What is Channel Conflict? How Can I Avoid It?
As the Vice President of Sales or Channel Support for an emerging growth company, you have decided to use outside sales partners in addition to your direct sales team to meet your revenue goals. You need to be prepared for conflict between your organization and your channel partners. An example of this potential conflict can occur when multiple channel partners begin selling the same product in a market with different pricing. Inevitably, this will create a situation in which your channel partners have to compete against one another and/or your internal sales team. But, this conflict can and should be avoided.
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. Conflict impacts your customers, your channel partners and your company.
Channel conflict impact on customers:
- customers delay a purchase to ensure they are getting the ‘best deal’
- customers regret a purchase that has already been made once they learn of the ‘better deal’
Channel conflict impact on channel partners:
- a decrease in morale within the channel
- lower employee engagement and mindshare
Channel conflict impact on your company:
- frustration with channel partners
- missed revenue targets
So the question becomes, how can you avoid channel conflict? While you might not be able to completely eliminate it all together, you can manage and reduce it by taking the following proactive steps:
Marketing and communications
Your partners must have clear, consistent, explicable communications coming from one source so that the product/service message is the same. They also need active alerts, reminders and bulletins about new product introductions.
Training and certification
Your channel partners should be assessed and continually trained (via webinars, e-learning activities, etc) so that they are properly aligned with the value proposition and market positioning of your product/service.
Measurement is a vital key to an emerging company’s performance because it will help you make more practical decisions and having good information at your finger tips allows you to make those decisions in a timely manner - "time is money."
Your partners must have access to a partner portal so that you and your partners can effectively collaborate on products and sales strategies and share good data.
To effectively execute these action points without draining your company’s already limited resources – you need a channel partner management system, which is a full service platform that allows you to educate, support and track your partner’s performance so that all parties can be more successful sellers. A channel partner program can reduce the cost of managing and administering the channel and remove most of the causes of the conflicts themselves, improving results for all involved. 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.
One of the most new and exciting channel partner management technologies for reducing channel partner conflicts and increasing your top line is PRM -- partner relationship management. PRM helps sales teams manage their channel sales partner relationships to ensure that the partners have what they need and that the relationship is producing.
For more on how to avoid channel conflicts and PRM, download our whitepaper.