How to cultivate Distribution Channels using Six Sigma strategies

Global suppliers widely use Distribution Channels to reach portions of their customers. Distribution channels help open doors to new business opportunities faster at lower costs and with lower risks. For Manufacturers and OEMs, distribution channel partners assist in marketing and selling their technologies, services, and solutions in markets locally and across the globe. Distribution channel partners can be retailers, distributors, vendors, consultants, value-added resellers (VARs), or systems integrators (SIS). Distribution channel partners can provide a fast and effective way to penetrate new markets and expand existing customer relationships, allowing manufacturers to focus on other strategic imperatives and core competencies. Distribution channel partners bring established local-level networks and are closer to customers. Many companies find that their distribution channel partners significantly influence their business growth. Distribution channel partners are already vital to many industries, including electrical and electronics, communications, safety, food and beverages, and pharmaceuticals.

Managing distribution channel partners through change can prove particularly challenging. The distribution channel is not merely additional sales people within the organization, it consists of entities that need mentoring, managing, and incentivizing differently. Utilizing distribution channel partners is an investment, as programs and strategies should be developed that are responsive to channel partners’ needs and drive them to sell the products and services to the end customer. If suppliers fail to make it easy for their partners to sell their solutions, those partners will look for other products to sell. If a product or service is easy to sell, partners are better positioned to present it to customers as the best option to meet their needs. How do you engage and prepare channel partners for business or change appropriately using Six Sigma DMAIC tools?

DMAIC stands for Define, Measure, Analyze, Improve, Control.

The Define stage will establish the scope and boundaries, the problem we are trying to improve or eliminate, and the goals we want to achieve. In our case, the goal is to improve the distribution channel partners’ performance and alleviate selling the product or service.

The second step is to measure and analyze partners key information like:

·  Number of partners and partner end-users

·  Tiers of Partners (Tier-1, Tier-2, Tier-3 distributor, etc.)

·  Partner locations

·  Types of partners (gold, platinum, silver, etc.)

·  Data for each partner such as number of feet on the street, quotes per quarter, quote conversation rate, sales revenue per quarter

Based on this data, one can create a partner master list to use as input to the partner segmentation process.

It is crucial to segment and target specific partners or sets of partners as “high-touch” or “low touch.” High-touch partners usually comprise larger partners in key locations that generate many orders or dollars per quarter. Low-touch partners are often the smaller, tier-2 resellers that distributors can manage. High-touch partners will receive more live training, customized communications, onsite support, and frequent two-way engagement. Low-touch partners may receive more distributor-led or self-paced training, general communications, and virtual support. Sometimes, converting a tier-2 reseller to a tier-1 is possible based on the geographical location or change in the economy (Government regulations, new investments, etc.), but that needs high engagement from the supplier and the partner's willingness and commitment (financially and technically).

After partner segmentation, several considerations should be considered to help shape the partner engagement strategy and timeline. For example:

·  Executing a “big bang” deployment vs. piloting

·  If piloting, piloting to a select group of partners or all partners in a location

·  Deploying a set of functionalities or process changes vs. deploying all changes at once

·  Blackout periods for fiscal year-end, calendar-end, or shutdowns

When planning the deployments, remember the team is solving for fragmented stakeholders across many companies with business needs and restrictions. The partner data, partner segmentation, deployment approach, and deployment timeline should come together to create the foundation for the Partner Engagement Strategy.

After segmenting and determining which partners to engage with and when the partner engagement strategy can be developed, A successful partner engagement strategy involves five key components: impact assessment, stakeholder management, training, communications, and deployment plan.

Impact Assessment: The comprehensive impact assessment is the key input driving partner engagement. The impact assessment details the technology, process, policy changes, and the degree of change to partners. Process design and technical system documents are key inputs for the impact assessment. However, the impact assessment takes these a step further by defining user and role-level impacts. An essential component of the impact assessment is the partner design review. By reviewing prototypes, the degree of change, and the perceived impact, whether positive, negative, or neutral, the project team can react to the partner's perspective and incorporate feedback early in the lifecycle.

