In our industry, there are few roles as opaque as the head of channel. It's fairly simple to define the VP of sales role, chief marketing officer, or chief financial officer.
But the role of chief channel officer (CCO) is more ambiguous. What's the difference between a good CCO and a great one? What makes a CCO an integral part of the company leadership team or creates the conditions for outsider status? Most importantly, what makes a channel leader effective for the both company's channel management and partner relationships?
A good chief channel officer recognizes the following six roles are critical to both defining and achieving the channel mission. A great CCO builds teams with the skills to master all six roles while balancing internal and external focuses. A CCO provides leadership in the following areas:
The chief channel officer as a sales leader
The first crucial role as a CCO is a sales role in partnership with the field sales leadership. Often, there is unproductive conflict between a channel leader and the field — particularly when the field feels, often with good reason, that their autonomy to hit their number is threatened.
But a good chief channel officer sees their sales role in two dimensions:
1. Support and serve the field by helping them achieve their revenue targets AND
2. Protect the company’s long-term viability and growth prospects in the marketplace
Often, these two goals are in conflict — for instance the sales leader wants to run a promotional incentive to encourage the partner base to increase sales for the quarter by offering partners free product if they hit a specific revenue goal.
As a CCO, your job is to help the field hit their objective. But you know this promotion will favor the largest and most price-oriented partners who follow demand at the expense of the partners who create demand. As a partner in sales, your role as head of channel is to offer alternatives that motivate the channel to move deals faster while protecting the fundamental fairness of your program and rewarding your demand creators for new business. So, you offer an alternative — free passes to your upcoming partner event as well as incremental marketing dollars for new business generated. This plays to the cost-focused models that exist at many product-oriented partners while protecting the pricing structure in the market for subsequent quarters.
As a sales leader, your role as a channel leader is to support revenue growth while ensuring the overall business stays attractive for both present and future partners.
The chief channel officer as a marketing leader
At its core, the CCO role is about promoting the business opportunity with selling your products to a wide variety of solution partners, resellers, ISVs and others. As a result, being a channel leader has a lot in common with franchise marketing. Like the CMO, you worry about the overall value proposition to customers, the competitive positioning of the product and the opportunity for customers to drive productive change in their business.
But, your first focus is on selling the business opportunity to the partner.
Marketing a business proposition requires you to be capable of explaining to the partner base why your product has the potential to win in the market. This is a different conversation than why your product is valuable to customers — partners understand that a given market will reduce over time to a 2-3 race with a clear leader.
As smaller companies, partners want some assurance that you aren't going to be acquired or exit early from the market, since their investment has to pay out over years.
For example: when Altiris hit the market, it was very attractive to solution partners and many companies invested heavily in partnerships. When Symantec announced the acquisition of Altiris, the channel pipeline immediately collapsed as most customers already had a volume purchase agreement with Symantec for security software. If Symantec had announced the acquisition with a statement that the company intended to integrate the product into its volume purchase program in 18 months (knowing that integrating faster would be difficult), it would have allowed much of that pipeline to close with the partners who created it. A statement would also give time for the company to develop a deal registration program to protect the vibrancy of the acquired company’s channel.
Like in sales, your role as a CCO is to understand the value proposition and the business proposition as well as the marketer, but to guide decisions and external announcements to ensure channel integrity and orderly transition of business occurs.
The chief channel officer as an operations leader
Companies’ channel programs are made on great business propositions and broken with bad operations. In our work with partner loyalty research, we've found that operational considerations are rarely the reason that a partner will start doing business with a company, but operational issues can torpedo a relationship. Ongoing minor issues can compound into the perception that your company is hard to do business with.
Once you have been tagged as difficult — to predict or do business with — partner enthusiasm for you will diminish.
As the CCO, you need to have a deep grasp on the operational details of how partners interact with your organization. A useful exercise is spending time with partner staff to understand what's working and what isn't. Ideas include:
- At quarter end when partners are placing orders with your company
- During incentives claiming
- When a partner needs customer support for a solution
- Conduct an annual survey of your partners that asks about the partner's role, the interactions they've had with your company and any pain points. A survey will allow you to determine which issues are more prevalent among multiple partners.
