Thursday, July 18, 2024

B2B Solution of the Week: How to best analyze channel sales performance

To succeed in the channel, B2B firms must examine the shortcomings of common data analysis methods with emphasis on how they’re used to monitor and measure an organization’s channel sales activities and performance. In addition, a data analytics solution must have certain components, especially for trend analysis.

“Channel teams develop incentive programs blindly or using high-level information, such as top line revenue; they don’t know how an incentive program performs or if a partner delivers expected sales,” says Jennifer Hartwell, product marketing manager, Revitas, provider of revenue, channel and contract management solutions. “Trend analysis gives business users this insight, enabling them to monitor incentive performance by program, partner and product and identify causes of trends. They can identify and replicate top programs, modify programs not yielding results and make other decisions to improve.”

Avoiding channel conflict

One of the largest obstacles in analyzing channel performance remains the avoidance of conflict in the channel. Without proper care, these problems will materialize in the least desirable of places—the B2B establishment.

Channel planning, monitoring and measuring is done at the highest level (based on) broad market mapping, white space analysis and whole product influence, leading to partner selection criteria and measurement, notes Rich Blakeman, author of The Hybrid Sales Channel and managing director at MHI Global, an advisory on multi-channel strategies. “Rules of engagement are seldom consistently enforced, leading to significant conflict in the worst venue possible—the court of the customer.”

To solve data conflicts at the customer level, Blakeman advises that channel management should exist as a territory-based model. If the actionable parties stay at a higher level, go-to-market differences between geographies, industries and partners could be missed and planning will become overly broad.

“Planning for performance must be bottom-up, not top-down—even if under a broad strategic framework,” Blakeman says.

Plan what to measure

Before B2B marketers can ever hope to analyze the sales data from their channel partners first they must know what to measure and how to benchmark it. For example, the ultimate statistic remains profitability per channel, and to understand it you must evaluate all the inputs that influence its output, according to Brian Gatti, partner and marketing consultant at Inspire Business Concepts, a marketing strategy and planning company.

“Each input needs to be looked at from three dimensions: the extent to which it impacts the output, the extent to which you can influence it and the extent to which you can measure it effectively,” Gatti says. “Also, understand acceptable margin of error and how much that margin of error actually costs. These are not necessarily in tandem—a higher margin of error may not necessarily mean a higher financial risk if the metric evaluated has a lower impact than another with a high degree of certainty.”

A high coefficient of correlation serves as the secret sauce in sorting this data. If B2B marketers can understand the relationship of their channel sales outputs vs. the inputs, they can function effectively whether or not they have perfect data, according to Gatti. For more on this, he recommends looking up what influential mathematician Karl Pearson has to say about it.

“With this number and the margin of error based on the sample size of clean data, you can start to build a model,” Gatti says. “The more data you collect, the better your analysis may become.”

Partnership management

John Panaccione, president and CEO, LogicBay, vendor of partner relationship management systems
John Panaccione, president and CEO, LogicBay, vendor of partner relationship management systems

While all the channel performance discussion seemingly comes from B2B firms, their partners have something to do with it, too. However, as autonomous business entities, they will not allow B2B to force anything upon them, according to John Panaccione, president and CEO, LogicBay, vendor of partner relationship management systems.

So without a compelling reason, partners will not willingly integrate with a B2B vendor’s CRM system, an outlook consistent with this thinking.

“Independent sales channel partners always have their own systems that they use to run their businesses,” Panaccione says. “Multiple systems supporting multiple vendors quickly becomes a nightmare for the sales partners that need to access them and unmanageable for the vendor that needs to maintain them.”

According to Panaccione, without an integrated IT system on which B2B vendors and channel partners can collaborate, they cannot coordinate activities involving sales bookings, lead volume, market development fund spend and others. Only with integration can B2B vendors and their partners create statistically correlated key performance indicators (KPIs), according to Panaccione.

Not all about the data

For all the proclivities that B2B professionals have toward data, the channel remains a complicated mechanism that does not lend itself readily to analysis. B2B vendors and their channels call it a partnership for a reason. They must have an all-for-one-and-one-for-all attitude that transcends simple figures on a spreadsheet.

“Data analysis isn’t going to capture everything an organization needs to create a successful channel program,” says Elliott Yama, business leader, best practices and knowledge management, Apttus, quote-to-cash solution provider. “Relationships between an org and partners are too varied and circumstantial to put into preordained buckets like sales performance. It’s about your own resources: maximize the channel and make sure they’re best-suited for customers instead of going by the numbers.”

The most appropriate application of data analytics to the channel takes the form of exception management, according to Yama. It’s really about adjusting pricing, incentives, understanding customer relationships and how all these contribute to the best distributor relationships, he explains.

“Data needs to be about perfecting delivery to the channel vs. how the channel itself is going to perform,” Yama says.


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Derek Handova
Derek Handova
Derek Handova is a veteran journalist writing on various B2B vertical beats. He started out as associate editor of Micro Publishing News, a pioneer in coverage of the desktop publishing space and more recently as a freelance writer for Digital Journal, Economy Lead (finance and IR beats) and Intelligent Utility (electrical transmission and distribution beats).