agency profile
As published in BMA's Copy

Channel Marketing: Building the Foundation
By Dave Dimmick

When your advertising agency suggests in all seriousness that you should consider advertising less, it doesn't mean they have gone over the edge. To the contrary, if they follow that statement with recommendations to explore new or expanded marketing efforts in the channel, it may be some of the best advice you have ever received.

The reasons are many. The channel offers an ideal focus for corporate/product branding and messaging; marketing communications in the channel build awareness, enthusiasm and results among all your sales partners; and communications expenditures in the channel are leveraged to return a higher value than in any other marketing budget area.

Leveraging is the most compelling aspect. If your company does not have the extensive advertising budget necessary to contend head-to-head in the end-user market, channel marketing provides a strong, highly competitive alternative.

Achieving success in the channel, however, is not a default choice. Strategy and tactical execution must be guided by one basic principle: Understand the specific needs of each segment of your channel and respond to those needs tactically.

While the scope and complexity of channels vary by product and category, the best way to organize the approach to understanding your channel is to stratify it into inter-related segments. In many high technology markets, this breaks down into three areas: distributor, reseller and end user.

Developing the knowledge base needed to target these segments requires a lot of spade work. It involves gathering all the information you can about each channel player, communicating with them extensively, and eventually, negotiating promotions, events, tie-ins and other tactical elements on a custom basis with every major partner.

Along the way, as your analysis of the channel progresses, you will discover that people in different segments speak their own language and have their own needs and unique regulations that impact what you do tactically. Your knowledge of, and response to these needs, can spell the difference between a winning campaign or disappointing results.

A brief look at the issue of incentives demonstrates how this in-depth channel knowledge should inform all the tactical considerations of your campaign.

For instance, I know of one distributor contest where television sets were to be awarded to sales leaders. It sounded like a great idea. However, it was soon learned that one influential distributor had a policy that capped prize values at a $100 maximum. In response, a custom promotion was developed to appeal to the individual practices of each distributor in the channel. As a result, we kept all the distributors on board as partners for a successful product launch.

Some organizations do not want their key sales people to win prize trips that take them out of the field. And frequently, independent VARs don't have the time for prize travel. It follows that in these cases, the trip to Tahiti is not going to be a sales incentive that enlists partner buy-in.

How you budget for incentives also has some hidden pitfalls. There are some channel partners who expect you to fund the income tax liability incurred with gifts or prizes that are part of incentive programs. Communicating with your sales partners early-on can help prevent being blind-sided by this kind of expectation.

Thorough research that develops understanding of every channel segment will help avoid the spinning of wheels and tilting of windmills. This advance work informs and defines the tactics with the greatest potential for success. And most importantly, it establishes the structural foundation for creative execution, branding and messaging in a campaign that will meet the expectations of your sales partners and your own channel marketing goals.