is a need to restrict access to different CRM entities as per the type of the user. Using our custom partner portal solution, you can decide to provide role-based access to your different partners and their team members to enhance security and streamline operations.
3. Sharing Confidential Business Data
There are certain product installation videos, lists of use cases, and several other types of confidential data that you would want to make available to only a small group of confidants. A partner solution can help you make that possible and provide confidential data to only certain users.
4. Purchase & Invoicing
While entering into a channel partnership agreement, the end goal of any partnership is commercial benefits. Whether it is enabling specific discounts for partners, generating POs and invoices, or generating payments, you can manage it all using a partner portal solution.
Using our services, we can build an Online Partner Portal for your business that is an extension of your CRM. Alternatively, you can choose to develop a web-based portal independent of the CRM. Either way, the database remains on your servers, and your security remains intact.
We are a CRM consultancy with over 14 years of experience in portal development solutions for various leading CRM systems, including Suite/SugarCRM, Salesforce, etc. Our development team follows two approaches - launch-ready portal solution integration and custom development.
First, our team gathers your portal requirements and analyzes them. If they don’t differ much from our portal’s features, our team provides you with the ready-made partner portal that we have. If your portal requirements require slight customization in our ready-to-integrate portal, we do that for you and provide you with the final product. If the product you require is largely different from our current product, we also adopt a custom-build approach to build a portal exclusively for your business. We keep giving you updates on the development throughout and test the final product for market readiness. Once everything is fine, we roll out your partner portal to you for your final use.
So, get your partner portal ready and streamline your channel management process right away!
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