Predicting Payo� of Channel Programs How do you measure the success of stimulus spending? It’s an obvious question for the Government, and it’s one that channel marketing professionals should also pose when it comes to money spent for demand generation. The ugly truth is this – money you spend to boost channel sales often disappears into a black hole. Sadly, your campaign can spend millions of dollars and tie up scarce resources with no viable return. Unfortunately, instead of boosting sales, it reaps just a meager blip. If managed e�ectively, these programs should bring stories of success. Instead, channel partners congregate to heap undesirable blame on you for hampering their success with “sub-par” support. To make matters worse, your CFO blames you for nuking the budget.

Before you spend a dime, you need to counter these risks with better modeling of channel program options. In this paper, we’ll take an in-depth look at how you can optimize your channel o�ering and enjoy more accuracy in predicting program revenue. The goal is to know, in advance, how a change in discounts, MDF funds, contracts or other elements will impact competitive challenges and return on investment.

Evaluation Factors Identifying and weighting factors for your channel program

A channel program analysis will be tailored to each specific program.One cannot assume that program elements are interchangeable between business sectors, companies, or even the individual brands within a single company. Quite often the lessons learned in one program are confidently applied to another and fail miserably. Your channel program will blend a unique combination of brand, technology, business plans and other channel program elements.

The evaluation will use the same analytical tools you employ with many other areas of marketing. An analytical process such as conjoint or logit modeling demands precision in defining program categories and prioritizing each element. One requirement is to objectively quantify elements in order to avoid emotional judgments in the evaluation. Avoid skewing the analysis with negative reactions by channel partners who tend to voice frustrations on what cost them the last sale.

The table below provides examples of elements you may identify in a channel program. The examples show ways to group the elements and weightings for analytical modeling. Specific elements in your evaluation will vary based on requirements of the particular channel program.

TUNING CHANNELPROGRAMS• Establish Elements

• Weight value of each element

• Use conjoint or logit modeling for analysis

BENEFITSFOR MARKETING

• Lead Profiling

• Lead Qualification

• Integrating Leads for Channel Partners

FOR SALES

• Leads will be qualified, receptive, ready to buy

© Crimson Consulting Group. All rights reserved.

C R I M S O N C O N S U L T I N G G R O U P

1 2 3 4 5

1

Using Analytics Statistical program modeling “unpacks” economic impact of tradeo�s

A key challenge in developing a successful channel program is to anticipate the economic impact of implementing one element versus another. Bear in mind, there’s never enough money to test every element. Determining the Evaluation factors such as those described above will become the input variables for conjoint or logit modeling of your channel program. Use of a rigorous statistical analysis will provide you with data to make the hard choices. It will provide evidence to share with channel partners who challenge your choices.



1 2 3 4 5

2

MarketingResources

PROGRAM CATEGORIES HIGH-PRIORITY PROGRAM FEATURES LOW-PRIORITY PROGRAM FEATURES

SalesResources

TechnicalResources

Rewards andIncentives

Infrastructure

• Marketing tools• Marketing planning• Marketing Development Funds (MDFs)

• Field sales engagement/ lead sharing• Sales coverage/rules of engagement• Relationship management

• Technical tools• Technical planning• Technical support• Technology/product integration and alignment• Product certi�cation

• Marketing training• Partner conferences

• Sales tools• Sales planning• Sales training

• Technical training• Professional/technical certi�cations

• Partner portal, directories, partner networks, partner relationship management

• In-house use products, proof-of- concept funding, OEM and resale discounts/rebates, in�uence/ referral fees, non�nancial recognition (non-cash awards)

Source: Crimson Consulting Group, IDG

By so doing, it will help build confidence with your CFO as you deal with the usual internal budget wrangling. Specific benefits of program modeling include:

• Identifying innovative program elements • Determining the value of each program element • Implementing smarter cuts in program costs • Deploying the best program elements to maximize channel revenue • Providing the evidence you need to sell changes to your organization • Strengthening your channel relationships

The ability to value nuances is a big benefit of conjoint or logit modeling. When managing a multi-million dollar channel program budget, the cost of changes is often understood—but the cost of revenue lost is overlooked. It’s in your best interest to incur a minor cost for the research; this is a drop in the bucket compared to the high cost of implementing the wrong program elements. Analytical modeling provides you with a cost-effective way to make better decisions, reduce the price of your channel programs, and maximize revenue.

