Which is why it comes as no surprise that businesses try to jerry rig CRM to cope with the intricacies of managing resellers, partners, dealers and brokers -- the indirect sales channel. After all, it’s about sales, maintaining relationships and keeping those partners loyal to extend the customer lifecycle, just like in CRM, right?
All Relationships are Not the Same
Well, not exactly. Some of the underlying ideas are the same, but resellers are customers for different reasons, and in a vendor-reseller relationship, both parties have expectations of the other. Failing to take this more interdependent relationship into the system omits key data, and it means you get only partial visibility into what’s going on with your channel.
Unlike B2C and direct B2B sales situations, relationships in the channel aren’t nearly as touchy-feely. The friendly things you do to consumers are appreciated in a channel relationship, but they don’t prolong your relationship with your customers, who may deal with many other vendors and wear many different hats. What they need is value: they need good products and services that they can sell, of course, but they also need a vendor that is as easy to work with as possible.
This goes both ways. Channel partners want help with marketing, access to training and, when they first become partners, a coherent onboarding process. These are things that are difficult to manage through a CRM application.
At the opposite end of the relationship, the vendor wants its partners to do certain things to be effective resellers of its products. It wants training to be an ongoing process, especially as new products are added (or as the reseller brings new people on board who will be working with the vendor’s products). It wants its resellers to achieve certain levels of certification as a result of that training. It wants to track the reseller’s performance over time in order to understand what resources it should devote to that partner. And it wants the ability to track the effectiveness of its partners’ marketing efforts, especially if it’s devoted marketing development funds (MDF) to those efforts.
Tracking these channel-specific activities is tough sledding for a CRM application. Most of them are designed to deal with direct sales situations, which can certainly be complicated. Adding another layer through indirect sales, however, exponentially complicates the management task and introduces a host of channel-specific requirements. If you want to retrofit your CRM application, there’s no doubt you can find a consultant who will take your money to do it -- but you’re likely to pay top dollar for that work, and it’ll take more money to expand on those changes as your channel efforts grow and change.
Turning Silver into Gold
There’s another key difference between the underlying philosophy of CRM and that of partner relationship management (PRM). In CRM, one of the overriding objectives is to keep your best customers the most loyal. As a result, most businesses devote an inordinate amount of energy to their top customers, a practice seen most clearly in the airlines’ efforts to make their most frequent flyers their most loyal customers.
Managing the channel requires companies to segment their customers, too -- and they’re even more formal about it. You’ll hear companies talk about “gold,” “silver” and “bronze” levels of partners. If partners are really effective, they may be dubbed “platinum” partners. And, since these top partners generate a disproportionate share of the revenues, most businesses treat them like frequent flyers and lavish all the goodies on them -- marketing help, extra leads, free training and so on.
However, that’s a mistake. The platinum and gold-level resellers aren’t killing it because they get goodies. They’re great because they’re great -- and being great gets them dollars from customers. They’d excel at what they do regardless of what the vendor did -- and if the vendor made a misstep, these partners would spot it and demand changes. Essentially, these partners take over part of the relationship management task, because it’s good for them and their bottom lines.
So, are the vendors’ investments in these partners the most effective? The answer is often no. Frequently, efforts made to boost silver-level partners and nudge them into becoming gold-level performers are more effective way to increase revenues for vendors. Gold-level partners are already selling at full capacity; wouldn’t it be smarter to cultivate other partners and influence their behaviors, and thus increase the number of gold-level partners?
This isn’t the linear thinking that underpins good old CRM. It’s much more complex and must take into account the entire network of relationships that extends from the vendor through the channel and down to the end customers.
CRM works great for B2C and B2B when those sales are direct. When you expand to include resellers and dealers, the relationships become more complex and may require a more purpose-built solution.
Title image courtesy of Jeff Kubina (Flickr) via a Creative Commons Attribution-ShareAlike 2.0 License
Editor's Note: Read more of Chris's CRM thoughts in Why Extending CRM is Critical to Meeting Customer Needs