So what is channel development?  Channel development is about creating partnerships upline and downline that bring greater influence, strength and sales to those participating.  Channel marketing is creating propositions to potential partners, marketing to them, and then motivating/incentivizing them.  Channel Marketing Partners are typically vendors, manufacturers, distributors, resellers and retailers, working in cooperation.  They start with a deep understanding of their specific target market. They identify the customer’s business issues and develop an approach to addressing those issues, cooperatively building programs from the ground up. They then assemble the necessary pieces and package them into a solution. The goal is to get customers to buy into the total vision of the Channel Partners.

Designing a system that can manage the complex relationships in channels is no small feat.   In 2004,  CRM Today said that most PRM (partner relationship management) tools out there were like “putting wings on a bus.”  They tried to re-purpose the CRM and it simply did not work.   They share why:

“CRM is fundamentally designed to manage direct sales engagements between a sales representative and a buyer. This mode revolves around collecting and sharing data throughout the customer lifecycle.  PRM, on the other hand, is designed to manage a complex ecosystem comprising legally independent partner organizations. This one-to-many model revolves around aligning business processes across the entire value chain, from vendor, to partner, to customer.”

Today, there are a number of PRM options that are much more sophisticated and designed from the ground up to work for channel managers.  And somewhere along the way, PRM became TPM (trade promotion management) and the term “trade funds” became used for co-op marketing.

A 2008 study by the Consumer Goods Technology group finds that “While only 52 percent of companies in 2008 evaluated trade spending, more and more companies are attempting to implement trade promotion management (TPM) applications to improve TPM analysis in 2009.”  The reason that more companies haven’t taken on a TPM application is due to their complexity and cost.

Oh, and did I mention cost?  NewsFactor suggests that “Because trade promotion spending can reach 20% or more of sales, a very minimal percentage of improvement [from a TPM] can justify an entire project without reaching too far.”

They then go on to detail ways to lower the cost:  Roll it out slowly and to those who can benefit most, first. Get sales buy-in and usage early in the process. Use an SaaS.  Build real metrics. Eliminate your desire to build unique processes into the system.  Talk with other companies (i.e. software vendor user groups and references) who have implemented a TPM and learn from them. Don’t wait until it’s too late and you make mistakes.

“Many growing CP manufacturers can quickly get inundated with unexpected deductions or make poor decisions about promotions due to a lack of centralized visibility. Many growing manufacturers start facing challenges associated with managing trade promotions when they reach a dozen or more SKUs, or when they start negotiating with their first national retailer, or when they surpass the $10M mark in sales.”

Here are several offerings by TPM vendors to get you started:

• Purplewire’s ChannelSUITE
• Adesso Solutions’  TradeAdvantage™
  
• The Synetics Group’s TPM
• The MEI TPM
• The SAP TPM
  

The Channel Champion recently attended a TPMA conference (trade promotion marketing association) and found that the key metrics to evaluating channel effectiveness are:

• Budget to spend
• Net incremental sales
• ROI – consumption or shipment based
• ROI – variable and fixed margin
• Incremental spend

Add to that list those NewsFactor recommended:

• Promotion effectiveness
• Lift improvements
• Reductions in stock-outs.

As an aside, the company that I work with, C.A. Walker, can support marketing’s efforts in channel development in the following ways:

• Profile partners to identify new contract opportunities
• Measure partner “brand fit,” awareness, satisfaction, usage
• Test partner communications, incentives and promotions

I look forward to learning more about channel marketing developments and sharing them with you here.

trade promotion management (TPM)

So how are marketers doing?  I reviewed this morning a press release that caught my interest from Alterian Partners in London Customer Engagement Agencies shaking up the Marketing Industry and, from there, their research study 2008 Annual Industry Survey.  A few interesting key findings from their study:

• Marketers are using multiple applications to run a campaign from creation to execution.
  • 51% are using 3-6 applications
  • 25% are using 7+ applications
  • 13% are using 9 or more applications

• Less than half (47%) of respondents use analytics, and a quarter of those surveyed cite analyzing results as the hardest part of any campaign.

• The application most used when running a campaign was Campaign Management (32%) followed by Email Marketing (23%) and Web Content Management (10%).

Alterian’s solution to this problem, according to their materials, is “analytically-led software” to facilitate the entire online and offline customer engagement process:

“The Customer Engagement Cycle is driven by Customer Engagement Personas. These Personas are the captured data and intelligence of an individual customer which constitute the quantifiable, current and future value of that customer, increasing in accuracy and completeness over time through patterns of engagement, predicted future revenues and loyalty.

A typical engagement cycle would include the delivery of a message to a known or unknown recipient, the capture of the recipient’s reaction and analysis of the collected insights into the individual. Treatments and recommendations would then be applied to the next communication based on the learning that has taken place, and any content that is served up to the individual will be optimized and delivered based on metrics such as channel, frequency, probability or location. If the customer is returning to the website, for example, the website itself will be customized to the individual in terms of the messages delivered – based on their location, time of day and the engagement life cycle stage they are at.”

How their product translates into marketing ROI:

• Integration of the people, processes and applications of marketing.  Start with managing a single channel or use the entire suite of integrated applications.
• For a website, it will analyze number of visits to the site, keywords used to arrive at the site, navigation preferences, etc., look for site trends at an aggregate level and then tie aggregate web activity back to the individual for a custom website view.
• Greater management influence based on fuller customer insights, predictability of future campaigns success, and shared risk/reward models.
• CRM analytics that interact with customer-facing systems: call centers, campaign management systems, and sales force automation tools.
• Topical analysis automatically delivered to management.
• Easily handles ad-hoc analyst questions, reducing data preparation costs and need to increase headcount in order to increase client services.
• Intimate knowledge about the sequence of events to create marketing communication programs.

Although I have not demoed Alterian’s products, they seem worth looking into further as a way to strengthen a company’s relationship marketing program.