The sales channel’s increasing complexity has changed how the indirect channel looks. It’s larger, it’s in the cloud, and there’s a lot of data coming from many different sources and through many different apps, from point-of-sale through a growing partner network, and back to the OEM. Manufacturers are not getting the full benefit of that data, and that lack of visibility into the channel causes them to make poor decisions that can result in lost opportunities.
Potentially valuable sales data may be held by a variety of different cloud or as-a-service applications used by the manufacturer to gain visibility into, and manage the channel, and channel partners themselves may be using still more as-a-service apps of their own to gather data from customers at the point of sale. Still others rely on anecdotal stories and informal feedback to make multi-million dollar decisions on what to put in the channel, and where.
With hundreds of different partners, each using their own processes, protocols and tools for gathering this data, it’s no wonder the “partner ecosystem” of some enterprises have become more of a partner quagmire.
The above image represents the many different types of channel movement – gold shows product movement and blue shows information about what happens to those products. How these movements take place – and the ability to gain a unified view of the entire ecosystem – is what will make or break a channel-driven sales organization.
The Channel Visibility Problem
A Gartner vendor briefing highlighting Channel Data Management vendor Zyme describes why channel visibility is one of the most vexing problems facing manufacturers today. The lack of visibility carries with it a quantifiable cost in terms of unnecessary inventory carrying charges, stockouts and write-offs due to incomplete information, not to mention inaccurate incentive payments, which can be significant. The problem is aggravated at companies with multi-product and multi-channel businesses, and where products have a shorter lifecycle.
Many enterprises attempt to remedy the visibility problem with home-grown systems and processes, although these often fail due to a lack of internal data management skills, a lack of integration between the data and apps used by the many stakeholders involved, and the need to scale the visibility solution to a global ecosystem that may encompass thousands of partners.
According to Zyme CEO Chandran Sankaran, visibility is enhanced when the manufacturer functions as the center of the partner hub. “There is a treasure trove of information you can get from your partners,” said Sankaran. “And with thousands of partners, you want to try to drive up average performance, but not in an ad hoc, anecdotal way, which goes only in one direction. Partners can’t always share information and metrics with each other – you as the manufacturer have to be at the center of their universe, with complete visibility into the entire channel, deriving information on what works and what doesn’t, and sending out those best practices back into the channel.”
How the Cloud has Complicated the Sales Channel
The overwhelming need for a unified approach to channel management is much more pressing today, due to the complexities brought about by the cloud. Often unstructured, informal, and driven by channel partners who are more concerned about making day-to-day sales than they are about sending data back to headquarters, a channel-driven organization can only work efficiency if channel optimization – and clean, unified data – is part of the story.
The cloud has made the channel quagmire even more confusing, on four primary fronts:
Internet of Things
The most disruptive part of the cloud is the Internet of Things, and the numbers are overwhelming. Ken Edwards, an independent consultant for Zyme, notes that there is expected to be 28 billion things connected to the Internet by 2020. “That means 28 billion devices have to be manufactured, and 85 percent of those are sold in distribution and have to go through a distributor, reseller, and potentially an installer before getting to the end customer,” said Edwards. “That’s 28 billion devices that all have POS data that Zyme has to collect through this journey, starting at the manufacturer, and going through the distributor, the reseller, the installer, and the end customer.”
The size of the sales channel has grown significantly, due in large part to the presence of a new type of born-in-the-cloud partner. “Today there are tens of thousands of these in the U.S. alone,” said Sankaran. “Many of these are smaller companies, on the rise due to the growth of IoT – and manufacturers now have to deal with a much larger network. Without the enhanced visibility and a comprehensive Channel Data Management program, this larger partner ecosystem will be impossible to manage.”
Lack of Integration
An extended channel environment may incorporate hundreds of partners, with dozens of different as-a-service applications in use for gathering, parsing, analyzing, and sending data. “A large partner network may be made up of hundreds of different partners, each with its own mobile app for collecting and transmitting data,” said Renat Zubairov, CEO of integration platform-as-a-service (iPaaS) company elastic.io. “The resulting confusion can result in missed opportunities and decreased visibility. Yet, requiring a centralized build-and-deliver approach in which IT handles all the integration will not be agile enough to meet the rapidly changing data-driven needs of the sales channel. This points to the need for IT to take on more of a brokerage and management role, ensuring that each of the many apps in use are able to work together.”
Point-of-sale is really where it all begins, but getting that POS data from multiple retailers, through an increasingly complex network of partners, is a challenge. Retailers at the very end of the sales chain gather point-of-sale data using anything from anecdotal stories from sales clerks, to sophisticated POS technology that gathers data on purchasing trends and customer metrics.
“We can take a snapshot of the global channel and see that there is approximately $1 trillion in inventory at any given time,” Sankaran said. “The channel has developed so that it is somewhat managed blindly through anecdotal stories. You hear from a salesperson in Italy about a particular product not moving well in the channel, or you hear from your Vietnamese partner that products have stopped selling, but it’s anecdotal. In the last decade, we didn’t provide information back to the manufacturer about how much product is sitting in the channel, how much is sold, and who it’s selling to. This is the vital lifeblood information that never existed before in an organized fashion, and now it’s beginning to exist at an industrial scale. That’s what CDM is. It’s taking a $4 trillion industry from blind to sight – putting instrumentation in the channel, and allowing the business to take this data, and make decisions that alter the course of their business.”
Bobby Marhamat, Chief Revenue Officer at Revel Systems, said, “that point of sale information is relevant to many stakeholders, not just the retailer – it may filter up through a distributor and back to the manufacturer and have potentially dozens of touchpoints, and will influence marketing decisions at every stage. That POS data often informs those decisions made at the OEM level that influence what will be manufactured, what will be put into the sales channel and where – and ultimately provides valuable feedback as to customer preferences and patterns. Stakeholders higher up in the chain must not discount the importance of the tech and processes being used to collect information at the customer level, and those processes need to be easy enough so as to accommodate the rapid, complete, and accurate collection of all relevant data.”
A Single View of the Channel
In an environment where everyone is working towards the same goal, from the OEM to the reseller and retailer, with each one contributing towards the visibility of the entire ecosystem through a variety of data gathering tactics and tools and as-a-service apps, the sum is greater than its component parts.
In this increasingly complex environment, there may be dozens of as-a-service apps that touch the sales channel in some capacity, either at the OEM level or at the partner or retailer level, each one being deployed and run by a line manager.
Besides integrating the disparate data that comes from multiple sources, integrating the apps that collect that data – and employing Channel Data Management (CDM) as a framework for unifying a fractured sales channel and deriving value from focused data – will make the ecosystem even stronger.