Channel Management. Harder Than Direct Selling?

Braham Shnider is a pretty sharp guy.  He’s president and CEO of Channel Enablers, a Australia-based sales performance improvement provider that specializes in channel management strategies and training.

I flew my plane up to Norwood, MA airport a while back to meet Braham face-to-face over lunch.  Fifteen-hour differences in time zones can make scheduling phone calls a challenge.  Plus any chance to fly my plane…  We had an excellent discussion.  As a result, I thought an interview with Braham would make for interesting reading.  He and I see things very similarly when it comes to managing an indirect sales channel in a B2B environment.

Here’s the interview:

Dave Stein: Even though indirect sales accounts for nearly 70 – 80% of all products sold, why is it that it does NOT get the same attention as direct selling?

Braham Shnider: The percentage may be even higher than 80% with the advent of the GFC (Global Financial Crisis) and the push to lower selling costs. We know many of our clients have increased their adoption of indirect channels in the last 18 months. However, many sales and senior executives have been promoted from a direct sales background and I think the simple cliché applies “people do what they know best, not what they don’t know” – so they promote and develop a direct sales culture and believe that indirect channels is easier to manage and therefore often plays second fiddle to high-touch direct customer selling.

Dave: What do you see as the trend going forward, will direct sales continue to get a disproportionate share of attention and why?

Braham: There is no question in my mind that direct sales gets far more attention than it should. In fact we estimate that 80% of sales training budgets are spent on direct sales training yet up to 80% of the revenue is coming from indirect sales channels. This inverse relationship makes no sense and is just bad business. There a few thought leaders who have recognized this and are doing something about it. They are investing in securing (internally and externally) quality channel sales people, developing specific channel management competencies and ensuring that senior channel managers who manage large and strategic channel partners are compensated and recognized at the same level as a successful direct sales person.

Dave: What is the major difference between the role of someone who sells direct and someone who manages indirect sales channels?

Braham: Someone who successfully sells directly often does so because of their ability to “control” events, manage risk and provide differentiation as opportunities progress down a sales pipeline. It is their ability to wrap their hands around a qualified opportunity and not lose control that makes them successful.

Channel managers need to understand how their company’s sales methodology works and are often involved in their channel partner’s sales opportunities. They need to be able to qualify and forecast opportunities in their channel partner’s sales pipeline. But they do NOT control their channel partners or their sales opportunities as their channel partners will do things for their own reasons not because they have been told to do so by a channel manager who works for another company.

Successful Channel Management is about influencing channel partners on how they develop, manage and optimize sales opportunities while also influencing and leading change initiatives and investments that drive indirect channel revenue.

Dave: So are you saying that managing indirect sales is more difficult that selling direct?

Braham: Yes!!  Because successful channel managers need to do be able to bridge both worlds—not only do they need to know what a direct sales person does that makes them successful in building and managing sales pipeline but they also need to be able to apply that knowledge to virtually manage a sales team and deliver on a sales forecast with a team of people that does not work for them.

Dave: So what distinguishes a very successful indirect channel manager?

Braham: We have identified five specific channel management competencies that differentiate the best channel managers. These are:

  1. The ability to execute on a channel partner lifecycle management strategy to identify, recruit, enable, manage, and transition channel partners in their territory;
  2. Understand the business model and investment criteria of channel partners and be able to have a business conversation about investment initiatives;
  3. Articulate the key issues and business priorities that affect partners’ stakeholders and have the influencing skills to manage partners to change and invest as required;
  4. Manage the channel partner relationship, engagement, and achievement of joint objectives through the partner planning process;
  5. Lead and manage partners to identify and resolve their own barriers to success and to become independently able to generate indirect sales revenue.

Dave: What can companies do to get a competitive advantage through the way they manage their channel teams?

Braham: Hire, fire, grade, compensate, and develop to win!  What I mean here is that there are a few thought leaders who are investing in their channel teams by deploying a channel partner lifecycle management process, recruiting better quality channel sales people, developing specific channel management competencies and ensuring that a senior channel manager who manages a large and strategic channel partner is compensated and recognized at the same level as successful direst sales person—they are peers.

Dave: Channel Enablers mainly works in high tech.  Do you think the same principles apply to other industries and their indirect sales channels?

Braham: It is our experience that the fundamentals of good channel management are the same across all industries, the only exception being industry specific nuances, business practices and naming conventions.

Dave: What are you going to be discussing in your upcoming webinars?

Braham: We have just completed our global and regional Channel Management Benchmark Study for Channel Sales Success. We will be discussing what have we learned as an industry, what skills and practices set the benchmark for channel sales success, and how well do vendors drive their adoption? In which high priority areas is current execution performance low and how should channel managers be measured, graded, compensated and developed.  The first webinar will be held June 21.  (Here is a link to the registration and information page.)

Photo credit: © Stephen Coburn – Fotolia.com

Comments

  1. says

    There are two basic strategies that enable a supplier to get a disproportionately high percentage of the time and efforts of their channel sales personnel.

    1. Salespeople sell best what they know best. Educate them all with clear, concise, interesting, weekly product application bulletins .

    2. Salespeople sell best for suppliers that they trust and respect the most. Developing personal relationships of mutual trust and respect with them results in outstanding revenue increases.

    • Dave Stein says

      Thanks for the comment, Jacques.

      There is another important factor. Since salespeople do what you pay them to do, rather than what you tell them to do, you have to make sure that selling your product provides at least as much money for the channel salespeople as other products in their portfolio. Am I right about this?

  2. says

    Yes, when all else is equal salespeople sell whatever earns them the most money. However, in technical channel selling there may be a large choice of what products to focus their time and attention on. Then, there is often a wide variation among the salespeople of the product mix that each sells.

    When I was the CSO of a capital equipment supplier to the electronics industry, our hybrid circuit product line was our least profitable. Only a few of our salespeople ever sold that equipment. So, I substantially increased the commission rate for that line for the next six months. After two months there was no increase in sales activity for that line. So, I cancelled the commission increase.

    Then, I brought the salespeople in for two days of technical training on hybrid circuit manufacturing. On the third and fourth days we discussed new sales practices for that line and the competitions’ products.

    Each salesperson received a list of every company in their territory that fit the demographic profile for buyers of hybrid equipment. We also role-played prospecting and selling the line.

    During the next nine months, there were still a few salespeople who did not sell that line. Yet, our sales of hybrid equipment had increased by almost sixty percent.

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