In this increasingly specialized world, no company can hope to be all things to all markets. This applies to sales processes as well as technology. To help increase sales to multiple markets (including vertical and/or geographic), many companies now rely heavily on indirect sales channels. This can include any combination of resellers, distributors, sales agents, factory reps, strategic alliance partners, or other types of partnerships.
In a 2002 article, The Yankee Group reported that “in industries such as high technology, consumer packaged goods, and discrete manufacturing, the indirect sales process represents between 60 and 70 percent of revenues.”
In light of this increased reliance on indirect sales channels, many companies have created products that address the challenges posed by these selling models. The primary category of products is called Partner Relationship Management (PRM). Another term for the same class of products is Channel Relationship Management (as in sales channels).
PRM is a business strategy that allows companies to both market to and deal with customer-service needs. Information such as shipping schedules and other sales information is made available via Web-based PRM applications, including calendars and spreadsheets. Channel Relationship Management also shares components of Customer Relationship Management (CRM), which finds companies using both to better address customer and partner issues.
A May 2002 white paper from Siebel Systems defines PRM as “a business strategy designed to automate and streamline business processes between brand owners and their partners (that is, within the partner value network), thereby enabling them to work collaboratively to increase revenues, reduce partner channel costs, and improve customer satisfaction.”
But as with most three-letter acronym product classes, interpretations of what PRM means vary greatly from vendor to vendor, and from analyst firm to analyst firm. Let's take a closer look at analysts' views on PRM and related technologies.
What is PRM trying to address?
In a recent analysis by Patricia Seybold Group, “Supporting the Partner Channel,” CEO Patricia Seybold and senior analyst Ronni Marshak provided a thorough review of what they’ve found to be the major problems facing companies that sell through indirect channels:
- New product launches: “Partners are rarely adequately educated on new products or on new product releases before they’re launched.”
- Education and training: “Although most suppliers do eventually provide good education and training…this is usually provided much later in the product cycle than it should be.”
- Proposal generation: “Customers are increasingly impatient with the time delays…during the proposal and negotiation process.”
- Break/fix: “…customers feel that most problems…could be prevented if the supplier had more visibility into the customer support interaction….”
- Upgrades: "Very few companies have taken the time to really understand customer upgrade scenarios…upgrades tend to be fraught with misunderstandings, finger pointing, and black holes. This leaves the customer with a bad experience and a…reluctance to repeat the process with the same partner/supplier relationship."
Where is the "value add" in selling through partners?
According to the Seybold Group article, Cisco discovered that customers who purchased directly from Cisco had a much higher level of satisfaction than those who purchased through their partners. Many companies that uncovered a statistic like this would either jettison certain partners or determine that they should increase their emphasis on direct selling in the interest of customer satisfaction.
Cisco, however, decided that the solution was to provide PRM tools and services to repair the partner/customer dissatisfaction problems, thereby allowing the partners to focus on what the customers perceived as the value of buying through partners:
- Being the single line of contact for all questions and concerns
- Providing industry-specific insights and experience
These "values" are some of the primary reasons companies like to buy through partners. Cisco, as large as it is, simply cannot afford to staff to the levels that would be required to provide this level of service to all customers in all the markets it serves. Partners are crucial to the continued success of companies like Cisco, and PRM products, tools, and services are increasingly viewed as keys to success in selling through indirect channels.
Note that these observations apply no matter what kind of company you work for—it’s not specific to technology companies. Any company that relies on partners should be evaluating the tools that are available to help make its partners more effective and its customers more satisfied. Here are just a few examples of other types of companies that are evaluating PRM solutions for their sales partners.
Home improvement products
Companies that manufacture home improvement products often rely on home improvement contractors and local distributors to sell their products to consumers. Nonsales professionals such as plumbers and carpenters staff most of these distribution channels. It is crucial that these channel partners receive tools that make it easy for them to configure and price solutions, accurately describe the features and benefits of the products, and close business.
Complex or made-to-order manufacturers
The more complex the product, or the more options that can be added, the more a manufacturer's channel partner could use PRM tools. If ordering a product is a simple "model number, size, and color" sale, most PRM products are probably overkill. But if there are dozens of models, and each model has multiple options, and the resulting configurations can result in expensive, complex solutions, then PRM systems can make a marked difference in the accuracy of configurations and quotes and can result in higher close rates.
How can you tell whether you are a good partner to your partner? The Seybold article offers 13 questions that you can use to evaluate how well your firm is supporting your partners. I recommend that all of my readers who sell through indirect sales channels take a look at the list and read the entire article.