The Channel Life Cycle: How To Build and Scale Your Ecosystem

By Kellie Auman Posted on 1/18/18, 3:05 PM

Along with our developing tools intended to help ecosystems of all sizes continue to grow and achieve their goals, we also spent considerable time consulting with indirect sales organizations. Over the years, we came to recognize certain patterns in how vendor partnerships form, grow, and evolve over time. From this, we identified three key stages that are common during the growth of all ecosystems – along with a fourth “regressive” stage which an ecosystem might slip into should their growth falter.

The Phases Of The Channel Life Cycle

1. Emerging Growth

The Emerging Growth phase is where any ecosystem will begin. Whether they’re newcomers to retail, or switching over to an indirect sales model after years of direct sales.  They’re in roughly the same place.  They have few or no sales partners, and are just beginning to set up the systems necessary to support their operation.

Planning and patience are necessary here. The better a vendor implements a  plan, determines goals, and invests in technology early on, the smoother the ride ahead will be. Those who move too quickly, or try to expand before they have proper infrastructure in place, could critically endanger their chances of succeeding in the market. 

graphs showing improvement over time

2.  Scaling Up

Once an ecosystem has a plan and infrastructure in place, and have began to attract sales partners, they move into the Scaling Up phase. No plan made early on is going to be 100% complete and accurate, and they’ll undoubtedly run into some growing pains. If the channel manager is on the ball, they should recognize signs of instability early on and move to fix them before they turn into bigger problems.

Issues to look for might include:

  • Software systems that aren't integrated
  • Slow and inefficient onboarding/training/certification programs
  • Difficulties providing technical or sales documentation 
  • Inadequate databases for measuring data
  • Communication breakdowns at various levels

3.  Continuous Improvement

When an ecosystem has matured and stabilized, it moves into the “Continuous Improvement” phase – because, ideally, that’s what happens. A good indirect sale ecosystem should begin to almost run itself, with a steady stream of new partner applicants and ground-level sales staff who are enthusiastic about pitching your products\services.

However, that doesn’t mean a channel manager can sit back and relax. The key here is to keep an eye on KPIs and analytics, and continue searching for ways to improve and optimize your operations. Major changes will be rare, given the “inertia” inherent to large business ventures. The focus will be on tweaking the workflow, keeping partners happy, and listening to suggestions for improvement from the customers.

Ideally, a mature ecosystem can remain in this state almost indefinitely, as long as its business planning remains responsive to its chosen market.

4.  Sub-Optimized Conditions

Hopefully, your ecosystem never slips into this phase, but it can happen at any time when an ecosystem loses its momentum and begins to backslide into unprofitability.

Typical signs an ecosystem is sub-optimized include:

  • High amounts of partner “churn” with few remaining steady partners
  • High levels of disparity in partner performance
  • Severe communications breakdowns within the channel organization
  • Lack of consistency in sales\marketing approaches from local partners
  • Consistent complaints from partners

The reasons an ecosystem might become sub-optimized are many, but the best approach is to slow down, rethink your strategy, and look for opportunities for technology investment which can alleviate the problems plaguing your channel.

Grow your ecosystem with LogicBay's solution.  No matter where you are in the channel life cycle, LogicBay’s proven blend of tactics and technology can help drive greater growth within your ecosystem and better engagement from your partners. Contact us today to learn more about our methodology.

 

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