One critical element in controlling operational impacts to the channel is to run your partner program as a P&L statement — program fees are your revenue and your costs are services you buy internally, ranging from support to internal use licensing to incentives. By controlling your P&L, you control your investments into the support and customer service systems that partners experience, and you become the customer for operations, raising their sensitivity to partner impacts.
You own the partner experience and operational excellence is a critical part of it. Getting your operational details down and knowing how the experience is evolving is part of leading the company to serve partners, as well as customers, better.
The chief channel officer as a leader in product strategy
As channel experts, we've seen it's tough to make a channel successful with poor-performing or under-featured products. Because good technology is the catalyst for channel programs, as a CCO it's crucial to have an active voice on product direction and strategy. As a CCO, you represent a critical voice into the product equation — features that customers may not value may be valued highly by partners, and you represent the partner perspective within the leadership team.
For example, building out APIs or management interfaces that allow your product to be scripted or controlled by other processes may not be a critical step for customers, who typically are looking for a user interface or management console, but may be critical for partners who build IP or want to build out integration capabilities that increase your reach or use cases.
Partners are often under-surveyed when developing product designs, so as a channel leader, you can build out partner advisory councils and product feedback forums for your product teams.
The chief channel officer as a risk minimizer
Channel partners can be skittish and can over focus on potential loss — unless there is a great opportunity to grow and sustain business over the long term. Many channel leaders focus on the potential upside for partners (ROI calculators, incentive programs, promotions) without considering the loss aversion. A focus on risk mitigation can help you gain more quality partners.
Risk takes two main forms:
1. Direct risk. For example in the channel space, a technology company makes a concrete change, like eliminating an incentive that made the business attractive or introducing an OEM partner who has lower pricing than other partners
2. Perceived risk. An example could be a leader with a company makes a statement that appears erratic to partners and can cause panic.
Perceived risk is the hardest to control — partners may de-invest because they don't trust their local sales rep or the direct teams. Most often, however, the issue comes as a result of uneven application of channel program rules and policies. Exceptions can be detrimental to partner investments, especially when the exception isn't in a particular partner's favor. For instance, a company takes a deal direct that was developed by the channel.
Your role as a CCO is to manage the actual and perceived risks that partner face and control over channel policy exceptions is crucial for maintaining peace.
The chief channel officer as a partner advocate
Lastly, and most critically, a great head of channel has the voice of all partners and works to integrate channel into every critical business process. The CCO is the representative of channel partners in every essential conversation.
During financial planning, leadership often sees partners as an expense — by integrating effective partner capacity planning into the financial plan, you demonstrate how partner growth correlates to revenue growth that scales with further investment.
Here are some examples of ways to connect with critical business processes:
|Business process||Channel Integration into key business processes|
|Sales forecasting||Deal registration creation and close rate, channel run rate modeling, next logical sale analysis|
|Marketing planning||Business proposition alignment to customer value proposition; incentives and promotion design; lead distribution and MDF alignment|
|Financial planning||Capacity planning, reach/frequency/yield analysis, partner contribution margin analysis|
|Operations review||Quote to cash processes should be channel oriented as a workflow; incentives visibility, order visibility, pricing and licensing support desks|
|Product plan||Partner advisory councils, competitive telescoping through partners, partner adoption of complementary/dependent products|
|Corporate strategy||Partner as a growth lever, impact of acquisitions on partner investment, partner as leverage in the company growth story|
The scope of the CCO is more akin to being the CEO of partners than a divisional leader. The CCO's domain crosses into many areas of the business and the role requires skills that may be beyond the capability of any one leader. That’s why it’s critical for a company's leadership team to be composed of individuals with differentiated skills. Actively recruiting staff from other groups and disciplines can help you greatly in managing these different roles and serving both the business and partners effectively.