The desire to make effective and profitable business decisions based on actionable insight is quite rightly top of everyone’s agenda. Companies are working harder than ever to capture and analyse data about every aspect of the business in order to improve customer experience, refine business processes and drive sales.
For global brands that put $5 trillion dollars’ worth of goods and services into the hands of global distributors, resellers, retailers and VARs every year and rely heavily on the effectiveness of the channel to secure sales, the ability to gather this business critical insight can be hampered by a lack of visibility into partner and distributor performance.
Vendors have tended to be over reliant on purchase order and point-of-sale reports provided by resellers for the data they need and that data is not always provided in a timely manner or in sufficient detail. Vendors often have to turn to data found within their own internal sales, financial or technical support applications to get the information they need.
There is still a tendency to manually capture and process much needed business critical data about what has worked well for resellers, and what has not. This not only increases the risk of error but inadequate analysis also means that marketing, sales, finance and supply chain management teams are more likely to be making decisions blind.
As Dr. Andrew R Thomas highlights in The Customer Trap: “This results in billions of dollars that go into the channel completely untracked, not to mention missed opportunities for more effective, quantifiable sales and marketing initiatives.”
Clearly low levels of confidence about data integrity have a direct impact on the ability to assess the success or failure of marketing campaigns and incentives or to monitor partner product expertise. More importantly, without a ‘single source of the truth’, it also makes it much harder to forecast channel sales, calculate rebates and commissions, allocate market development funds (MDF) or assign staff and budget to those partners that need it.
The solution lies in supplementing CRM, ERP and PRM systems with a direct partner interface in the form of a Channel Data Management (CDM) solution that automates the collection of unstructured channel reports in dozens of languages from partners all over the world.
A CDM solution also corrects inaccuracies in sell-through reports (end user, geography, SKU information) using master data files and proven algorithms to ensure compliance and accuracy. Dashboard analytics enables users to visualize large volumes of data for better business decision making.
How do you get started? Experience shows that the right foundations must be put in place from the outset which means quite simply starting with A, B, C!
You don’t get what you don’t ask for and what you don’t know you can’t manage. Ask for sales and inventory data from your distribution partners. Without good, clean, reliable data you will always be in the dark on how your products are “really” performing in the market.
The sales data needed by most vendors is generally ‘what was sold’ down to item number, who it was sold to i.e. which customer and/or reseller, along with country and the transaction date. However, it is always useful to gather Inventory data to support forecasting and to run a truly effective channel.
When asking for data, the best practice approach is to agree internally what data is required and then issue a template to distributors and resellers showing clearly what fields are required as mandatory fields, and which fields are just optional. Your trusted partners will not thank you for regular changes to this template, so it’s important to agree internally what information is really needed, and what will be used to further the vendor understanding of the business.
B) Boomerang reporting
So called because you can “boomerang” insights back to the partner as soon as their sales and inventory data has been received and processed by the vendor.
Getting sales and inventory data from your partners in a timely and cohesive fashion encourages collaboration. If you have the systems to support the automated processing of the received data, overlaid with different reporting variables, such as partner type, or product category – the very idea that you can then send the data (with analysis and perhaps proposed sales campaigns) back to the partner will be extremely well received.
The new insights “boomeranged” back to the partner in turn helps them to develop and grow their own business. Systems can often be a limitation, so it would be important to prioritise the development effort needed to allow the vendor to play their role as a good collaborator. The timely system generation of meaningful automated reports that your partners can use, will be invaluable to the vendor’s business growth. More importantly, vendor account managers can drive data driven conversations much more readily, based on sales data that is literally “hot off the press”.
Contracts with your distribution and reseller partners need to reflect your need for a deeper understanding and transparency about the final destination of your products. Without specific clauses in these contracts, the vendor will always be in a difficult position to get sales and inventory data from partners.
The contract is the natural place to call out the precise data requirements, with best practice linking the provision of the data in a timely, accurate and complete way to some form of rebate or additional discount. Having this in place wraps dollars around the data, and provides the partner with a financial reason to adhere to your company reporting policy. Make the contractual element a top priority or your efforts to gather channel insight will be on the back foot from the beginning.
The need to collect accurate and timely data insights from the channel is moving higher up the business agenda and into the boardroom. If vendors can get this right they will undoubtedly positively impact the ability of their brand to achieve aggressive customer focused goals, as well as improving the relationships with their distributors and partners. Establishing a solid foundation for data capture and reporting initiatives, also means 20:20 vision of the channel is entirely feasible.
About the Author
David Marshall has global experience in Senior Sales and Marketing roles at a number of high tech companies. He has spent much of his career working with and supporting the reseller channel, focussing on driving transparency and sales results through insight. This document is based upon excerpts taken from David’s E-Book – A-Z of Best Practice Channel Management.