Modeling also enables economic simulations that may not be obvious to your team or they may not appear in qualitative surveys. Results can reveal cost saving measures by eliminating elements that are expensive or generate a miniscule return. You will be able to justify program designs and changes by using the objective analysis shown in the Revenue Forecast and Program Costs modeling. Modeling will help you maximize return on the program investment based on your strategic alternatives. As an added plus, it can also simulate competitive responses.



1 2 3 4 5

What Crimson Has Learned Lessons from channel program modeling by our clients

Crimson Consulting has effectively helped its clients to evaluate channel offers and optimize programs with sophisticated research design, implementation of program modeling, and analysis of results. Each analysis recommends which programs elements meet the business objectives, and which ones are counter productive. While each analysis is different, we have discovered several themes that are common to many hi-tech marketing campaigns:

• The decision to purchase based solely on brand may overwhelm all other elements • Increasing discounts seldom matters to the channel • Returns processing time is inordinately important • Technical support is often cited in qualitative research, but seldom affects choice • Contract length can affect choice • Larger channel players often need custom programs

3

CONJOINT ANALYSIS

Methodologies

STIMULUS CONSTRUCTIONTwo Factor at a Time; Full Fractional design; Fractional Factorial Design; Self Explicated; Adaptive Conjoint Analysis; Hierarchical Bayes Estimation

DATA COLLECTIONTwo Factor at a Time Tradeoff Analysis; Full Pro�le Concept Evaluation; Feature and Level Evaluation; Combinatorial Approaches

MODEL TYPECompensatory and Non-Compensatory Models; Part Worth Function; Vector Model; Mixed Model; Ideal Point Model

MEASUREMENT SCALERating Scale; Paired Comparisons; Constant Sum; Rank Order

ESTIMATION PROCEDUREMetric and Non-Metric Regression; MONANOVA; PREFMAP; LINMAP; Non-Metric Tradeoff; Multiple Regression; LOGIT; PROBIT; Hybrid; TOBIT; Discrete Choice Self Explicated Additive Models

SIMULATION ANALYSISMaximum Utility; Average Utility (Bradley-Terry-Luce); LOGIT; PROBIT

Source: Scott Smith—The Concept of Conjoint Analysis

engage© Crimson Consulting Group. All rights reserved.


1 2 3 4 5

In one case, a major distributor found its industry amidst a shift from one type of channel program to another. It was imperative to learn if there would be enough potential sales growth to o�set the market hit. In this situation, bankruptcy was a distinct possibility. Modeling with conjoint and logit analysis revealed a need to change virtually the entire channel program, and illuminated which new elements would provide the best returns. After implementing the new channel program, the client increased its annualized revenue by 60 percent in the first quarter. As a result, it went on to become one of the top three distributors in its market.

ConclusionYour company may be looking to improve the e�ectiveness of its channel programs. In today’s environment, it’s crucial to create correct programs, messages, value propositions, and go-to-market strategies. By so doing, these will help you to better engage your channel and partners, and enable them to sell your products.

By using the same analytical modeling tools you apply to other areas of marketing, you can take control of these challenges and apply them to channel programs. With modeling you can optimize your channel programs with confidence—and know that you are deploying the correct elements that will reap the biggest benefits for lead generation and revenue growth. Crimson Consulting provides services to help you in this e�ort. Crimson Consulting Group’s Channels & Partner Service is designed to help F100 companies improve channel and partner program results.

Crimson is an end-to-end marketing consultancy. We specialize in Channels and Partners; Products and Markets; Interactive; and Lead Management. Our clients include Adobe, Cisco, eBay, Hitachi, HP, IBM, Intel, Microsoft, Oracle, SAP, Seagate, Symantec, and Verizon.

Email Dylan Charles, Partner leading the Channels & Partners Service at Crimson Consulting Group:

[email protected] or visit our website at http://www.crimson-consulting.com

HEADQUARTERSCrimson Consulting Group, Inc. 4970 El Camino Real Los Altos, CA 94022 Phone: 650.960.3600 Fax: 650.960.3737 [email protected]

tuning your channel program for more profit

Business