Software Business

How a Partner Relationship Management system can enhance this

This article is really about channel conflict: reseller channel vs. the "others".

The story goes like this: software vendors want to expand their reach and be in control of the whole distribution network, so they go to market offline, online, through multi-channel operations. Of course, resellers want to have control in their own back yard and don't like anything spoiling that, whether it comes in the form of information requests from the vendor or any type of competition. As a result, the "other" part of the network is not much liked by resellers.

Take, for instance, a vendor's online store... wow! ...it's all over the place and accessible 24x7 and resellers' dear loyal customers can by-pass them in a jiffy and get what they want online. This is one point of view. Let's try and look at things from a win-win perspective and see what vendors can do to protect their resellers and avoid channel conflict, what resellers can do to protect themselves & how a PRM (Partner Relationship Management) can further enhance this protection.

Some issues (in no particular order)

1. Product is very consumer-oriented and doesn't require additional services/ support as an add-on to the sale; little need then for an offline selling force.

Most software programs are released in English and small developers especially do not have the resources or the time to translate the product in many languages, if at all. On the other hand, resellers can do this and offer a product to the market in the customers' native language, which is always a plus.

The vendor's online store can indicate that translated versions of the product can be purchased directly from reseller X. This can be taken even further, and the reseller can help with website localization as well. Bear in mind though that writing copy for a website or even just translating is not easy and you need to have some copywriting skills to do it right. Using native speakers is a good start though.

Another thing that a reseller can do is offer product support. This has two main advantages:

1. is preferred by end-users (better communication, cheaper phone bills) and
2. increases reseller's chances to make an upgrade or a renewal sale through better relationships.

2. Vendor uses an affiliate network. Affiliates are 'stealing' online customers from resellers.

There shouldn't really be a conflict between affiliates and resellers, as they address the market differently, although they do share some selling techniques. For instance, resellers are better at selling custom solutions/big volume or complex packages that also include add-on services and sell B2B & B2C. Affiliates sell (or rather refer) a product "as is" and they address mostly the consumer market. Resellers have a physical office, answer phone calls from customers and take care of invoicing & billing, while affiliates only do online sales and marketing and rely exclusively on the vendor's eCommerce system etc.

The relationship between a vendor and a reseller is contract based, usually long term. Reseller has targets to reach and puts a great deal of financial effort into the sales process.

For more on this subject, check out the Affiliate Marketing article section on the Avangate website.

3. Vendor has more than one reseller in a certain territory. Resellers are 'fighting' for the same clients.

This is a tricky one, as it is head-on competition. As vendor, you can still protect your resellers by giving them products that they are best at selling or that they have more experience with. You can incentivize them differently (with different discounts per product) and you can also split the territory even further, according to their location, or give them leads based on past performance and achieved targets, or, simply on a random basis.

And as pointed above, you have after all long-term relationships with your resellers. Surely, there are some that you work better with or bring you more revenue. According to your own objectives, you can incentivize your preferred resellers further with different commission/ margin schemes.

4. Vendor trying to expand faster than the resellers can cope with.

So you are a top-notch vendor that wants to expand further, faster, be ahead of competition. But resellers make you stay behind and miss out on opportunities. Well, help them to help you.

Organize joint marketing activities, do more product training with them, put at their disposal promotional materials / demo versions. These are actions you should undertake anyway, but even more so if you want to expand or enter new markets, or when competition is tough on a mature market.

Another thing you could do is use a PRM system, or put in a different way, you must use some sort of PRM if you want to expand successfully. Advantages of using such a system in this particular case are huge, even if we look only at the logistical side of things: a PRM would make your activities more efficient, smoothen the vendor-reseller workflow, centralize information and ensure you work with standardized documents. Add to this 24x7 order processing and product license delivery and you're a winner (and there's much more to a PRM than this).

5. Vendor has online store. End-customers are buying directly from vendor's website.

"So you're selling products online and you want to sell them offline through me as well. Why? You're practically stealing my customers." says the reseller...

Here's what the vendor should answer:

• "Yes, Mr Reseller, but I can give you leads from the website - I cannot possibly deal with everyone that visits the site. All leads from your country will be yours. You'll find them in your account, on our web-based PRM system. Like this, you will also have full access to end-customer information and sales records.
  Also, think of the customer. How about we try together to optimize customer experience through web self-service for the latest product information/ trial downloads " etc.
or
• "You are right, Mr Reseller, that is why when a visitor from your country - new or current customer - tries to buy online, s/he will be redirected to you through our PRM-driven Partner locator. So you don't even need to worry about missed opportunities from license renewals or requests for product upgrades."
or
• "I see your point, Mr. Reseller, but how about you use our online shop as a 'Reversed' Channel - redirect small customers that do not need value-added services (technical support/ sophisticated solution/ integration/ combination with other software products etc) to the website - you won't have a bad name for serving them late or not serving them at all. This would go under 'greater channel efficiency and effectiveness'."

6. Vendor and reseller are 'On the other side of the world' from each other. Communication between them is more difficult.

24x7 online order placing, fulfillment and tracking are crucial elements for a dynamic distribution channel and improve radically the time to market. As vendor, this is what you should aim for. Also, you must avoid communication problems between you and your resellers. Easier said than done?

Actually, help is at hand, especially for vendors and resellers with cross-continental locations: use a PRM system and make distances and time differences disappear. A PRM allows orders to be processed immediately after being placed and, provided payment terms are met, resellers can get immediate access to license keys/ registration codes which they can pass on to their clients and complete the order. You can be located on the other side of the world, your partners do not have to wait not even for one day to get the software delivered to their clients.

7. Vendor requires information on end-customers. Resellers are reluctant to supply this info.

This is a conflict between vendors and resellers in any industry. The software industry however offers one advantage: software licensing. Use it wisely to get end-user information right from the source, before product activation, whether this happens as a result of an online sale or a brick and mortar retail purchase.

The advantages of capturing end-customer details are unquestionable: it allows full control over sold licenses and it also permits the vendor and the resellers to better manage license renewals, product upgrades as well as promotional and cross-selling campaigns.

As resellers are sometimes 'skipped' out of the end-user data capturing process, they lose part of their control over the market and may become reluctant to work with that particular vendor. Vendors should turn this problem into an advantage: give resellers tools and access to client databases afferent to their own sales not only to strengthen their relationships but also to offer resellers increased business opportunities, more so than when resellers built and managed their own client databases. Help them sell more and they will want to stay.

Some conclusions

Vendors
At the end of the day, channel strategy depends on the customer buying process. The important thing is to align this strategy, together with related sales and marketing activity, with a proven understanding of 'what works' - if vendor's online store or an affiliate network is part of this, then you need to find solutions to best protect resellers "around" it. And, of course, you shouldn't forget that resellers are your reliable, long-term partners.

Resellers
Resellers, on your part, you can also adopt a wide range of strategies and tactics to strengthen your position within the channel. Make sure you get and learn all you can from the vendor in order to sell more of his products, more efficiently, to the point that you become preferred reseller. Eventually, you will have vendors "fight" for the privilege of selling through you. Then you'll have to worry about avoiding channel conflict the other up the stream.

• More Software Sales through Network Cross Selling
• Phishing Attempt PayPal / Avangate BV
• Avangate in 2009 - Happy New Year!

• Internet Marketing (41)
• Software Business (66)


• Affiliate Marketing (23)
• Avangate Updates (1)


• Website Usability (20)