Stakeholder Management: Understanding and tracking partner stakeholders is an ongoing activity. The project should leverage the relationships the channels and sales teams have built and begin working with those contact points. From there, additional key stakeholders at each partner can be identified. A suggested practice is creating a partner contact and activity tracker that lists each partner organization being engaged, the key points of contact, and what activities the points of contact have been engaged in (e.g., design reviews, test events, planning meetings). This tracker essentially becomes the partner information database. A way to maintain engagement and momentum with partner stakeholders throughout the project is to involve partners in key program events such as user experience documentation, early system testing, or user acceptance testing. Key partner stakeholders should be targeted for various events based on their roles when planning partner engagement activities. Most of these partner testing events should be held in person at the project or partner sites to facilitate a positive, engaging, hands-on experience for the partners. Leveraging these events will help ensure that partners feel ownership in influencing the change and give these partners the chance to be “early adopters” within their organization.

Training: The training plan should consider training format (e.g., live vs. virtual), whether to leverage a train-the-trainer model with partner POCs, and collateral to be delivered (e.g., job aids, joint visits). Training plans should be customized for high vs. low-touch partners accordingly. Influential partner stakeholders can help track and encourage participation in training.

Communications: Partner communications are targeted to partners based on the engagement approach identified (high touch vs. low touch) and the degree of change identified in the impact assessment. Key communications include awareness, training enrollment, “get ready” messaging, go-live announcements, and postdeployment support. It’s vital to start communications early to build awareness within the partner organizations.

Deployment Plan: The deployment plan is a daily plan used to execute the deployments to all partners. It includes the key milestones in the partner deployment timeline, impact assessment, stakeholder management plan, training plan, and communications program. Still, it details them out for each partner or set of partners. The deployment plan should be updated when the project scope or schedule changes or key training or communications date shifts.

Working with global partners requires understanding and considering cultural differences that may influence business practices. Some factors that affect the deployment and can vary from country to country include holiday periods, the need for localization/ translation of materials, the importance of on-site meetings, and working hours. The local deployment team members can help navigate these factors.

After deployment, the final stage of partner engagement is the control, which includes support and adoption. The key components of adoption include providing partner support and tracking adoption metrics.

Partner Adoption Support: A partner adoption support plan is developed to document the support for partners during the immediate weeks after going live and for long-term steady-state. A leading practice is to provide onsite support for key high-touch partners for a week or two after going live. This will help promptly address questions and identify blocking issues that need to be resolved by the project team. Maintaining the two-way dialogue between the partners and the deployment team is vital, and it should have been established before the support phase. Furthermore, the support plan should document how partners should provide feedback about adoption inhibitors, knowledge gaps, or product defects after going live.

Partner Adoption Metrics: Partner adoption metrics should be tracked continuously by defined areas (e.g., region, countries, operating group) and by defined time frame (e.g., 2 weeks, 1 month). Establishing a cadence to provide adoption readouts to leadership, stakeholders, internal users, and partner users is crucial. This provides users with awareness of how they are trending and provides leadership with vital information as to which areas require additional support. Along with tracking metrics, there should be established adoption goals in place. These goals should be challenging but achievable. Partner Adoption Metrics Partner adoption metrics should be tracked continuously by defined areas (e.g., region, countries, operating group) and by defined time frame (e.g., 2 weeks, 1 month). Establishing a cadence to provide adoption readouts to leadership, stakeholders, internal users, and partner users is crucial. This provides users with awareness of how they are trending and provides leadership with vital information as to which areas require additional support. Along with tracking metrics, there should be established adoption goals in place; these goals should be challenging but achievable.

Campaigns and incentives could be a great strategy to drive adoption and create friendly competition amongst sales team members. It should be an equal playing field where anyone can win in any round. Before beginning the campaigns and incentives, the parameters for measuring adoption and selecting winners should be defined. Winners should be announced to leadership via newsletters, emails, and readouts at “All Hands” meetings to entice the sales team to increase adoption.

Driving distribution channels must include continuous and close engagement with all partner company stakeholders. It must also include joint and field visits to the end-user to collect accurate information and find root causes of possible or existing problems.

Changing how we interact and manage our distribution channel partners may affect pricing and discount structures, sometimes even resulting in slightly different prices. This is often an extremely scrutinized area for partners since this impacts the bottom line. Extra attention should be focused on training partners to be aware of the possible pricing changes they might experience and the proper protocols to follow when facing those scenarios. Teams should be prepared to provide additional communications and support around pricing and discounting.