Retaking channel ownership

Von Stephen Teh

"Ecosystems." "Go-to-market strategies." "Channel mapping." Sometimes it seems the IT industry fuels itself on buzzwords. But while the industry sustains itself on its core competency--boosting innovation and improving technology--it needs to punch up its "legacy system" of antiquated, inefficient channel programs to get all that vital technology to market.

In theory, channel marketing is simple: The market is made up of a bunch of buyers that want your product and, for a fee, the channel will help get your product to market with as little friction as possible.

The reality is far different. The IT channel is fraught with complexity and conflict. Add a dose of mistrust, mix in a lack of communication, and you have a recipe for disaster. It?s little wonder that IT vendors can sell anything among the chaos and complaining of a channel constantly holding out its hand for just that little bit more.

Part of the problem is that channel relationships are developed over a number of years, but that relationship is not typically owned by the vendor company. Rather, it is owned by the vendor?s channel representative. In Asia, the industry typically has a high staff turnover rate, which means the relationship is often lost once channel reps move on. Another complicating factor: vendors often run ad hoc programs which do not effectively track or help build the relationship in a programmatic way.

Furthermore, vendors typically take a short-term view of channel relationships because of sales-quota pressure, and companies often develop a channel that?s ill-equipped to sell their product. The result is sales that emphasize price-cutting rather than the value a product can bring to an end-user.

A vendor that seems to have addressed this issue is US-based on-demand access provider Citrix Systems. To reduce channel conflict and open up communication, Citrix have introduced an incentive scheme called the "Advisor Rewards Program." Joseph Yang, director of solutions at Microware (a Citrix Solutions advisor), said: "Advisor Rewards is a program that rewards selling, not winning."

Citrix Solutions Advisors (CSA) essentially sell two items: a Citrix product, and the services to install that product. This means a CSA member can cut the price on a Citrix product to win the services business. This isn?t optimal for Citrix as it not cheapens their product but also means the client may not have bought the best prescribed solution. A CSA rep may also find selling Citrix solutions difficult because of price-cutting tactics--a practice which deflates motivation.

Conflict resolution

To reduce price cutting and potential channel conflict, the "Advisor Rewards Program" provides a margin on the deal if the CSA registers and qualifies the deal early on in the sales cycle, communicates with a Citrix representative regularly, and--most importantly--"value" sells to the client. Consequently even if the CSA loses the deal to another CSA, the original CSA still receives a percentage of the deal. This creates a win-win scenario all around.

Since a CSA is encouraged to value-sell, this means that the client is buying a solution that is more in tune with their requirements. And if a CSA suddenly has a deal "cut" from under them, they still benefit. Furthermore, it has the added benefit of opening communications between Citrix and their CSA?s while reducing the amount of channel conflict between CSAs.

In today?s competitive environment, channel marketers need to look at innovative channel strategies "Progress or perish" is the mantra. The trend is towards delivering more and more value to the end user, and as a more solutions-focused technology sector prevails, we should see an increase in the quality of channel programs.

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