Partner Relationship Management: Emerging Vision In The E-Commerce Marketplace

Let us begin by saying that channel partner relationships are complex and partners' potential impact on revenue is high. But the questions that haunt many Fortune 100 companies--usually making even the toughest CEOs squirm--are: How much do you know about any given channel partner? and "How critical are the channel partners to your overall marketing strategy?"

The answer to the first question typically is: "We don't know enough about our channel partners." The answer to the second question is: "Our cannel is critical to our overall marketing strategy." These two statements highlight the fundamental problem of channel management today: The channel is the most critical component of marketing and distribution strategies, yet often we lack both the information and tools to manage it and the most fundamental knowledge of the partners that compose it.

It is estimated that more than 50 percent of the high-tech industry's sales go through indirect channels. In industries selling high-ticket items through an indirect channel, the channel partner, dealer, reseller or VAR becomes more critical.

Predictions abound that the proliferation of Web technology and e-commerce business models will accelerate disintermediation and speed the elimination of channel partners, distributors and resellers. However, every indication points to the opposite effect. Internet and Web technology do not mean the death of the indirect channel; rather, they finally provide the tools to empower and enable it. The Internet puts the tools to control, manage and measure indirect channel activity into the hands of sales, marketing, brand and e-commerce managers. This to-market method celebrates the union of clicks and bricks. It is a realization of the importance of partnership that goes beyond the perfunctory business vocabulary of today and creates a spirit of loyalty by initiating very specific management steps that create a climate and culture for collaborative commerce.

Partner relationship management (PRM) in its simplest form is using and leveraging what is known about a partner to segment and create micro-segments based on a unique partner profile composed of detailed information gathered from contacts of a partner across all the various touch points in an organization.

PRM uses unique knowledge as an enabler to more effectively drive relationship and loyalty with channel partners in such a way as to achieve measurable increases in revenue and market share.

Knowledge and information about each channel partner becomes critical to the success of managing relationships. With information gathered from partner touch points, internal corporate and external sources it is possible to develop a detailed profile of each channel partner. A company then can generate a partner profile based on this information. This profile can be used to segment, micro-segment or create a specific individual segment that is unique to one partner. Detailed knowledge about channel partners allows manufactures to move from initiatives and strategies aimed at the channel to specific strategies targeted at individuals. The objective of each partner strategy is revenue growth and increased market share. Partner strategies are now custom-developed based on information specific to each channel partner. The possibility of greater effectiveness is assured. These micro-initiatives launched toward an individual partner, and subsequent information gathered in a central partner database, allow us to measure the effectiveness of initiatives and strategies. There is no more guesswork or decision making on partial, incorrect or anecdotal information. In many cases, both channel initiatives' success and failure come about for mysterious reasons that we cannot control and often cannot explain.

Beyond the technology there are a considerable number of cultural and philosophical hurdles that each company who travels down this path must leap. Surprisingly, these often are more formidable a challenge than any technical aspects of PRM. Channel programs must be engineered to focus on a partner's unique needs in order to maximize revenue and marketshare. The Internet and Web technologies are used to embrace and enable the channel. These enabling technologies hold out the promise of an exceptional ROI by increasing revenue and marketshare, and reducing the cost of maintaining and supporting the channel. Both manufacturer and dealer share the cost reductions. A byproduct of more efficient communications and support of the channel is increased partner loyalty.

Manufacturers must use technology extensively to manage the relationship, develop a unique strategy for each partner and measure the effectiveness and progress as the strategy is executed. PRM uses information regarding channel partners to implement segmentation strategies in the partner population.

Customer relationship management (CRM) has a distinctly consumer focus and has been refined over the last 25 years. Specific management and operational practices have been developed to optimize performance in this specialty area. Unique and specialized technology has developed and continues to evolve. Oddly, the philosophy of CRM and the business self-interest that motivates it have not been transferred to PRM.

