Top 4 Challenges in Channel Sales Management
In the sales world, a channel is a system of bringing the goods and services from the manufacturer/seller to the buyer/consumer. Any form of management entails some degree of command, influence, and enforcement on either an individual or a team to extract business performance. Therefore, channel management becomes complex owing to the various elements of the management pertaining to the channel.
Here are 4 such challenges:
Variety of Organisation Structures and Priorities
When it comes to the direct sales force (either direct or contractual) the degree of control we can exert is more than what we can exert over a channel partner. That is because while some channel partners are companies some are individuals. when it comes to individuals, management is relatively easy but companies are made up of people—sales people, technical people, marketing people—whereby we land up trying to manage an entity rather than individuals. This duality in managing stakeholder expectations creates a huge amount of complexity. Further, channel partners have their own priorities. The challenge here is that those priorities do not necessarily align with the priorities of the organisation or may even change over a period of time. It may be a case that while the organisation is trying to promote a specific product or trying to penetrate a specific market or making the channel partner adhere to a particular sales process, the channel partner may not be willing carry out pertinent activities. Hence it becomes crucial for the organization to understand what partners’ priorities are instead of indiscriminately pushing agendas and using resources to arrive at the desired business results.
Different Needs and Competencies of Partners
Different channel partners have different types of customers to whom they cater to. Further they have different skills and competencies. Also, how successful the partner is depends on their skills and competencies in the ecosystem in which they operate. Many a times both, the channel managers and organisations fail to cater to the specific needs of each channel partner which is why many of the initiatives that are rolled out in the channel don’t really have the desired business impact. Additionally, the bigger partners who carry a bigger chunk of target are more important to the organisation than those partners who don’t carry the full product range. Appropriating the desirable quantum of resources for the high-velocity and high-volume partners versus the low-velocity, low-volume partners makes channel management further challenging.
In the case of a direct sales force structure, there is a clearly defined structure, hierarchy and authority. You have a sales person who directly reports to a sales manager. But in the case of a channel structure, you have a channel partner, who either may be an individual or a company, reporting to a channel manager in an indirect reporting relationship. If the direct sales force misses their targets in two or three quarters, they get fired for poor performance. However if the channel partner does not perform in the short to medium term, it may not be so easy to fire him for many reasons. Eventually, over the longer term if a channel partner doesn’t perform that partner may be replaced, but it doesn’t happen as quickly as it would when you’re managing a direct sales force.
The Forecasting Challenge
In today’s VUCA environment one of the major challenges in channel management is developing accurate forecasts. For businesses which are non-seasonal or typically retail, it’s relatively easy to predict within a few percentage points what the demand is going to be. However if a company or a product is in the growth phase in it’s life cycle or if the overall economy is in distress coming up with a forecasting model becomes a big challenge. This is where understanding various types of channel partners, their own sales velocity and the product mix behind that velocity is critical. Without proper systems and processes in place, it is improbable to come up with accurate forecasts.
While there are other types of challenges that may be very specific to a market segment or a country the above are some common challenges pertaining to channel management. To ensure consistent channel productivity to it’s fullest potential and create a tangible business impact it is imperative for the organisation and the channel manager to overcome these challenges.
At InspireOne, we have tackled such channel sales challenge through detailed understanding and implementing some of the best channel management solutions effective in modern times. In our subsequent articles, we shall discuss on resolving these challenges and how you can effortlessly gain business impact through channel sales.
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