Channel Partner Relationship Management

In the frenzy to move from the markets of the last 40 years to the new virtual marketplace, major corporations are spending billions of dollars and marshalling limitless resources in a race reminiscent of the U.S. and USSR's, face-off over the moon. Who will get there first and what will we do when we get there are questions that remain to be answered. An opportunity exists to use new technology to revitalize and transform old market-methods of distribution. The rewards for quick action are increased revenue, market share and a rich return on investment (ROI).

The Internet marketplace already has revolutionized consumer markets. Business-to-business (B2B) channels and partnerships are being altered just as substantially and fundamentally as consumer markets. For at least the last 10 years, consumer customer service has been heralded as the method to increase revenue and reduce costs. Customer relationship marketing (CRM) and the recognition of the lifetime value of customers has been touted as major companies' preferred marketing and service methods. Channel partners--including dealers, distributors and VARs--have not been beneficiaries of the same enlightened, progressive and civil treatment.

Think for a moment about the relationship between a manufacturer and an exclusively franchised dealer population. What would the result be if we judged a manufacturer's relationship with its dealers by the same high standards we would judge a Fortune 100 company's relationship with its customers or consumers? Many manufactures simply have failed in the most basic ways to develop or manage partner relationships. The result is that most strategic channel partner initiatives fizzle and fail. Failure of these initiatives is most often due to:
* Lack of knowledge about the channel and or partners.
* Lack of too1s to effectively manage, monitor and measure the channel partners.
* Lack of effective communication to and from the channel partners.
* Lack of information to support decisions and develop channel strategy.

Tools and architectures to manage consumer relationships are plentiful and mature. However, the most basic CRM tenets listed below seem to have no partner relationship management (PRM) counterparts.

The last 10 years have spawned such customer-centric buzzwords as:
* Customer loyalty.
* Customer retention.
* Lifetime value.
* Repurchase intention.
* Relationship marketing.
* Micro marketing.
* Database marketing.
* Data warehousing.
* Service customization.

This is a direct contradiction to the customer-driven philosophy and operating practices of every major company. While they focus on consumer loyalty, they have not seen the business benefit of establishing strong channel partner loyalty and ties. The consumer-centric methods and doctrines of the last decade have not been applied to OEM and dealer relationships.

Mistrust, frustration and overt animosity between manufactures and dealers mark the B2B channel relationship. Both manufactures and dealers regard the customer as "mine" rather than "ours." This shortsightedness is a detriment to manufactures, dealers and consumers. Manufacturers act in arbitrary and heavy-handed ways as if they are monopolies. Their end-game plan is to sell direct to consumers. Dealers, on the other hand, use passive resistance or outright defiance to maintain some degree of independence. Dealers often brazenly sell the goods of competing manufacturers, either in the same or nearby storefronts. This type of identity or brand dilution thwarts the brand plans of OEMs.

The distribution channel needs enlightened self-interest. All parties should realize that an effective relationship is a competitive advantage. Effective strategic initiatives at the partner level have the potential to increase revenue and market share.

While some manufacturers will leverage Internet technology to disintermediate their channel partners, some of the most far-reaching and strategic plans will call for the use of Internet technology not for the elimination of the existing channel, but rather, for the enhancement of it. Technological changes can optimize and enable the channel. Changes in technology and the move to Internet-based channel tools and infrastructure offer opportunities to reengineer current process and communications methods by the overall automation of existing functions, such as:
* Reseller recruitment.
* Sales and inventory reporting.
* Business planning.
* Channel contracting.
* Reseller training.
* Technical libraries.
* Order tracking.
* Status notification.
* Lead management.
* Lead generation.
* Technical support.
* Quality management.
* Communication.
* Product information.
* Pricing data.
* E-mail and Web-based event alerts.
* Relationship management.
* Software distribution.

Automating and re-engineering the business processes listed above will reduce cost and increase effectiveness, as well as lead to increased revenue and market share.

CRM has championed the concept of a "segment of one." The primary problem in many applications is the lack of information about the people who contact us. Add to this, the fact that little or no relevant or leveraged data about a customer is collected during a contact. The fallacy is that a "segment of one" must be carved out of the massive customer segments by unique and detailed information. Everything that is known about a customer is required to customize contacts. This creates a unique segment comprised of one individual. There is, again in theory, so much information available about this individual and his or her prior contact history that we can initiate particular actions to customize the contact based on available data. With tens or hundreds of thousands of potential or existing customers this is difficult, but the problems are compounded when tens or hundreds of millions of customers are involved.

PRM rarely involves more than a few thousand partners. It is far easier to assemble a partner database of 5,000 dealers than 5 million consumers. Once assembled, information can be collected from a variety of diverse sources and centralized for leveraging across the organization.

Contact points in an organization that feed specific information to a centralized partner database could be:
* Field service and maintenance.
* Sales.
* Contact center.
* Corporate headquarters.
* Accounting and billing.
* Training.

The centralized database is populated by the functional groups within an organization, but additionally partner-specific data is captured by a variety of technologies that interface with them, such as:
* Self-service systems.
* Internet and Web applications.
* accounting and billing systems.
* Other legacy systems.
* Lead management systems.
* Sale- and product-tracking systems.

No longer is critical client data housed in a field manager's head or the local office's database. The following partner touch points funnel information instantaneously into a centralized partner database. The unique data is used to formulate a profile and accumulate a history. This information is used to formulate and execute a strategy to optimize revenue for both the reseller and the manufacturer.

The accumulation and centralization of partner information from diverse sources creates a consistent view of the type and number of contacts made between each company. PRM systems create a panoramic of full-spectrum view with which to develop a strategy. The effectiveness of the partner strategy can be measured and managed by monitoring partner information and key indicators in the partner-centralized database.

The results of this initiative are that no mere lip service is paid to the philosophy of partnership and empowerment. The steps and organizational architecture outlined will result in reduced operating or channel costs and measurable improvements in quality, revenue and market share.

The major hurdles that will take an organization from its current state to a PRM initiative are as much cultural as they are technical. New technology must be leveraged and business processes re-engineered. Past methods of dealing with channel partners have engendered animosity and mistrust. A revolution in vision is required to move forward. The risks are as great as the rewards.

Tom O'Leary is business development manager for The SoftAd Group where he works with clients to optimize channel partner strategies utilizing Internet solutions. He has been an integral part in developing strategies with e-commerce companies having started in the field with Autoweb.com, which he helped establish as a segment leader prior to it's successful IPO.

Doug Tanoury is director of client services at The SoftAd Group and has been a transforming force in Customer and Partner Relationship Management. He is a management and technology expert in Relationship Management and has worked in this field at Bell Operating Companies, AT&T Communications, Electronic Data Systems, MCI Telecommunications and eLoyalty.