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7
Fundamental Elements of an Effective Service Channel Strategy
By
Tom Sweeny, ServiceXRG
Technology
vendors have long looked to channels to broaden their access
to markets expand their geographic reach and enhance their
skills and resources. While many vendors form channel relationships
to sell products, more than two-thirds (69.7%) of technology
vendors surveyed by ServiceXRG use channels to sell, deliver
and renew support and maintenance services.
Vendors that have active channel programs rely heavily on their partners for critical service sales and delivery functions. The vast majority (84.4%) of partners that sell service contracts are involved with the delivery of these services and nearly three quarters (73.4%) are responsible for renewing contracts. The success or failure of channel partners to sell and deliver services can have a profound effect on a vendor’s ability to achieve strategic service objectives and meet financial performance goals.
Therefore, technology vendors that look to partners to perform critical service functions must have a well-defined and executed channel strategy. A successful channel strategy for services requires several elements: a clear vision for the role that partners will play, an established program and criteria for attracting and retaining the right partners, the commitment and capabilities to support partner success, and the means to monitor the effectiveness of the channel program and the performance of individual partners. ServiceXRG has identified seven fundamental characteristics for developing and sustaining successful service channel partner relationships:
1. Develop a Formal Service Certification Program
2. Establish Clear Sales and Account Ownership Guidelines
3. Offer Equitable Channel Compensation
4. Insure Effective Skills and Knowledge Transfer
5. Enable Partners with Tools and Resources
6. Maintain Open Communications Channel Partners
7. Establish Success Criteria and Performance Monitoring Capabilities
Develop a Formal Service Certification Program
A service partner certification program provides the means to identify and evaluate the ability of prospective partners to sell and/or deliver services. A well-developed certification process includes the means to award certification, monitor ongoing compliance with standards, and revoke certification as necessary. Best practices for a formal service certification program include:
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A definition of the characteristics and capabilities channel service partners must possess to be certified.
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Established processes and procedures used to identify, evaluate, and monitor partner compliance with certification criteria.
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Dedicated staff with appropriate skills to develop and manage a formal service partner certification program.
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Mechanism to communicate certification standards and processes to prospective partners.
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Processes and resources to audit partner performance and compliance with certification standards to assure that certification criteria are continually met.
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Documented guidelines for revocation of certification should partner fail to sustain certification standards (e.g., initial notification, timeframe to correct non-compliance, probation period, implications and actions if/when certification is revoked, defined process for re-certification).
Establish Clear Sales and Account Ownership
Guidelines
Effective service channel strategies depend upon minimizing channel conflict among partners and between partners and the vendor. Best practices for minimizing channel conflict include:
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Clear guidelines for sales territories and account ownership to minimize channel conflict among partners and with vendor sales team.
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Clearly defined distinctions between partner and vendor-branded services. Definitions for when it is appropriate for the end customer to purchase one program type vs. another.
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Defined processes, timeline and tools to be used to secure the on-time renewal of the customer.
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Established contingency plan to assure transfer of account management in the event that a current partner fails to fulfill its partner obligations.
As a practice, compensation strategies shouldn’t be determined simply by the product sold, customer segment served, or even the level of effort the partner expends. Rather, the partner compensation strategy must be devised as a means to encourage proper behavior, partner loyalty, and other desired results. An effective service-channel compensation strategy must include the following key provisions:
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Partner certification program to assess partners’ capabilities to sell and deliver services.
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Ongoing performance monitoring to track sales performance, delivery quality, and customer satisfaction.
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Clear milestones for incenting desired behaviors such as up-selling and renewing service programs.
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Overall monitoring to assure that partner contributions are quantifiable in terms of the return on investment (compensation + training + other benefits provided).
Insure Effective
Skills and Knowledge Transfer
Ongoing partner success depends upon the vendor’s ability to maintain a high level of expertise through ongoing training and knowledge transfer. Elements of an effective partner training program include:
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Employing a variety of training methods to encourage ongoing education of channel partners including on-site, on-line, and possible internship/mentoring programs.
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Leveraging curriculum developed for sales and support organizations to train partners.
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Coupling individual training with competency testing and award certification based on skill level achieved.
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Providing partners with access to the support knowledgebase and self-guided learning resources.
Enable Partners with Tools and Resources
Successful sales and service delivery depends to a great extent on up-to-date and accurate information and proven tools and processes. Some partners may have an adequate infrastructure, while others may be severely lacking. The vendor must be prepared to assure that partners have access to the data (entitlement, registration, customer, etc.) and systems necessary to facilitate efficient sales, entitlement and delivery of services. Partner enablement must include:
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Extending partner access to registration, customer-tracking and contract-management systems.
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Encouraging partners to use diagnostic tools and resources to support end customers.
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Standardizing partners on common systems to provide full visibility into partner sales and renewal performance.
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Processes to examine how top-performing partners use tools and resources and the means to share with other partners as best practices.
Maintain Open Communications Channel Partners
One of the most common partner criticisms of vendors is that they feel that they have little to no voice in the relationship. Partners are on the front lines with customers and often have valuable input to share about the quality of products, services, processes, and procedures. A successful partner strategy demands open, ongoing communication between vendors and partners. The following means of communication are integral to the channel strategy:
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Periodically surveying partners to assess their satisfaction with the current level of support provided and to solicit recommendations for enhanced support.
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Actively soliciting feedback from partners about their observations and interactions with customers to identify opportunities to improve products, services and other key elements of the overall customer experience.
Establish Success Criteria and Performance Monitoring Capabilities
A channel strategy must support the overall business strategy; thus, measuring the impact of channel partner performance is essential. Ongoing performance monitoring can also help to facilitate an open and honest relationship between the vendor and the partner and act as an early warning system to identify potential issues, or simply provide insight into opportunities for continuous program enhancement. Elements required to successfully monitor partner program performance include:
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Establishing clear expectations with partners about the level of performance expected.
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Definition of key measurable metrics and the methods by which performance will be monitored.
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Process to present regular feedback about performance such as a monthly or quarterly report card.
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Process to review the report card with the partner and identify appropriate corrective actions to address performance issues.
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Formal process to evaluate root cause of partner underperformance.
For More Information
ServiceXRG conducted a study of 106 partners of information technology vendors and the views and opinions of 42 technology vendors that currently use partners to sell, deliver and renew support and maintenance services. This report explores current channel practices and performance to present strategies for improving the use and effectiveness of channel partners for the sale, renewal and delivery of support and maintenance services. A free summary of this report is available at www.servicexrg.com/publications.
About ServiceXRG
ServiceXRG specializes in helping companies develop and execute service and support strategies that strengthen customer relationships and optimize financial performance from service operations. ServiceXRG’s research provides a balanced perspective of the IT services industry with views from users, service professionals and suppliers. ServiceXRG combines years of real-world service industry expertise with a unique ability to collect, analyze and present high-quality industry data. ServiceXRG provides management consulting, custom benchmarking, competitive analysis and customer satisfaction assessment, and publishes a series of reports on industry trends and best practices. For more information, visit www.servicexrg.com.
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