ROI: The Path to Job Security for the Channel Marketer

February 19, 2008 at 12:15 am Leave a comment

By Jay Nelson

More and more, the “R” word is being tossed around. Yes, folks, it might be time for another recession. And, guess what time it is for the channel marketing professional? Yes, it’s time to find a new career!

Why is it that the channel marketing department is often the first one gutted once times get tough and technology vendors start to trim back? Certainly, marketing is never a safe department, but channel professionals should have their own benevolent society.

I think the reason is primarily the economics. I have *never* worked with a vendor in over 10 years of consulting that has meaningful metrics showing the impact channel marketing has on sales and the overall business. Not one. Not the large vendors, not the small ones.

I know that if I was the leading channel marketing executive at a technology vendor, the first thing I would do is create a defensible economics model. It may be self-serving, but you have to know how efficiently channel marketing drives sales revenue and at what cost. It also creates a roadmap to measure improvements and ROI on new investments over time.

Of course, this is a massive undertaking requiring a greater understanding of how channel partners use marketing investments to drive sales. It requires an understanding of each different type of partner and how they go to market. It requires an in-depth conversation, neigh, “negotiation” with your accounting department.

What should it show? Well, it should show that it costs less to drive sales through indirect channels; not a lot, but less. It should show that the indirect channels are touching markets and customers that are difficult or expensive to cover directly. It should show that if you do not properly invest in channel marketing (demand creation, promotions, events, and support/teaming) the channels ARE expensive to sustain.

How do you do it? Start with the last calendar year. Try a bottoms-up approach.

Did you measure the effect of any channel marketing programs? How? Can you trace any outcomes of the programs back to actual sales? Start with one lead. Where did it originate? Did it close? Who closed it? How long did it take to close? What other company resources were used to close it?

Maybe top-down works better for your organization. How about sales out reports from distribution? Were there any spikes or dips in the sales numbers? Were they adjacent to any promotions or other new channels initiatives? Which ones?

Talk to accounting. How about cost allocation? How is it done? Is it fair? Does it capture relevant costs? Does it fail to capture relevant costs?

Look back two years. Are the same numbers available? Can you start to find common effects?

Are you measuring all current activities? What are the metrics? Are they accurate? Do they make sense? Are there better ones? How could better metrics be captured? Can they be compared to past data?

Soon, a model will develop. It may not be perfect, but it needs to be defensible with senior executives and it need to provide a measuring tool for internal evaluation of channel marketing on-going.

So, sure, get that eBay side business up and running on the side. Learn to teach Yoga. Look into selling Jaguars. But, for goodness sakes, figure out the economics of your channel marketing and how much your group is adding to the bottom line. You will thank me! Really.


Entry filed under: Industry Perspective.

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