Reduce Channel Conflict Through Best Practices
Posted by John Panaccione on Tue, Sep 20, 2011 @ 03:27 PM
Implementing a best practices strategy is an excellent way for a company to examine and continuously improve itself. Nearly all companies today have some benchmarking or best practices initiatives in place. Looking "outside" the organization, companies get ideas through trade associations, outside consulting companies and general industry standards. But, importantly, the company can also look "internally" for best practices that can be leveraged across the organization.
For manufacturers marketing products through a dealer channel, the adoption of a best practices philosophy "in the channel" is critical to minimize the inherent conflict that can occur between OEM and dealer. This conflict is not just price-based, but includes friction that can arise from a lack of dealer training, poor communication from company to dealer, or merely inefficiently delivering information and applications from too many old legacy sites and systems. These manufacturers must be able to capture and broadcast channel best practices that can help the company work efficiently with its dealers, and to convey best practices ideas among the dealers themselves. Adopting a best practices approach in every area of the channel, in a secure, non-competitive environment, can increase dealer loyalty, reduce channel conflict and improve marketing ROI for both manufacturers and their partners.
The "Best" Channel Best Practice? - A Partner Relationship Management System
Companies have reduced channel conflict by incorporating what is today considered "a must" best practice - a Partner Relationship Management (PRM) system. PRM systems are web-based software solutions that unify all facets of developing and managing a distribution channel into a single partner portal. A PRM system is at its best, however, when it functions well in these four areas of channel management: Marketing/Communications, Training/Certification, Performance Management, and Collaboration.
PRM systems give companies an integrated system to market, sell and service their products more effectively than traditional or out-dated sales applications. It's a best practice that should be integrated into any company today selling through a channel. The channel management software provides better communication, training, and information to the dealer channel and reduces the inherent conflict that can arise between OEM and dealer.
Spreading Best Practices Through Collaboration
Collaboration is proving to be as important as any channel management process in a PRM system today because the dissemination of best practices throughout the channel can reduce conflict and create a more loyal dealer base. Automobile dealers in the 1940's were the first group to compile and share best practices through the development of Dealer 20 Groups. Non-competing dealers got together, formed a group, and benchmarked financial information and began best practice sharing to improve their individual performance. Today many industries have 20 group associations; however, most of the best practices derived from them stay within the group itself. There is usually no system to collect these success stories and share them throughout the channel.
Given today's acceptance of social media, however, factory and dealer employees are "expecting" to be able to collaborate with others in their channel, and do it globally. A PRM system provides a perfect forum for this to take place, where it can be overseen and managed to the benefit of the enterprise and its channel partners. This peer-to-peer communication can help resolve current issues by providing a repository for best practices. Companies who just a few years ago were trying to stifle this kind of communication today are embracing it because they know it produces more informed, more effective, and more brand-loyal channel employees.
Sharing Best Practices Works
Some of our customers have shared with us best practices ideas that were generated through their secure PRM systems. Here are a few:
- A service manager at a truck dealership expressed a concern in a center forum about the way warranty submissions were being handled by the manufacturer. Other dealers concurred and discussions and suggestions followed. The OEM, after participating in these forum discussions, improved its warranty submission process to the benefit of all parties.
- A salesman at a compact equipment dealer has developed his own way to present a product using a tablet computer. The OEM likes this sales enablement idea and considers developing product apps for new product introductions.
- A boat dealer knew they needed to get involved in social media but before setting up accounts on Twitter and Facebook used the collaboration section of the OEM's PRM to reach out to other dealers to unearth some best practices already being used.
Might these ideas have eventually been shared with all dealers? Maybe so, maybe not. But the manufacturer, by encouraging collaboration and providing an easy to navigate partner portal forum for it, reduces conflict in the channel, generates brand loyalty, and improves overall performance and ROI.
Here's one conclusion of a recent study of manufacturers selling through a channel:
- "More than four in 10 of these companies tell us that they haven't earned enough mindshare among their partner networks." (The Extended Sales Enterprise: Channeling Better Results, Peter Ostrow, May 2011)
Mindshare, or perhaps a similar term, brand loyalty, must be earned through communication and collaboration. The more loyalty that exists between the OEM and the dealer, the less conflict there is going to be. Both parties, because of this mutual respect, can discuss and resolve conflicting issues much more easily than companies without such a bond. Companies today who are "reaching out" to their channel partners, and who have set up systems to allow channel best practices to manifest themselves, are much more likely to improve communication, increase dealer loyalty, and reduce channel conflict.