Managing Sales channel relationships -Step 4. Agreement on Mutual Business Goals

After Business drivers, Business Initiatives and Critical success factors are defined, for Channel owner and the Partner to reach the agreement on Mutual Business Goals it’s always good to establish a process that can be tracked and measured. Some steps of this Process of creating Mutual Business Goals could be:?

1.????Review current Channel owner’s initiatives that could potentially drive Partner value, use Value Map and 4 Quadrant system,

2.????Identify specific Capabilities/Solutions of Channel owner that might meet partner critical success factors to reach Business initiatives,

3.????List specific measures of Value in critical fields, e.g.: ?Finance, Operations, Markets, and Competition,

4.????Build a Capabilities/Solutions map,

5.????Define specific high Value Capabilities/Solutions for both sides.

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Value Proposition?

As a reminder, Business Value in channel relationship should be a crossing point between Business profile of the Partner and Capabilities of Channel owner.

Additional to that, the Value proposition must:?

-??????Create a specific or measurable business outcome,

-??????Set the Partner’s expectations,

-??????Assures Channel owner’s ability to deliver,

-??????Be specific to the Channel Partner.

?Value Proposition Statement

Value proposition statement is a way to express a Value proposition in a mutually acceptable way. Channel owner should create a set of ?Value proposition templates which could be reused with all its Partners adapted to Partner Business specifics.

Here are few examples of Value proposition template that could be used:

1.????By changing from …(Current approach)………. to ……(Proposed solution)…… you will impact ……(Business driver)…… which means ……(Specific Measurable outcome)….. . We can track the Value delivered by ……(Value tracking system)… and report back to You ……(Frequency)… . ?

2.????We can help You address ………(Business driver)……… by providing ………(Proposed solution)……..which will result in …………(Specific Measurable outcome)……..we will ensure Your gross margin by …(Shared Risk/Reward strategy)…. .

Exercise: Create Value proposition statements by using following examples.?

Business drivers:?

-??????Customers looking to simplify operations

-??????Cost reduction without compromising customer satisfaction

-??????Focus company resources on creating Valuable and Innovative offering (Maintain competitive advantage? Maintain added value price premium?)

?Value created for Customer:

-??????Better customer service (Customer satisfaction?)

-??????Less downtime

-??????Great product functionality or design

-??????Simplified support process

?Value created for Partner:

-??????Reduce inventory

-??????Reduce cost of Services

-??????Reduce cost of shipping

-??????Increase customer satisfaction and eliminate churn

Channel Owner Capabilities

Even though Business Value in channel relationship should be a crossing point between Business profile of the Partner and Capabilities of Channel owner, it is good to know that Partner is a transactional side in Channel relationship and therefore a Value for the Partner is ultimately a Value for its customer.

Another thing to have in mind is that this is circular relationship and not a one-way process. For instance, new set of Values identified for Customer and Partner will create new initiatives and Channel owner will work on extending its capabilities to meet them. Simple example to that is e.g. Customer advisory board and Channel owner product development in accordance with their recommendations.

So which Channel owner Capabilities could bring to Partner/Customer Value??

1.????Products range, quality / performance (What passes through the Channel),

2.????Programs and Processes (How value is delivered) e.g., Solid and stable Channel program,

3.????People and organization structure supporting Channel initiatives,

4.????Alliances and synergy effects,

5.????Opportunities for Value Added Services revenue/margin,

6.????Discount structure, Bid support, Competitive positioning.

From Value Map to Capabilities/Solution Map

So, how do we come to concrete Solutions and reach Mutual Business Goals by identifying Initiatives that are bringing the most Value/Benefits to both sides in the process.

Important thing to have in mind is that this process should be iterative and adapt with development of relationship to re-evaluate Initiatives or introduce new ones with the course of relationship improvement or deterioration.

Capabilities/Solution Map

?So now when Initiatives are evaluated and put into the perspective of Value Map, existing Capabilities of the Channel owner should be evaluated, and a Capabilities Map should be created that will give insight into which Channel owner capabilities would bring the highest Value to the joint initiatives. Capabilities are sometimes called Solutions. E.g., those can be transferred to Product features, Channel program features, Services organization capabilities etc.

The purpose of building the Capabilities/Solution map is to explore where both Partner in business relationship can differentiate on the market by building a Value in their joint relationship. It’s always good to start with the “Power position” which are Critical success factors that would give clear advantage on the market. After that as the next step highest Value initiatives should be investigated and mapped to capabilities and after that the process should go to the lower value ones. ?

Things to have in mind when creating Capabilities/Solution map:?

1.????If Critical Success Factors are hard to be defined, initiatives should be split into potential actions and Critical success factors should be analyzed based on this new more fragmented level,

2.????Always start with Highest Value Business initiatives and drive the process to the lower Value ones,

3.????When deciding on “Power position” one must think about following: Which items on this list provide differentiation from a competitor? Can differentiation items be introduced? What needs to be done to further differentiate?

Product Revenue estimation?

When Capabilities/Solution map is created it can be used to estimate the Revenue by product line. To do that one must have in mind that:?

1.????Each opportunity addresses a business driver (key business problem-business issue), a driver may have one or more opportunities still not defined and an opportunity may have more than one lines of business, therefore estimation calculation should be flexible and open,

2.????If there is a concrete Financial Value already identified as a part of Value map, then the Solution map and Value map should be used in combination to complete the revenue plan for each product lines.

Value Creation Checklist

So now when Capabilities/Solution Map is created its worth checking if one went through the whole Value creation process and if no critical steps were missed. The bellow process can be a basis to develop checklist for Value creation process for specific Business environment.

Definition of Specific Mutual Business Objective

A mutual Business Goal is reached by identifying Mutual business Objectives, which in everyday Business life transfer into Business drivers and Initiatives. Mutual Business goals should therefore by picked from the Capabilities/Solution map having in mind the highest Value Business Initiatives for Both sides in the process. Those initiatives should be mapped with Channel owner capabilities and a list of those initiatives should then by translated in to Mutual business Goals.

Summary

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To summarize the Agreement on Mutual Business Goals (MBGs) part, here are some Key points to be taken into consideration for a Channel owner:?

1.????The Basis of a meaningful Mutual Business Objective is a meaningful Value Proposition,

2.????When creating Value proposition all Channel owner’s Valuable Capabilities must be considered,

3.????A Value proposition needs to be Specific and Measurable,

4.????Mutually Highest payoff solutions should be focused on first,

5.????Value creation process checklist is always a good tool to check if something is missed.

Next article will be on the step 5. of the channel relationship flow: “Development of “Channel Partner Business Plan”.?