Insights

Removing the Blindfold: Accelerating Growth Through Data-Driven Channel Management

John DeSarbo

"Data is the Achilles’ heel of the channel," says Tiffani Bova, vice president, distinguished analyst–research at Gartner. Bova is right. Despite years of investment in IT systems and processes, many high-tech vendors still struggle with data gaps and quality issues that obscure the visibility of channel performance and growth opportunities.

While numerous high-tech companies are making great strides mining customer data, they fail to tap into the wealth of information they receive from channel partners. As a result, many are missing tremendous opportunities.

Selling through indirect channels is an alluring option for most B2B high-tech providers. Channel partners offer a cost-effective means to reach small and midsize companies, particularly those in remote and emerging markets. Channel partners are often in position to provide unbiased advice and assistance in evaluating and implementing solutions. For these reasons and others, high-tech companies are increasingly selling their wares through channel partners. According to a recent forecast from Forrester, approximately $2.1 trillion will be spent on IT in 2013. Industry analysts estimate that indirect channels generate two-thirds of high-tech industry revenue.

As high-tech companies shift from selling on-premise hardware and software to selling IT as a service (ITaaS), they need partners that can successfully transition with them. Unfortunately, many traditional partners are not able to make the switch. IDC predicts that there will be a turnover of 25,000 to 50,000 infrastructure partners in North America by year-end. For high-tech providers with dozens, hundreds and even thousands of partners, finding the right ones for ITaaS and investing in the right programs to drive their performance is critical.  

With so much at stake, "channel chiefs" realize that they can no longer manage their indirect channels based on anecdotal information and rules of thumb. They need to take a data-driven approach to channel management, leveraging analytics to answer seemly intractable questions:

  • Do we have enough partners given the market opportunity, and where should we recruit them?
  • How should we set prices through the channel?
  • How well are our channels performing? Who are the high- (and poor-) performing partners?
  • How should we allocate program investment and compensate our channel sales team?
  • Where should we target campaigns and enablement, and should we introduce new partner incentives?

Challenges to Taking a More Data-Driven Approach to Channel Management


Channel analytics are not for the faint of heart. The amount of data available and broad range of analyses to be conducted can at first appear overwhelming. The data that is available is often spread across multiple, disparate information systems, particularly in large organizations with decentralized, regional partner programs.

Analyzing channel performance and measuring the impact of channel investments requires unlocking and then integrating information silos—standalone systems, or even spreadsheets, used to track partner certifications, MDF/co-op claims and payments, deal registrations, sales transactions, shipments and returns, partner/customer satisfaction data, etc. For many high-tech channel managers, the dizzying complexity can be paralyzing. This is a key reason that implementing a master data management program is a critical first step in many channel analytics initiatives.

That said, gathering and integrating channel data is further complicated by the fact that IT vendors depend on their channel partners to provide vital information. When IT providers sell through indirect channels, they often lose visibility into how and to whom their channel partners are selling their offerings. Unfortunately, some channel partners are not willing to share information regarding sales, either because they do not trust the vendors or because they are not clear how the information will be used to benefit their businesses.

As a result, many high-tech vendors have little or no sales-out or point-of-sales data. Understanding how and why end customers purchase and use their products and services appears to be a nearly insurmountable challenge.    

IT providers have struggled with these challenges for years, but as Bob Dylan famously proclaimed, "The times, they are a-changin.'" The good news is that the barriers limiting access to channel data are breaking down. New software as a service (SaaS) data management and business intelligence tools are making it easier to aggregate and analyze the multitude of data from indirect channels. At the same time, a new spirit of collaboration in the channel is helping partners and vendors feel more comfortable sharing information beyond their firewalls.

All these exciting technology innovations are creating new challenges for high-tech providers. After all, now that all this channel data is available, how do we take advantage of it?

Bring on the Quant Jocks: The New Channel Operations Competency Model


The key to tapping into the potential of all this channel Big Data isn't only about adopting more technology or new processes—it’s about cultivating a new set of skills and capabilities in channel operations.

It’s no longer sufficient for channel operations teams to simply administer day-to-day channel management processes and produce reports that provide insight into channel performance to date. High-tech providers need to evolve their channel operations’ roles so the team is empowered to deliver greater value to the organization.

Specifically, channel operations teams need to analyze channel-related data to guide their companies in strategies and actions that will generate the greatest return from their channel investments. 

Such structural and cultural changes won’t happen overnight. High-tech companies must commit to a new competency model—and recruit and train channel operations professionals suited to analytical thinking and decision-making.

The payoff for making this transition and advancing channel operations capabilities is a significant competitive edge. High-tech companies can fine-tune their channel programs to drive increased ROI, while sharing these insights to help partners grow their businesses. And by paving the way for partners to generate more business, IT vendors boost their top line while strengthening and cementing their partner relationships.

This is the first of three articles examining channel analytics in the high-tech industry. In the next installment, we'll delve into the specifics of the new channel operations competency model and how high-tech vendors can apply it to their advantage.

About the Author: John DeSarbo, Principal


ZS Principal John DeSarbo

John leads the ZS Sales Channel Strategy & Management Practice, and has more than two decades of consulting and industry experience focused on sales and marketing strategy and operations. His areas of expertise include multi-channel go-to-market strategy, channel analytics, alliance and partner programs, and sales force design. John works with clients across a variety of B2B industry sectors with a particular focus on the technology industry.