In fact, PRM has just begun to emerge from the shadows of CRM. It has a business-to-business focus and despite the critical part it plays in both marketing and distribution, it is an area that has been neglected by manufactures and OEMs. A unique feature of PRM is that business partners have more frequent contacts across a wide range of the manufacturer's organization. This accentuates the need for a universal contact history for partners so that a panoramic view of their past and present dealings are visible for decision making and problem tracking. Other key characteristics that differentiate PRM from traditional CRM are:
* Low-contact volume.
* Communication intensive.
* Information intensive.
* Access to information across an enterprise.
* Want targeted/relevant contact.
* Diverse corporate touch points.
* High quality expectation.
* Desire custom/consistent handling.
* Possess technical sophistication.
* Driven by cost containment and revenue growth.
* Contact over diverse media (phone, fax, e-mail, chat, forum).
* High time sensitivity.

Conflict is common in many channels today. Historically, the resources OEMs have brought to the distribution channel have been unfocused in planning and haphazard in execution. People have been sent into the field and out to zone offices to manage the relationship with channel partners. This distributed model lacks coordination and management controls and often leaves critical partner information in places where it cannot be leveraged or accessed for planning and decision-making purposes. Communications often is poor and quality inconsistent in both directions.

Channel strategies, by and large, seem to fizzle and fail, for they often are based on limited information, or worse, on anecdotal information. Limited segmentation or targeting is done and a blanket approach is taken toward all partners. The question is, how effective are strategic initiatives at the partner level? There also is no mechanism to measure the effectiveness of initiatives in many channels. The success or failure, like the initiative itself, is based largely on subjective or anecdotal information.

What can we realistically expect from a PRM initiative? Is it a panacea to eliminate all the pain that exists in an indirect channel?

We can expect to establish a profile database on each channel partner that will provide:
* Consistent full-spectrum view of each partner.
* Leveraged knowledge for decision making.
* Complete history of past and current contacts.
* Segmentation and targeted strategies.
* Complete customized communication.
* Measurement of channel strategy initiatives.

Common channel activities that are likely candidates for process re-engineering and automation are:
* Lead management.
* Sales productivity.
* Training.
* Program management.
* Communication.
* Product information.
Information libraries.
* Ordering and order status.
* Inventory management.
* Warranty information.
* Forecasting and scheduling.

Channel strategies and initiatives often are uncoordinated, but in a PRM environment all activities are centrally coordinated via an intranet or extranet. Unlike CRM technology that is front-end or interface-focused, PRM has a partner-focused database that drives strategy and measurement reporting.

The key to establishing PRM is to concretely identify all possible partner touch points across an organization. These touch points need not represent human contacts, but can represent self-service applications such as interactive voice response (IVR) systems, Web-based applications and a variety of enterprise and legacy systems. All touch points, whether human or technical systems, must be identified and accounted for. This centralized partner database contains information from functional groups across the organization that touch the partner or are touched by the partner. These might include:
* Sales force automation.
* Inventory and distribution.
* Billing and accounting.
* Order and tracking.
* Lead management and sales reporting.
* Corporate headquarters.
* Warranty tracking.
* Corporate legal.
* Special segments and reseller programs.
* Contact management and call centers.
* Corporate and legacy systems.
* Internet applications and self-service systems.

Some OEMs and partners are capitalizing on moving and leveraging information at Internet speed, allowing collaborative sales and marketing efforts not previously possible. A move that promises early adapters, rich returns on investments, increased revenue and expanded market share.

PRM's impact is immediate, for it is more a management philosophy-like approach to the market and business architecture. It is a method for delivering the right information to the right individual at the right time for the purpose of growing revenue and market share. Manufacturers are moving toward knowledge enablement and channel partners toward the information empowered promised by PRM. It is the Internet that creates this data-rich environment, in many cases simply by connecting and optimizing all the resources--human, technical and informational--that a manufacturer already has put in place.

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.

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 an segment leader prior to it's successful IPO.