Are your channel programs costing you share and profit?

Frank Lynn & Associates has observed an interesting similarity among our clients recently, particularly those in traditional mature markets. These clients have realized they are managing a current channel strategy based on outdated channel programs. Often through benign neglect, these programs have failed to keep pace with both market evolution and changes in the manufacturer’s channel strategy. When did you last review your channel programs?

When most manufacturers think of channel programs, the focus immediately turns to economics; the channel pricing structure and other elements of the economic relationship with your channel partners. Most manufacturers have done a good job of keeping their channel pricing current with the channel strategy. However, your channel programs go well beyond the economics–they impact virtually every element of your channel relationships. In this paper, we review the elements of a well crafted channel program now tv 月費 , and address some common questions we hear manufacturers asking today regarding those programs.

Q. What is a channel program?

The most actionable definition of a channel program includes all the formal written and stated elements of your channel relationship. The program goes well beyond just a contract or a pricing structure–it defines all aspects of your relationship with the channel. As such, the program becomes the “recipe book” from which to manage your channel relationships.

The common elements of your channel program include:

> The contract or legal framework for your channel relationship

> Your price/discount structure and all related economic policies

> Any sales/marketing or merchandising/promotions offered to the channel or through the channel to the end user

> Technical requirements of the channel and a description of your technical support offering to the channel

> Policies and procedures outlining the operational relationship with your channel (including order transaction and movement of product

A formal channel program, as described above, provides structure to the channel relationship. It provides clear direction to your channel partner regarding the channel’s role and what you value. It outlines the process and metrics you will use to evaluate your channel’s performance. It also assures the channel partner objectivity in its dealings with you.

Q. What are the components of a successful channel program?

The components you choose for your channel program will be unique based on the needs of your target end user and the role you’d like your channels to play in meeting those needs. However, our experience shows that the most effective programs share a broad set of common elements. Envision your channel program as a series of “chapters.”

Agreement

This chapter defines, in general terms, the conditions under which you and your channel partner agree to do business together:

> The contractual agreement of a defined scope and time frame; the most effective agreements specify a time period (usually 1-3 years) to the channel authorization. The intent here is obviously not to change out channel partners frequently. Rather, the defined timeframe provides a basis for regular review of the relationship

> The general definition of channel responsibilities; while these responsibilities will be spelled out in detail later in the channel program, the contract of agreement provides some insight into your expectation of the channel

> A statement of your distribution policy; are you going to offer your distributor exclusivity? Will you have multiple channels serving a defined geography or market segment? This can be spelled out through

> A description of the “primary area of responsibility” or authorized
territory for the channel