Channel Partner Relationship Management (PRM)

The Channel Challenge Of An e-Commerce Marketplac

By Tom O’Leary And Doug Tanoury 

In the frenzy to move from the old markets of the last forty years to the new virtual marketplace, major corporations are spending billions of dollars and marshalling limitless resources in a race reminiscent of the U.S. and USSR’s, coldwar race to moon. Who will get there first and what will we do when we get there are still questions that remain to be answered. An opportunity exists to use new technology to revitalize and transform old market-methods of distribution. The rewards for quick action are increased revenue, market share and a rich return on investment (ROI).

The Internet marketplace has already revolutionized the consumer markets. The business-to-business (B2B) channels and partnerships are being altered just as substantially and fundamentally as consumer markets. For at least the last ten years, consumer customer service has been heralded as the method to increase revenue and reduce costs. Customer Relationship Marketing (CRM) and the recognition of the lifetime value of customers has been touted as the preferred marketing and service method of all major companies. Channel partners, including dealers, distributors or value-added-resellers (VARS), have not been beneficiaries of the same enlightened, progressive and civil treatment.

Think for a moment about the relationship between a manufacturer and an exclusively franchised dealer population. What would the result be if we judged a manufacturer’s relationship with it dealers by the same high standards we would judge a Fortune 100 company’s relationship with its customers or consumers? Many manufactures have simply failed in the most basic ways to develop or manage partner relationships. The result is that most strategic channel partner initiatives fizzle and fail. Failure of these initiatives is most often due to:

Lack of knowledge about the channel and or partners

Lack of too1s to effectively manage, monitor and measure the channel partners

Lack of effective communication to and from the channel partners

Lack of information to support decisions and develop channel strategy

Tools and architectures to manage consumer relationships are plentiful and mature.

However, the most basic Customer Relationship Management (CRM) tenants listed below seem to have no Partner Relationship Management (PRM) counterparts.

The last ten years have spawned such customer-centric buzzwords as:

Customer Loyalty

Customer Retention

Lifetime Value

Repurchase Intention

Relationship Marketing

Micro-Marketing

Database Marketing

Data Warehousing

Service Customization

This is a direct contradiction to the customer driven philosophy and operating practices of every major company. While they focus on consumer loyalty, they have not seen the business benefit to establishing strong channel partner loyalty and ties. The consumer-centric methods and doctrines of the last ten years have not been applied to OEM-Dealer relationships.

Mistrust, frustration and overt animosity between manufactures and dealers mark the business-to-business channel relationship. Both the manufactures and the dealers regard the customer as "mine" rather than "ours". This shortsightedness is a detriment to manufactures, dealers and consumers. Manufacturers act in arbitrary and heavy-handed ways as if they are monopolies. Their end-game plan is to sell direct to consumers. Dealers on the other hand use passive resistance or outright defiance to maintain some degree of independence. Dealers often brazenly sell the goods of competing manufacturers, either in the same or nearby storefronts. This type of identity or brand dilution thwarts the brand plans of OEMs.

The distribution channel needs enlightened self-interest. All parties should realize that an effective relationship is a competitive advantage. Effective strategic initiatives at the partner level have the potential to increase revenue and market share.

While some manufacturers will leverage Internet technology to disintermediate their channel partners, some of e most far-reaching and strategic plans will call for the use of Internet technology not for the elimination of the existing channel, but the enhancement of it. Technological changes can optimize and enable the channel. Changes in technology and the movement to Internet based channel tools and infrastructure offer opportunities to reengineer current process and communications method by overall automation of existing functions, such as:

Reseller Recruitment

Sales & Inventory Reporting

Business Planning

Channel Contracting

Reseller Training

Technical Libraries

Order Tracking

Status Notification

Lead Management

Lead Generation

Technical Support

Quality Management

Communication

Product Information

Pricing Data

Email & Web-based Event Alerts

Relationship Management

Software Distribution

Automating and re-engineering business processes listed above will reduce cost and increase effectiveness, as well as lead to increased revenue and market share.

Customer Relationship Management (CRM) has championed the concept of a "segment of one". The primary problem in many applications is the lack of information about the people who contact us. Add to this the fact that little or no relevant or leveraged data about a customer is collected during a contact. The fallacy is that a "segement of one" must be carved out of the massive customer segments by unique and detailed information. Everything that is known about a customer is required to customize contacts. This creates a unique segment comprised of one individual. There is, again in theory, so much information available about this individual and their prior contact history that we can initiate particular actions to customize the contact based on available data. With tens or hundreds of thousand of potential or existing customers this is difficult, but the problems are compounded when tens or hundreds of millions of customers are involved.

Partner Relationship Management (PRM) rarely involves more than a few thousand partners. It is far easier to assemble a partner database of five thousand dealers than five million consumers. Once assembled, information can be collected from a variety of diverse sources and centralized for leveraging across the organization.

Contact points in an organization that feed specific information to a centralized partner database could be:

Field Service & Maintenance

Sales

Contact Center

Corporate Headquarters

Accounting & Billing

Training

The partner centralized database is populated by the functional groups within an organization, but additionally partner specific data is captured by a variety of technologies that either interfaces with them directly, such as:

Self-Service Systems

Internet & Web Applications

Accounting & Billing Systems

Other Legacy Systems

Lead Management Systems

Sales & Product Tracking Systems

 

 

 

 

 

 

 

 

 

No longer is critical client data housed in a field manager's head or in the local office database. The following partner touchpoints funnel information instantaneously into a centralized partner database. This unique data is used to formulate a profile and to accumulate a history. This information is used to formulate and execute a strategy to optimize revenue for both the dealer reseller? VAR? and the manufacturer.

The accumulation and centralization of partner information from diverse sources across an organization creates a consistent view of their contacts with the manufacturer and the manufacturer contacts with the dealer. It creates a panoramic of full-spectrum view with which to develop a strategy. The effectiveness of the partner strategy can be measured and it progress managed by monitoring partner information and key indicators in the partner centralized database.

The results of this initiative are that no mere lipservice is paid to the philosophy of partnership and empowerment. The steps and organizational architecture outlined will result in reduced operating or channel costs and measurable improvements in quality, revenue, and marketshare.

The major hurdles that will take an organization from current state to a Partner Relationship Management (PRM) initiative are as much cultural as they are technical.

New technology must be leveraged and business processes re-engineered.

Past methods of dealing with channel partners have engendered animosity and mistrust.

A revolution in vision is required to move forward. The risks are as great as the rewards.

About the authors:

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. toleary@softad.com

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. dtanoury@softad.com

 

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