The days of channel executives cobbling together a stack of off-the-shelf and home-grown solutions to just barely support their staff and partners seem to be coming to an end.
With indirect sales team accounting for the lion’s share of B2B revenue, vendor demand for high-performing, purpose-built channel solutions is being met by a growing number of innovative and process-focused technology providers.
Compared to the number of solutions created to support direct sales programs, the number of channel-dedicated technology firms remains relatively small. Jay McBain, Forrester’s principal analyst – global channels, pegs the number of companies at about 100 providers. That jives with the number of firms listed in the ZS Channel Management Technology Landscape.
But as demand for these solutions continues to grow – and analysts and market watchers predict it will – it’s likely more established firms and start-ups will bring new products to market, said McBain.
Technology behemoths such might also be expected to make bigger plays for a share of the channel solution market, industry watchers suggest. For example, in a Partner-Path Tech Channel Video Cast, Tim Harmon, managing director at Nuvello, suggested that enterprise software vendors such as SAP, Microsoft and Oracle might “stand up and get more inquisitive” about the channel market.
Venture capitalist are already placing bets that demand for channel management and marketing solutions will grow.
Earlier this summer, Emergence Capital, a venture capital firm, invested $15 million in Impartner, recognizing opportunity for both the company and the technology category to grow.
In an email to CMR, Brian Jacob, founder and general partner of Emergence Capital said he “absolutely” expects the overall market for PRM technology to expand. “In many industries, indirect sales account for a majority of revenue, yet even today, a surprising number of channel managers still use spreadsheets and DIY databases to manage their complex web of data.
“In most companies, the direct sales teams have the resources they need, and the indirect team gets ‘what’s left.’ Companies that want to build a reliable indirect channel need PRM, which is specifically designed to automate channel management, optimize both partner and vendor performance, and accelerate revenue.”
Customer relationship management technology, wrote Jacobs in a blog, “doesn’t work for an indirect sales channel.”
Salesforce didn’t describe the reason behind its introduction of its Sales Cloud PRM in quite the same way. Rather, Mike Micucci, GM and SVP, Salesforce Products, commented that Sales Cloud PRM fills the need of many companies. It is “a turnkey app that enables them to extend the world’s best CRM to their partners.”
Indeed, in an article Robert DeSisto, Chief Value Officer at Salesforce wrote for CMR, he acknowledged that a key challenge facing most companies has been making CRM actionable for partners and facilitating a more collaborative go-to-market approach.
Both PRM and CRM companies are recognizing the benefits of enabling better integration of their technologies. For example, in August, Mindmatrix, the supplier of a fully integrated platform offering complete sales and marketing enablement for direct and indirect sales, announced that its partner relationship management (PRM) software now integrates with Zoho CRM.
In a similarly motivated deal, Zift Solutions, a channel marketing automation provider, and Relayware, a partner relationship management (PRM) software provider, merged this summer. The companies stated that the merger positions them to offer current and prospective customers enterprise channel management technology and services via Zift’s Channel as a Service (CHaaS) platform. Relayware clients can integrate new capabilities for digital marketing, content syndication and social media syndication provided by Zift.
Commenting then on the Zift Solutions/Relayware merger, Maria Chien, service director of Channel Marketing Strategies for SiriusDecisions, said there is increased need and opportunity for more robust channel management and marketing and platforms. “The emergence of platforms and applications purposely built for channel marketing and channel sales have offered a vast improvement over forced-built or customized approaches,” said Chien. “As channel organizations look to simplify the way their partners drive success, investing in channel platforms to support the complex challenges of a supplier-partner relationship is becoming a necessity.”
In fact, the SiriusDecisions 2017 Global CMO Study surveyed nearly 300 CMOs and found that 30 percent of respondents plan to invest in partner relationship management over the next two years.
Other market research indicates that more vendors have and will be investing in solutions purpose-built to support channel programs. For example, in its 2016 Market Guide for Partner Relationship Management Applications, Gartner Research Director Ilona Hansen, reported, “By 2018, 20% of B2B organizations will have changed their indirect channel sales approach by focusing on commercially available PRM applications.”
In a LinkedIn exchange with CMR, she said those projections continue to be on-target. “The data is still valid,” she wrote. “We see much more ‘traffic’ around and interest in commercially available PRM solutions. Hence, I believe we can stick to it.”
Future Market Insights was also very optimistic about future investments in channel technology. In its report, Partner Relationship Management Market: Global Industry Analysis and Opportunity Assessment 2016-2026, FMI forecast that sales of channel technology would rise from $4.4 billion in 2015 to $26.8 in 2026.
Driving the almost 18% CAGR for the period, said FMI, is increasing need to automate channel sales processes and ultimately boost partner channel revenue. PRM solutions provide the visibility into partner performance, accelerates the time-to-revenue, improves partner access to sales and support material, increase the close rate and helps partners to sell products more effectively. As a result they, enhance the partner performance that leads to increase the return on investment.
Research is clearly showing that purpose-built channel management technology is benefiting the vendors that invest in it. According to an Aberdeen report, Companies that report using partner channel technology improve overall revenue at a 48% greater rate than non-users. Their profit margins climb almost two-thirds faster than non-adopters.
Almost 60% of best-in-class businesses extend their sales and marketing capabilities with active partner channel programs, reported Aberdeen in its April 2017 report, Partner/Channel Efforts: No Longer Outcasts of Marketing and Sales. Of them, more than two-thirds support their channel programs with partner management technology.
The increased usage of partner management technology is one of the key reasons why the overall performance of all companies with channel programs is out-performing those without, Aberdeen concludes. While channel programs have more “moving parts” to manage, noted the report, modern partner management technology supports operational efficiency that drives enhanced performance.
Companies that use partner management technology report a higher customer retention rate — 73% versus 65% for non-users. The lead acceptance rate for plugged-in businesses was 37% versus 31%
Ongoing innovation “of partner/channel technology is driving distinct value for its adopters,” concluded Aberdeen. “Moreover, as the technology can be applied to upticks in particular metrics, the deployment of partner/channel efforts can make marketing and sales operations more effective collectively.”
In a conversation with CMR, SiriusDecisions’ Maria Chien agreed that process-focused improvements to channel management technology is making it more invaluable to channel managers. “The solutions offered to companies today have the refined capabilities necessary to meet the dynamic nature of channel marketing and sales,” she said. Channel-focused businesses can’t compete as effectively using technology designed with only direct sales organizations in mind.
To succeed, suppliers require solutions to support the complex and dynamic challenges and opportunities inherent in a supplier-partner relationship that enable them to perform the delicate task of motivating and managing “people who don’t work for them.”
As more companies recognize the opportunity to boost their business by providing more support to their channel programs, Chien said they are looking at purpose-build channel management technology that will allow them to scale their business.
Historically, channel programs and investments made to support them tend to be an afterthought for many organizations. Now, ensuring that channel programs are part of strategic planning is an opportunity for tighter alignment across the organization and becoming more common. “Channel managers and marketers are more likely to get a seat at the table as companies plan their go-to-market strategies,” she said. As a result, more organizations are researching the channel technology tools that will help them out-perform the competition, and attract and retain motivated and productive partners.