As a channel manager, you know that your indirect sales channel can be an excellent source of revenue. Unfortunately, it can also introduce new elements of chaos into your organization that extend beyond the channel management team.
From engineering and fulfillment all the way to customer satisfaction, how you handle this chaos is critical to the success of your company. So what’s a manager to do?
We can’t determine solutions if we first don’t identify the challenges we’re facing.
The first and probably biggest challenge is visibility—just knowing what’s out there as sales-in-process. Is there a lot of business in the pipeline? Do we know what products are being quoted and to whom? Are we sure customers are being quoted when we expect them to be quoted? Are dealers or distributors reacting to bid dates in a way that keeps them successful and gets business into the factory? Are our sales incentives working?
Growth is another major channel challenge. Demand changes with growth, and that can put a big strain on your resources. Do you have enough people to quickly react to new business? Do you have the right processes in place to effectively manage these growth spikes—processes ranging from reviewing quotes and orders to reacting to pricing and discount requests in a velocity that really meets the needs of the business?
Another channel challenge is order accuracy. Inaccurate orders can quickly translate to the back-end costs. They create pain for the factory in terms of manpower, purchasing and materials. Those are problems that end up cutting into profits or leading to lost revenue.
When it comes to selling solutions, we live in a world of options. These options, including PC-based tools, homegrown development solutions, Excel-based tools and ERP technology, are on the table as potential tools one can explore and tap into, but these tools do have their limitations.
Canned ERP configuration solutions help with order accuracy but can be expensive to license and typically aren’t technology leaders in configuration. PC-based, manual or Excel-based solutions provide no visibility to business-in-process and make gathering meaningful metrics difficult. These “solutions” really aren’t complete if you want to be a metrics-driven business operating with known accurate data.
The Field vs. CPQ
Clearly, businesses are doing something to address these issues, and many are finding answers in configure-price-quote (CPQ) technology. According to Gartner’s sales leaders rate CPQ as their second-highest priority when it comes to CRM applications, right behind lead management.
It’s hard to disagree with them.
CPQ provides complete visibility into the channel. As a manager, it sheds light on where the business is in the sales process. You know who it’s being quoted to, if it’s being quoted on time, what products are being quoted and how you are performing on internal processes to meet customer demands. Add to that the fact you’re getting orders in the door accurately.
Aberdeen provides a very thorough look into how businesses are using CPQ in its 2014 report, “Configure-Price-Quote: Better, Faster Sales Deals Enabled.” They found that the best companies aren’t just making CPQ a priority, they are making it a reality. They found that best-in-class firms were 63% more likely than all others to plan on increasing their CPQ deployments over the next 12-month period—and with good cause. After spending 20 years in the specialty vehicle industry, I have seen CPQ make companies much easier to do business with, and that’s a huge competitive advantage when you are talking about complex products.
That same Aberdeen report also shows that CPQ users demonstrated stronger yields in customer renewal rates, lead conversion rates and in reducing contract and proposal generation errors. That’s taking the benefits of better channel management and extending them quantifiably to the bottom line, and that should be every channel manager’s goal.
Channel managers face unique challenges that, just by the nature of channel sales, are difficult in scope to grasp and overcome. All channel managers (and even channel sales reps) need to explore solutions that will best help them rein in the chaos that can surround front-end processes. If you can do that, you’ll be setting yourself—and your company—up for long-term success.