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May 16, 2020

The 6 Traits That Make an Effective Chief Channel Officer

In our industry, there are few roles as opaque as the head of channel. It's fairly simple to define what the role of the VP of sales is, or the role of the chief marketing officer or chief financial officer. But what is the role of the chief channel officer, and what makes the difference between a good one and a great one? What makes one an integral part of the company leadership team and what can make one an outsider to the critical processes of their company? Most importantly, what makes a channel leader effective for the both company's channel management and partner relationships?

A good chief channel officer recognizes the 6 roles below as critical to both defining and achieving their mission; a great chief channel officer builds teams that have the skills to master all 6 roles while balancing internal and external focus.

Chief channel officer as a sales leader

At the top of the list is the sales role that a head of channel takes on in deep partnership with the field sales leadership. Often, there is unproductive conflict between a channel leader and the field - particularly when the field feels, often with good reason, that their autonomy to hit their number is threatened. But a good chief channel officer sees their sales role in two dimensions - first, support and serve the field by helping them achieve their revenue targets AND second, protect the company’s long-term viability and growth prospects in the marketplace.

Often, these two goals are in conflict - the sales leader wants to run a 'promo' incentive to get the partner base to move quicker in bringing in revenue for the quarter by offering partners free product if they hit a specific revenue bar that quarter. As a chief channel officer, your job is to help the field hit their objective. But you know this promo will have the effect of favoring the largest (read: most price-oriented) partners who follow demand at the expense of the partners who create demand. As a partner in sales, your role as head of channel is to offer alternatives that motivate the channel to move deals faster while protecting the fundamental fairness of your program and rewarding your demand creators for new business. So, you offer an alternative - free passes to your upcoming partner event as well as incremental marketing dollars for new business generation for partners who bring deals in. This plays to the cost-focused models that exist at many product-oriented partners while protecting the pricing structure in the market for subsequent quarters.

As a sales leader, your role as a channel leader is to support getting the number in the door while making sure that the overall business stays attractive for both present and future partners.

Chief channel officer as a marketing leader

At the core, being head of channel is about promoting the business opportunity associated with selling your products to a wide variety of solution partners, resellers, hosters, ISVs and other businesses. As a result, being a channel leader has a lot in common with franchise marketing. Like the CMO, you worry about the overall value proposition to customers, the competitive positioning of the product and the opportunity at customers to drive productive change in their business, but your first focus is on selling the business opportunity to the partner.

Learn how to get a better, more measurable return from your partners with our  whitepaper on successful channel management 

Marketing a business proposition requires you to be capable of explaining to the partner base why your product is going to win. This is a different conversation than why your product is valuable to customers - partners intuitively know that a given market will reduce over time to a 2-3 party race with a clear leader. Consequently, they want to know what your path to winning is. As smaller companies, they want some assurance that you aren't going to be acquired or exit early from the market, since their bets have to pay out over years. Case in point: when Altiris hit the market, it was very attractive to solution partners and they invested heavily in building a business around it. When Symantec announced the acquisition of Altiris, the channel pipeline immediately collapsed as most customers already had a volume purchase agreement with Symantec for security software and wanted to wait and see pricing. If that acquisition had been announced with a statement that Symantec intended to integrate the product into their volume purchase program in 18 months (knowing that integrating faster would be difficult), it would have allowed much of that pipeline to close with the partners who created it and time for them to develop a deal registration program to protect the vibrancy of the acquired company’s channel.

In short, like in sales, your role is to understand the value proposition and the business proposition as well as the marketer, but to guide decisions and external announcements to ensure channel integrity and orderly transition of business happens in your franchise you are marketing.

Chief channel officer as an operational leader

Companies’ channel programs are made on great business propositions and broken on bad operations. In our work with partner loyalty research, we've found that operational considerations are rarely the reason that a partner will do business with you, but operational issues introduce a painful 'hassle-tax', with ongoing minor issues compounding into a perception that you are 'hard to do business with'. Once you have been tagged as difficult to predict or do business with, partner enthusiasm for investing more deeply in your product or service will diminish.

As chief channel officer, you need to have a deep grasp on the operational details of how your channel interacts with you. In many ways, one of the most valuable uses of your time is to go spend time with partner staff - be there at a quarter end when they are trying to quote and place orders with your company; spend time with them on incentives claiming or shadow them as they try and get support for a solution from your company. The 'internal out' view of looking at your operations from your perspective will never be as good as living the partner experience, but you should supplant this anecdote model with an annual survey of your partners that goes through their role and what interactions they have and the pain points. This objective view will tell you which anecdotes are true universally and which, while a significant pain point for the partner who mentions it, may not be as applicable.

