Fundamental Elements of an Effective Service Channel Strategy
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:
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:
Effective service channel strategies depend upon minimizing channel conflict among partners and between partners and the vendor. Best practices for minimizing channel conflict include:
Offer Equitable Channel Compensation
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:
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:
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:
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:
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:
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.
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.