As cloud technology disrupts the way products and solutions are brought to market, business models are being turned inside out and many established partners are struggling to adapt.
For businesses that rely on channel partners to promote and sell their products, marketing is rapidly becoming a critical strategic risk. The more technology migrates to the cloud, the more it disrupts old partner business models. Reliable partners who generated sales yesterday may not be the partners driving sales tomorrow, putting millions of dollars in channel revenue at risk.
Businesses not only need to change the way they’re engaging partners, and do so quickly, they also need to change the way they’re enabling and accelerating partners to sell. Why? Because while MDF and sales incentives remain a crucial method for motivating partners, businesses can no longer wait through six- to nine-month sales cycles to see which partners have moved the needle.
Revenue is a critical but lagging indicator of partner performance. It may be sufficient when the market is stable, but when it’s disrupted as it is today, successful businesses need leading indicators of partner success in order to manage the strategic allocation of resources and investments. Simply stated, businesses can’t afford to waste time and money investing in partners that can’t grow the market.
And yet, that’s exactly what many businesses are doing.
For decades businesses have relied on sales incentives to motivate partners, and Marketing Development Funds (MDF) to fuel partner marketing. In a typical scenario, a business might provide leads to a partner to pursue, MDF to cover the partner’s costs of product promotions, and sales incentives or rebates on generated revenue to motivate partner efforts.
As cloud technology disrupts the way products and solutions are brought to market, business models are being turned inside out and many established partners are struggling to adapt. At the same time, new partners are emerging with big plans and promises for growth—plans that are often competitive with established partners—but these new partners are unproven and require more resources to support and accelerate. These changes in the partner ecosystem not only put channel revenue for the manufacturer at risk, they increase the cost of partner marketing by disrupting established processes.
Most manufacturers have responded to channel disruption by sharply narrowing their focus to trusted partners who have delivered solid and consistent sales in the past. These partners get lots of attention and increasing sales incentives, while smaller and unproven partners are pointed to the self-service line with a pat on the back.
It’s no surprise then that for most manufacturers, the overwhelming majority of partners are inactive, while 20% or less of partners are expected to deliver all the channel revenue. The problem with this approach is that it sharply increases channel revenue risk. As fewer partners are relied on to drive a larger percentage of revenue, the failure of any one partnership will create a more substantial loss.
The problem with focusing efforts on fewer partners? is that it sharply increases channel revenue risk.
This reality is compounded by the fact that many manufacturers are pursuing the same strategy with the same limited pool of proven partners, creating intense competition for partners that can produce results. This increased demand also increases the partner’s ability to demand more incentives, further increasing channel costs.
The clear strategic imperative for channel managers is to diversify their pool of active partners, and to constantly groom new partners that have the ability to scale and grow the market. But how? The answer is more accessible than it might seem, and it centers on adapting many of the same techniques and technologies that have revolutionized corporate sales and marketing over the past decade.
There’s a lot of hype about trends and technologies to improve partner marketing that make it hard to cut through the clutter and determine what will work. But channel managers leading the charge to innovate partner acceleration have a few things in common:
A fourth factor that is gaining ground is a shifting of responsibility for generating leads from the manufacturer to the partner, though, to be sure, this is also happening for reasons that are not strategic or innovative.
In non-strategic cases, budget cuts to channel marketing simply forces cost and responsibility to the partner, creating an opportunity for competing manufacturers to pick up the slack. This also happens from the other end, when innovative partners reach for more independence and control by investing in their own marketing operations, which can reduce manufacturer influence in the marketing and sales process.
In cases where manufacturers strategically shift demand generation to the partner, it’s part of a plan to systematically vet new partners according to their ability to grow their? business. In these cases, demand generation is supported by programs with short-term objectives and metrics for partners to reach in order to progress. These processes help qualify partners on specific capabilities and readiness, and they advance partners into programs that further develop their capacity to grow.
As we’ve worked on developing programs that unify these four factors into a streamlined approach, we’ve looked at various marketing trends and technologies that can be adapted and scaled to enable partners to drive their own leads. The most promising trend we’ve found that can be successfully adapted for partners is Inbound Marketing.
If you’re not familiar with Inbound Marketing, it’s a simple idea. Outbound marketing is when you buy lists of prospects and hound them for a response by email, telephone or direct mail. Outbound marketing techniques are suffering from diminishing returns, and it’s not surprising why. Most people are tired of being targets for marketers everywhere they turn, and in ever-growing numbers they’re trying to shut marketers out, with spam filters, call screening and do-not call lists. This makes it harder and more expensive to reach prospects, which makes marketers more aggressive, which pushes prospects further away.
Inbound marketing is when you develop content that is designed to be found by prospects at various points in their decision-making cycle. Buyers today validate every decision online by searching for product reviews and complaints, and by discussing product decisions with friends and peers in social media.
For most solutions, there are many different issues to consider at each point of the purchase cycle, including learning about alternatives, comparing features and pricing, and determining whether or not the solution will truly solve the buyer’s problem. For every one of these points, inbound marketers create content carefully designed to be found by the right person at the right time to deliver the right information.
When executed properly, inbound marketing incorporates SEO, content marketing and social media in creative ways to fill a traditional sales funnel, drawing Marketing Qualified Leads into the pipeline.
Inbound Marketing is now several years old, and is used successfully by thousands of B2B companies, leveraging tools like HubSpot, Constant Contact, Marketo and Eloqua, right alongside more traditional marketing techniques like email, newsletters and digital advertising.
There is no list purchasing, engagement is voluntary, and timing is based on the buyer’s rather than the marketer’s need.
Analysts like IDC report that Inbound Leads are cheaper to generate and produce more purchase-ready prospects, because there is no list purchasing, engagement is voluntary, and timing is based on the buyer’s rather than the marketer’s need. Inbound Marketing also generates a wealth of data and metrics to identify all of the factors that help attract good prospects, from the kind of content that draws people in, to the locations and social networks where the best prospects can be found.
While Inbound Marketing is an effective approach for corporate marketing, it is also an approach that can be effectively scaled for partners. What it takes is a framework and a few pieces of technology to source and syndicate content that can be easily customized by partners, and easily tracked at each stage until qualified leads are in the pipeline.
So let’s look at how all of these pieces can be pulled together to accelerate partner revenue and reduce channel risk.
Putting these factors together into a single partner engagement scenario that focuses on Inbound Channel Marketing yields a program that virtually any business can pilot:
Although it takes time to build up the content and connections to drive leads, one quarter should be enough to get produce the first modest results, and provide a lot of intelligence to tune content and approach for the next round. You’ll have a wealth of data to see which partners are showing up, which partners are getting traction with followers and click-throughs, and which partners are driving leads. If you push the collected leads into a lead-scoring system, you’ll also be able to begin comparing the quality of leads to other approaches.
The most common objection we hear to this kind of approach is that it’s too hard for partners to execute. Many channel marketers believe that partners are too busy, or too uninterested to execute any program that requires more effort than pushing a button. Our experience, and that of many of our clients, is quite different—and it feeds directly into the strategic imperative of reducing channel risk.
Partners are often unmotivated to put effort into campaigns because they’re tired of the same old cookie-cutter MDF campaigns they see at every company they represent. When you offer programs that help them improve their market presence, the best partners show up enthusiastically. If you have partners yawn at an innovative program that helps them grow your market, that’s the clearest sign of all that you should be looking at new partners.
SocialRep is offering a comprehensive Executive Guide to Inbound Channel Marketing to qualified buyers of enterprise channel marketing services. If you’d like a copy, please send an email to Chris Kenton.