Conflict is a common ingredient between companies and their channel partners. A web search for “Channel Conflict” returns many articles, most of which are generally related to pricing issues with or between channel partners. However, channel conflicts can occur on a much broader spectrum across the channel and many manufacturers are not even aware of the conflicts. The consequences of ignoring “hidden” conflicts can rob a company of a significant portion of its ROI.
For example, maybe you hear your partners say things like this:
- “Why is it necessary to have so many websites, usernames, and passwords to get the information I’m looking for?”
- “How can I train my new hires? Where can they go next when they need instant information?”
- “We feel like we’re the only ones here. How do we get in touch with other people, whether it’s a company expert or another distributor, who can help me?”
Or maybe, your people say things like this:
- “Why do my partners let the good leads we give them dry up?”
- “Even my own people are frustrated with our current associated systems.”
- “Our partners don’t have the brand loyalty that we think they should.”
If you’ve heard these questions or comments from your distributors or your own staff, then you know there’s more than just a price conflict going on in the channel, and you know there’s a cost associated with this conflict. And if you haven’t heard them, maybe you should ask.
Research shows that there is often a significant gap between how managers at the manufacturer level perceive how their partners feel about the level of support they receive, and how channel partners perceive how they are being supported. In one study (Abistar Group, 2010), the gaps were shown to be significant. In a key area of partner management, marketing and communications, managers rated what they thought was their partner’s satisfaction at 77%, while partners rated it well below that, at 59%. Similar gaps were observed for Training and Certification, Performance Management, and Collaboration.
These gaps produce friction between the company and its partners. This conflict can eventually lead to reduced revenue, slower growth, and higher administrative costs. Also, resolving this type of channel conflict can improve ROI.
PRM systems can reduce channel conflict
Companies have reduced channel conflict by incorporating a partner relationship management (PRM) system into the channel. PRM systems are web-based software solutions that unify all facets of managing a distribution channel into a single partner portal. Along with continuous improvement programs and the application of best practices, companies have been able to increase channel productivity and reduce costs using a PRM system. These initiatives, when combined, make it easier for partners to do business with the manufacturer. Let’s take a look at some specific ways ROI can be increased using the same four partner management activities evaluated in the survey.
Marketing and Communications
Effective channel partner marketing is critical to the success of any business selling through an independent channel. Partners need to see clear and understandable communications coming from one source. They need alerts, reminders, and announcements about product introductions sent out in a timely manner. And they need to be able to quickly find past communications. A PRM system allows a company to successfully synchronize all business communication activity within a channel. If you communicate your products and brand effectively, your partners will be more informed and excited about your company, and more likely to sell your product effectively, increasing ROI.
Training and Certification
Today’s PRM technologies manage and deliver online training, classroom training, assessments, webinars, and other e-learning activities. This gives employees and their managers the ability to create, manage, and view a defined learning plan and certifications for specific job roles. This type of well-balanced channel training can go a long way toward reducing partner ramp-up time and costs and increasing individual performance, resulting in a positive impact on a company’s ROI.
Measurement is an important key to successful business performance because it helps managers make more effective decisions. Today, most channel management technologies include a reporting dashboard for managers to access information about the people and organizations they manage. Having good information at your fingertips helps you make good decisions and increase ROI, especially as a business grows and adds more partners.
Given the current acceptance of social media, employees “expect” to be able to collaborate with others on their channel. A PRM system can provide a good forum for this to happen, where it can be monitored and managed for the benefit of the business and its channel partners. This peer-to-peer communication can help solve current problems by providing a repository for best practices. Companies that just a few years ago tried to stifle this type of communication are now embracing it because they know it produces more informed, more effective, and more brand-loyal channel employees. As the level of information shared by many people increases, the ROI also increases.
Channel conflicts can be resolved
Instituting a web-based PRM system can increase ROI. The most successful companies using PRM systems have combined them with a program of continuous measurement and improvement, in addition to instituting business strategies based on the best practices found in channel management today. When everything is combined, this strategy can reduce the cost of managing and administering the channel and eliminate many of the causes of the conflicts themselves, improving the company’s return on investment in the long term.