Transitioning Channel Partners

Our November Tradewinds Council © https://www.jimthomasintl.com/the-tradewinds-councilcopy.html meeting discussion centered on best practices of Channel Partner programs.  It was interesting that two of our members, iconic 100 year old Minnesota companies, cited updated major Channel Partner programs in the past few years.  The changes were centered on achieving higher revenues and an improved customer experience. 

Most channel changes made are reactive and are in response to underperformance.  Successful channel transitions are usually the result of a proactive channel strategy that has been effectively communicated and implemented.  Most manufacturers find out that having fewer, but more devoted distributors is most effective.  Mindshare and time share are the critical elements for partner success.  https://www.jimthomasintl.com/blog/the-key-attribute-for-distributor-recruitment.

Fear of the unknown usually prevents a principal from making a change in channel partners. Therefore, a change management plan must be executed to avoid potential disruption to the customer base.  The risks may also include:

• Damage to the company product brand
• Loss of key customers
• Revenue deterioration
• Local lawsuits

Channel transitions take time and careful planning to minimize disruption.  Objective measurements, clear communications and shared execution can minimize disruption to affected parties.  It is also important to remember to address the fallout to other affected parties e.g. other channel partners as distributors tend to share principals.

There are three critical parts to the transition plan that must be developed:

1. A clear execution plan by prioritizing transitions.Create a roadmap and stakeholders for each task.
2. A focal point for communications and make sure there is internal and external alignment.Important points of contact are field Sales, CEO, Customer Service, Marketing and Legal/Finance functions.
3. A back- up plan in case execution goes off the rails so that end user customer relations are undamaged.

These are tough conversations to have with partners so keep them professional, not personal.  It is best for your local reps to have those conversations as they are  principal internal driver and have the most to gain from the changes.  My most contentious and challenging channel transitions have occurred in Latin America.

At a minimum, as part of your due diligence you’ll want to:

1. Review your business agreement and local distributor laws about terminating channel agreement.
2. Put together a spreadsheet of key end user customer contacts revenues and projects and a proposal on how they should be serviced.Know the gaps in your knowledge e.g. pricing.
3. Analyze and age any receivables due from the channel partner.
4. Review the past 6 months of leads and any new customer projects and know how they will be serviced.
5. Check with your customer service and engineering groups about the status of any current custom product projects in queue.
   
6. Review your IP portfolio of in country patents, trademarks etc. to ensure that what's yours is yours and ownership of these valued assets do not reside with your former partner and are under your control.
   

There are many other nits to work out, e.g. web site contact data, blanket PO’s, but these can be part of your overall change management process.

Do you want to have a free fifteen-minute call on improving channel partner programs?  We have built checklist and contingency plans from prior dealings so you don’t have to build one from a standpoint of inexperience.  Sign up on my web site or contact me directly by phone.

Good Selling!