Conflict is a common ingredient between companies and their channel partners. A web search for “Channel Conflict” generates 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 in the channel and many manufacturers are not even aware of the conflicts. The consequences of ignoring “hidden” conflicts can deprive a company of a significant portion of its ROI.
For example, you might 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 employees? Where can they go later when they need instant information?”
- “We feel like we are the only ones here. How do we get in touch with other people, be it an expert in the company or another dealer, who can help me?”
Or maybe, your people say things like this:
- “Why do my partners let the good leads we give them dry out?”
- “Even my own people are frustrated with our current partner systems.”
- “Our partners don’t have the brand loyalty that we think they should have.”
If you’ve heard these questions or comments from your distributors or your own staff, then you know that there is more than just a price conflict in the channel, and you know that there is 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 manufacturer-level managers perceive how their partners feel about the level of support they receive and how channel partners themselves 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 their partner satisfaction was 77%, while partners rated it well below that, 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 in 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 by 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 from a single source. They need alerts, reminders, and announcements about product introductions shipped in a timely manner. And they need to be able to quickly find past communications. A PRM system enables a company to successfully synchronize all business communication activity within one channel. If you communicate your products and your brand effectively, your partners will be more informed and excited about your company, and they will be 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 online 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 acceleration time and costs, and increasing individual performance, positively impacting a company’s ROI.
Performance management
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, particularly as a business expands and adds more partners.
Collaboration
Given the current acceptance of social media, employees “look forward” to being 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 company and its channel partners. This peer-to-peer communication can help resolve current issues by providing a repository of best practices. Companies that just a few years ago tried to suppress 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, so does the ROI.
Channel conflicts can be resolved
Establishing 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, along with establishing business strategies based on the best practices found in channel management today. When combined, this strategy can reduce the cost of managing and administering the channel and eliminate many of the causes of conflict themselves, improving the company’s long-term return on investment.