Channel Outlook Bleak
April 23, 2008
CMO Council's Channel Performance Outlook 2008 Report gives vendors a failing grade in driving business performance
By Stacy Straczynski
Predicting to remain steady in 2008 despite economic woes? Then you'd better consult your marketing crystal ball again. According to the CMO Council's Channel Performance Outlook 2008 Report, companies are wasting billions of dollars on ineffective marketing and channel building campaigns.
The Report, sponsored by San Mateo, Calif.-based channel management solutions company BLUEROADS, includes the survey results of over 500 dealers, resellers and distributors across six industry sectors: Information Technology; Physical Security and Surveillance; Telecommunications; Consumer Electronics; Office Products; and Professional Audio/Visual Equipment.
The analysis indicates a significant portion of branding and lead generation programs in operation today are not pulling their weight. In fact, it was even noted that some programs are performing to the opposite of their desired effect—alienating the channel and reducing customer affinity rather than building loyalty and driving purchase rates. The study found that:
• The pool is polluted with inefficient leads. Only 19% report vendor leads as "highly actionable";
• A sizable amount of monies are being wasted. 70% of resellers say vendor marketing campaigns are "ineffective" or "only somewhat effective" in driving business; and
• The competition is high and teamwork is low. 46% say vendor field marketing reps infrequently team for cooperative selling and nearly 80% of resellers say they have experienced conflict with vendors.
"From my perspective, it gives real reasons for concern in marketing," says CMO Council Executive Manager Dave Murray. "These are very significant negative numbers for the market. It's a sign vendors in the channel are not in alignment and not building trust and affinity."
"I think for sure, for me, what's disappointing is that a lot of the time the channel's an afterthought for marketing departments, adds Charles Watson, senior vice president of marketing and sales at BLUEROADS. "Systems are designed for the direct sales teams then revamped to incorporate indirect revenue sources … It's a prickly relationship and there's a debate as to whether the channel delivers value or not."
Watson precisely hits the nail on the head: The culprit behind the low numbers is the conflicting—almost self-sabotagingly competitive—nature of the channel relationship. With only 46% of direct venders allowing their resellers and indirect teams to have exclusivity to discovered lead opportunities, many channels suffer from a lack of credibility.
"It's a pretty corrosive effect," says Watson. "A's and B's go to the direct sales team, while C's and D's go to the indirect sales team. The indirect partners get 'trash' for leads and ultimately stop using [the channel-generated leads], while the direct sales team looks like heroes."
But the study finds that the conflict isn't all one-sided. As more vendors become less capable of efficiently managing lead development, indirect teams are stepping up their game and qualifying their own, which further disconnects alignment and increases the gap. Resellers now frequently turn to alternative non-traditional lead generation methods—such as referrals—that have become the new lifeblood for these groups. This new cream-of-the-crop business is then horded away from the vendors, an action the study terms as "lead greed."
"Part of the problem is that the indirect channel in many, many cases is not being treated as a partner—as in the direct sales channel—and there's a breakdown," Murray says. "The CMO needs to be the real champion of the channel … and needs to do a better job of qualifying leads going into the channel."
CMOs currently in this seemingly futile position are not without hope, says Craig Downing, director of product marketing for BLUEROADS. Here's a couple of steps he offers to help you realign your channel and start producing quality leads all the way through the funnel:
1. Work with your teams to define their exact roles.
"This is a hard step for CMOs to own 100%," says Downing. "If they think [their channels] are ineffective, CMOs need to collaborate with both the direct and indirect teams and discuss why the channel was brought into existence in the first place." Reach across the aisle and have a discussion with the head of sales to redefine the channel and its goals. It is most probable that the channel's goals have changed from the time it was first put in place. Remember, and remind others, that your indirect team can raise 50% of a company's revenue—direct sales is only part of the picture, Downing says.
2. Establish team rules.
Set up rules of engagement to limit both direct and indirect teams' leads to specific sizes, categories, regions, etc. This will split the qualified leads equally and assign accountability, which typically lacks in company set-ups where alignment and affinity lack. "What Marketing tends to do in this type of situation is they tend to ignore that there's no established rules of engagement," Downing says. "But bi-directional accountability and value will motivate a team to perform against corporate objectives."
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
|
|
RSS
