The challenge is to efficiently and effectively deploy limited resources across the region while still managing to meet the expectations of the corporate head office. This frustration is felt across many market sectors, and it is an area that certainly impacts the IT sector.
Markets are usually set up individually, and a country manager may implement a reseller channel strategy because it's less risky, then try to create mindshare for their product by running a channels incentives program that is very market-specific. Very often these programs are managed successfully in-country, but when companies start to regionalize their organizational structure, that often leads to disparate and disorganized programs across the region that suck up vast amounts of time and money. Great for the agencies they employ, but not so great for the vendor's bottom line.
End-user impact
Does any of this sound familiar? Many employees of IT vendors in Asia are likely nodding their heads. Quarterly goals are a mainstay of the industry, and this short-sightedness often means expenditures constrict as the need for revenue increases.
End-users should also be concerned, because the waste and ineffectiveness of some of these short-term programs means that they ultimately will pay for it. Whether through higher pricing, lower customer service, or the ultimate result (the outright withdrawal of a vendor from the region), it's much harder to get good customer support from a different time zone.
Is there a solution to this disorganization and chaos that seems to reign in Asian channels? In order to achieve efficiency and effectiveness gains, then a certain level of longer term commitment and structure must be put in place. Without that, there are no measurable goals, there is no ability to define success, and--more importantly--there is no ability to sustain a workable business model.
Regional drive
Channel incentive programs are about measuring sales success through the application of programs that manage a relationship with the channel. Where most channel incentive programs fail is through lack of results measurability, as well as the short-term nature (usually one quarter) of driving sales revenue in hopes of creating a "spike" at the end of a quarter. Running these types of programs for individual markets is difficult to manage from a regional perspective, and labor-intensive--not to mention that you'll never gain economies-of-scale benefits in the region if you are running different programs in various markets.
IT vendors are now ramping up Asian regionalization and, with this shift, they are starting to look at programs that will provide all of the above benefits in a cost-effective manner. One such innovative channel strategy--which is gaining momentum in Asia and beyond--is using the mechanics of loyalty points-based programs. These programs are used to recognize and reward behavior, as well as open a communications dialogue between the channel and the vendor (something that has traditionally been difficult for vendors to do in a two-tier channel structure).
The benefits of such a program are many. Vendors can define the points-earning scheme to reflect managing positive behaviors of the channel sales people. Instead of just measuring sales, they can include things like training, seminars and product launches. This will help them sell better, not just more, and just as importantly, communication will increase between the vendor and the channel.
Another important factor: data which has been traditionally difficult to obtain is now accessible to the vendor. The type of analytics run using these data will improve the organization's understanding of the channel, indicate which what "hot buttons" to push and how best to manage the relationship with the channel.
They say "necessity is the mother of invention," and I have seen far more innovative programs come out of the Asian region than anywhere else in the world. It's because we have fewer resources and thus we have to think smartly. Channel executives in this region have to continually ask the question "Can we afford NOT to innovate in our strategies?" Once they have the answer to that, the rest is easy.
Stephen Teh has worked for global distributors Ingram Micro, Alstom IT and local distributor Business Bits. He now works for global relationship and loyalty marketing agency ICLP Ltd based in Hong Kong. Contact him at stephen_teh@iclp.com.hk