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Locomotive Solutions

Business Well Done™

On the challenges faced by leaders of established businesses.

Channel Changers

A man and his daughter cleared the field, built the bleachers, sowed the grass, put up lights, raked the dirt... and one night a long line of cars began arriving.  And they're still coming, in real life, to visit the Field Of Dreams in Dyersville, Iowa.

But they're not coming just because someone built it.  They're coming because the place has a channel - a movie that reaches millions of potential visitors with a touching and inspiring message (offset only a little by Kevin Costner's slightly awkward pitching motion).  And over the years, the movie channel delivered enough momentum so that the word of mouth channel is now strong.

Product, innovation, differentiation, messaging - they all get a lot of press.  But the biggest challenge for many businesses is not having something worth buying, or even knowing how to talk about it. For many, their biggest hurdle is channel.  It's figuring out how we're going to get in front of the right people at the right time to fill a pipeline with enough good prospects to reach our goals for growth or stability or even just survival.

When we're trying to develop new business - whether a new product line, a new market, or an entirely new model - we usually look first for existing channels.  Salespeople are expensive, and it's hard work to develop relationships that lead to transactions, so naturally we hope to find some channel that gives us pre-established access to the right kind of customers.  But this works only when certain conditions are present.

The channel must have access to the right people.  This seems obvious - a B2C company wouldn't try to advertise to dads in Redbook, even though the dad may find himself near a copy of Redbook while he eats his breakfast cereal - but in B2B and B2G markets it's easy to try to convince ourselves that an available channel is close enough.  The trouble is, established channels know what they know and do what they do.  So they may call on industrial plants, but if their relationships are with the maintenance department and we need to get to the plant manager, we're probably in for disappointment.  Or maybe they call on Code Enforcement at municipalities, but we need to get to the Water Department.  Sure, they're often just down the hall.  Our channel partners won't even have to park in a different lot to make that call, but there's an invisible moat that many channel partners won't cross.

The same is true when it comes to product.  If they're calling on the right people, but aren't comfortable with our kind of product, we won't see much progress.  It could be the difference between a one-time system sale and an ongoing subscription service, or an OEM component sale versus an integrated system.  The channel partner has to be comfortable with the nature of the product - its scope, the technology, the sales process, the pricing method.

The final condition is productivity fit.  The existing channel is already selling something to customers.  Assuming they're the right customers for us, and the product suits the channel, the channel still needs to experience adequate financial and psychological benefits to add our product line to the mix.  It has to be worth their time.  This is a deceptively-easy equation for us.  We think, "Hey, every sale of our product is money they don't have today.  Who wouldn't want to make a few extra bucks?"  But the equation for channel partners is much more complex.

They're thinking about how much they'll have to learn, how strongly they believe in the value proposition of the new product, how much more transactional work they will undertake due to the new product, and how the new product will affect their customer relationships.  And for the savvy channel partner, opportunity cost is always present.  Sure, they could spend a little more time with a customer to talk about our product.  But they could also spend a little more time cultivating relationships to sell existing products, or they could spend that time promoting other new products (a good channel is always in demand).

Here's the most dangerous part.  These conditions are often not necessary for us to sign channel partners.  Channels are opportunistic.  So when we offer an opportunity for them to collect demand, they think, "Why not?"  But that's where our roads diverge.  We sign an agreement and see visions of dancing sugar plums, in the form of channel partners out in the marketplace, beating the bushes on our behalf.  The channel partners just see another thing they can say Yes to if someone asks for it.

Does Amazon want access to my e-book? Yes.  Will Amazon generate demand for it?  Probably not, unless the title is Why Amazon Is Right For Your Product.  The risk is that we'll sign a bunch of channel partners who are happy to put up our logo/brand, but not invest any effort.  It can take precious months - if not years - for our hope to drain away, until we finally realize that we need to try again elsewhere.

These conditions are necessary for action.  Get them right and you might even see results way out in Dyersville.

Paul SchwadaComment