One critical element in controlling operational impacts to the channel is to run your partner program as a P&L - program fees are your revenue and your costs are services you buy internally, ranging from support to internal use licensing to incentives. By controlling your P&L, you control your investments into the support and customer service systems that partners experience, and you become the customer for operations, raising their sensitivity to partner impacts.

You own the partner experience and operational excellence is a critical part of it. Getting your operational details down and knowing how the experience is evolving is part of leading the company to serve partners, as well as customers, better.

Chief channel officer as a leader in product strategy

As a former chief channel officer, I can tell you a secret - there is little I could do to make a channel successful on the back of poor-performing or under-featured products. Good technology is the ante for the channel business to start and being an active voice on product direction and strategy is a core role for a head of channel. The reason behind this is that you represent a critical voice into the product equation - features that customers may not value may be valued highly by partners, and you represent that partner perspective.

For example, building out API's or management interfaces that allow your product to be scripted or controlled by other processes may not be a critical step for customers, who typically are looking for a user interface or management console, but may be critical for partners who build IP or want to build out integration capabilities that increase your reach or use cases. Partners are often under-surveyed as an input into product designs, so as a channel leader, you can build out partner advisory councils and product feedback forums for your product teams.

Chief channel officer as a risk minimizer

Channel partners can be a skittish lot - their willingness to invest is a simple formula that is a function of greed over fear. If they think they can make money and grow a sustainable business, they will overcome their fear of loss and customer impact. As channel practitioners, we often focus on the greed side of the equation - how partners make money, ROI calculators, incentive programs, promotions, etc. However, focusing on the other side of the equation requires discipline, but pays significant dividends by reducing partners’ fear of risk.

Risk comes in two forms: 1) direct risk, where someone makes a concrete change, like eliminating an incentive that made the business attractive or introducing an OEM partner who has lower pricing than other partners and 2) perceived risk, where someone in your company has said something or done something that makes partners feel like they cannot predict your decision-making. Of these, perceived risk is the hardest to control - partners may de-invest because they don't trust their local sales rep, or the direct teams. Most often, however, the issue comes as a result of uneven application of channel program rules and policies. 'Exception-itis' is often fatal to partners’ investments, especially when the exception isn't in their favor, such as when a company takes a deal developed by the channel direct because the margin was too low or arbitrarily selects accounts to move to direct sales based on 'ripeness' created by the channel.

Your role as a chief channel officer is to manage the actual and perceived risks that partner face, and a critical step in driving this is ensuring you have control over channel policy exceptions.

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Chief channel officer as an advocate for partners

Lastly, and most critically, a great head of channel has the voice of all partners in their ears and works to integrate channel into every critical business process - you are how channel 'shows up and is heard' in every critical conversation. In the annual financial plan, partners are often seen as an expense - by integrating effective partner capacity planning into the financial plan, you demonstrate how partner growth correlates to revenue growth and the financial plan. With this kind of representation, partners move from being seen as an expense to being seen as a revenue engine that scales with investment.

Here are some examples of ways to map into critical business processes:

Business Process Channel Integration into key Business Processes
Sales Forecast Deal Registration creation and close rate, channel run rate modeling, next logical sale analysis, etc.
Marketing Planning Business proposition alignment to customer value proposition; incentives and promotion design; lead distribution and MDF alignment
Finance Planning Capacity planning, reach/frequency/yield analysis, partner contribution margin analysis
Operations Review Quote to cash processes should be channel oriented as a workflow; incentives visibility, order visibility, pricing and licensing support desks
Product Plan Partner advisory councils, competitive telescoping through partners, partner adoption of complementary/dependent products
Corp Strategy Partner as a growth lever, impact of acquisitions on partner investment, Partner as leverage in the company growth story

 

As you can surmise, the scope of the chief channel officer is more akin to being the CEO of partners than a divisional leader. Your domain crosses into many of your peers’ realms and the role requires skills that may be beyond the capability of any one leader. That’s why it’s critical for your leadership team to be composed of individuals with differentiated skills. Actively recruiting staff from other groups and disciplines can help you greatly in managing these different roles and serving both the business and partners effectively.

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