Practical tips for developing distribution partner programs that provide real value to the manufacturer

1. Customer Centered Strategies
“Practical Tips For Creating Effective Channel
Partner Programs”
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2. Customer Centered Strategies
Sales Enablement Consulting
Customer Experience
Sales Operations Channel Management

3. Channel Program Assessment
Objectives
• Strategy Assessment
– Determine channel strategic intent and business requirements
• Program & Partner Assessment
– Review alignment of requirements & benefits with strategy
– Evaluate partner alignment with strategic intent
– Score partner performance & compliance to requirements
• Program Development
– Establish parameters, requirements and benefits to obtain
strategic goals
• Partner Selection
– Select partners whose capabilities align with requirements
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4. Desired Outcome
• Enable channel program enhancements that…
– Accelerate profitable revenue growth
– Appropriately transfer costs to the channel
– Ensure an appropriate level of service and delivery
– Create efficiencies through operational consistency
– Achieve desired strategic objectives
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5. Steps to Improved Program
Effectiveness
1. Solidify Program Strategy
2. Define Program Structure
3. Update Operational Policies and Processes
4. Adjust Organizational Structure if Necessary
5. Create Program and Contract Documents
6. Communicate to the Channel
7. Launch Measurements
8. Monitor & Performance Management
9. Launch Incentives / Penalties
10. Capture Partner and Customer VOC
Education – to - Enforcement
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6. Strategic Value Questions
• Why do you need
distribution?
• What do your value from
distributors?
• What functions do you want
distributors to perform?
• What are they expected to
help you achieve?
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Carry Inventory
Customer Support
Time To Market
Demand Generation
Revenue Retention
New Customer Acquisition
Operational Cost Reduction
Marketing Extension
Reduce Inventory
Order Management Economies
Reduce Demand Volatility
Provide Longer Lead Times
Forecasting

7. Delivery
• Strategic Targets, Objectives, and Metrics
CES
CSAT
NPI
Strategic Objectives
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Revenue
Growth
Margin
Inventory
Turns
Strategic
Product
Sales
Cost of
Sales
NPS
Ops
Cost
Market
Share
Sales
Coverage

8. Partner Strategic Alignment
• Assess Strategic Capabilities,
Strength, and Focus…
– Market Segment
– Client Profile
– Resources
– Values
– Objectives
– Brand
– Competition
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9. Complexity / Performance Balance
Overly complex administration for vendor programs is one
of the biggest criticisms expressed by channel partners -
Forrester Research
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10. Channel Program Structure
• Develop programs that reward:
– Inventory and service level behaviors
– Revenue growth
– Overall cross-market revenue volume and penetration
– Distributor cost transfer
• This can be accomplished through…
– Discount levels
– Rebate tiers, rebate menus
– Benefit and requirement levels
– Communication of scorecards and dashboards
– Partner performance management and comparisons
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11. Inventory
• Incorporate distributor inventory levels into program
requirements or benefits
– Requirement to attain rebate or price level
– Rebate based on inventory performance
– Standard lead time and expedite charges
• Create a recommended stock list identifying part
numbers that are appropriate for distribution
• Tie minimum order sizes, drop ship, restock, cancellation
to recommended stock list
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12. Returns and Stock Rotation
• Stock Rotation
– Tier allowed % on distributor Tier
– Measured against previous period shipments
• Conditions:
– Require offsetting order or apply a restock fee
– Do not return recommended stock list items
• Consider scrap program
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13. Pricing
• Pricing vs. Rebates
– Corporate rebate drives executive positioning influencing inventory
– Less directly impacts front line sales activity
– Discounts enable your most effective partners to take share
• Control Discounting Activity
– Manage all discounting through ship & debit
– Consider cost, time to market, complexity, price erosion
• Communicate pricing levels to the market to incent
achievement of next level
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14. Menu Based Rebate Option
• Assign rebate values based on value to business
• Allow distributor to commit by selecting 1-2 additional
menu rebates
Example:
Base Rebate
Growth Rebate
1. Average Inventory Rebate
2. Market Leadership Rebate
3. Multiple Market Leadership Rebate
4. Project Registration Rebate
(Number, $, Win %)
5. Investment Rebate
6. Training/Certification Rebate
7. Share, Loyalty Rebate
8. Behavior Scorecard Rebate
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15. Bonus Rebate Option
• Provide opportunity to receive a rebate in addition to
Base and Growth Rebates when certain performance
thresholds are obtained:
Examples:
• Market Penetration Rebate
– #1 or #2 revenue position in multiple markets
– #1 or #2 revenue growth position in multiple markets
• Inventory Rebate
– Average Inventory level above XX% 15

16. Marketing
• Best-in-Class focus on marketing and advertising
engagement
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17. Marketing
• Marketing and Co-Op benefit based on revenue growth
– Allocating investment where growth is occurring
• JMP – Joint Market Planning
• Lead Management
– Implementation of a lead generation process
– Tracking process follow up, win %
– Transfer aging leads to other distributors
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18. Distributor Reporting
• Most companies recognize the need for partner performance
management, but execution of this separates Best-in-Class
from the rest
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19. Distribution Reporting
“Leading vendors develop programs to perform channel
partner reviews to ensure they are monitoring their channel
and testing the self-reporting elements…” KPMG
• Distributor performance comparisons
• Distribution dashboards
• Behavior scorecard
– Inventory
– Requested lead time
– Order Size
– Drop Ship
– DSO
– Project Registration Activity
– Etc. 19

20. Best-in-Class Documentation
• 75% of Best in Class Channel programs clearly defined
goals that are communicated to and agreed to with each
partner – Aberdeen
• T&C’s that clearly and concisely spell out program
eligibility, participation requirements, and details about
how rewards are earned, as well as what is not qualified
or allowed - CCI
• Require all participants to proactively agree to these
terms and conditions in advance of participation and
should be readily available for all participants – CCI
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21. Training
• Consider distributor certification and re-certification
programs
• Track distribution rep performance following training
delivery
• Provide incentives for training courses, levels, or hours
achieved by distributors
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22. Contact Us
Contactus@CCSdelivered.com
1-888-208-2234
www.CCSdelivered.com