Manufacturers today predominantly sell their products through a multi-level, indirect channel. This includes physical channels (distributors, resellers, etc.), as well as ecommerce channels, requiring manufacturers to devise an omni-channel sales strategy. Unfortunately, due to the low-quality data that comes back from the channel, these companies have an incomplete view into their sales, end-customers and the marketplace. This incomplete view hinders the formulation of an omni-channel strategy, and creates a “ripple effect” of adverse business consequences across the organization. For example, channel operations, revenue accounting, incentive payments and supply chain planning functions all suffer without access to high-quality channel data.
The problems lie in the processes and technologies currently in place for getting data from the channel. Most of these processes are manual, error-prone and do not scale. Access to sales-out data from channel partners is constrained by the partners’ infrastructure. Furthermore, data entered into channel partner databases frequently contains inaccuracies and duplicate records, making it especially challenging to tie sales-out data to the correct partner. In addition, channel partners often operate under multiple names and have different subsidiary companies, which creates another hurdle in identifying parent-child groupings. Data from online channels is frequently missing key information, making it difficult to track product performance in the fast-paced online marketplace.
By understanding the channel visibility problem and deploying a world-class, cloud-based channel data management (CDM) platform that leverages best practices, manufacturers can access clean channel data that enables smarter channel management. A best-in-class CDM solution provides manufacturers a comprehensive view of their customer base, easily tracks all aspects of partner performance, informs critical business decisions and powers key business processes. This ultimately empowers manufacturers to achieve significant cost savings and uncover new opportunities to create value.
The Four Pillars of the Channel Visibility Problem
There are several causes of the channel visibility problem that must be addressed in order to capture clean, decision-grade channel data.
First, many manufacturers do not have a cost-effective, global data capture infrastructure that supports a multitude of data reporting formats and data validation rules. Without this foundation, it is nearly impossible to achieve high levels of partner compliance in providing data, support richer data requirements — like serial number information with the growing relevance of Internet of Things (IoT) — and ensure the quality of data reported. This can also include web scrape data that helps manufacturers monitor the health of their ecommerce channel.
Second, manufacturers do not have a high-quality partner master database, which causes confusion when trying to accurately match point-of-sale (POS) transactions to partners. By establishing a partner master database that provides layers of high-quality content (from basic to sophisticated), manufacturers simplify the task of accurately identifying the partner and its subsidiaries reported in the channel data. This makes it easier to track and reward partner performance accurately, thereby increasing partner satisfaction.
Third, even when partners comply with reporting standards, problems exist with the quality of the data provided. This is often a result of manual reporting processes or error-prone data collection on the partner side, and the lack of a comprehensive CDM platform that automatically boosts data quality (via configurable data validation and enrichment rules) on the manufacturer side.
Finally, the consumption of data by decision-makers in a timely manner poses another challenge. Partner sales and inventory data can drive key business processes like incentive management, channel marketing, sales execution, supply chain planning, post-sales service and financial risk control. Integrating partner sales and inventory data with customer relationship management (CRM) or partner relationship management (PRM) systems maximizes benefits for channel account managers. However, most manufacturers lack a standard API-driven integration that enables all stakeholders to consume channel data in real time and make business-critical decisions.
Uncovering Areas of Opportunity
With a CDM foundation in place for addressing the channel visibility problem and collecting accurate data, manufacturers can start to apply hard intelligence to previously murky areas of their business. This includes data-driven strategies to optimize sales and inventory, based on comprehensive understanding of their products’ route to customer (RTC), end-customer buying behavior, partner selling patterns and how the company is performing in specific markets.
There are several ways manufacturers can use this data to create immediate value.
- Collect Tier One and Tier Two Partner Data to Identify the End-User: To reliably identify a company’s end customers, it’s essential for data to be collected from both tier one partners (generally categorized as distributors and wholesalers that buy direct from the manufacturer) and tier two partners (resellers that sell direct to end-users and mainly buy from the tier one partners). Manufacturers often receive better data from their tier one partners as a result of their direct transactional relationship. However, many of these manufacturers cannot clearly identify their tier two partners, despite having seen these partner names reported as the “sold-to” party in the distributor’s sell-out data. Getting accurate information on which tier two partners are being sold to is critical for gauging channel performance and areas for improvement.
- Collect Serial Number Information to Identify Route to Customer: To reliably identify how a product reached the end customer and customer buying behavior, it’s essential to collect product serial number information from channel partners. This is important for companies manufacturing smart devices (IoT) to track subscription and activation. Serial number information also helps manufacturers identify post-sales service opportunities.
- Analyze POS Data to Understand Partner Selling Patterns: Most manufacturers know their resellers’ sales volumes and have identified their largest and most strategic partners. The primary metric they track is sales volume, and sometimes whether the largest resellers are growing or declining over time. However, by collecting comprehensive POS data and conducting more granular analysis, manufacturers can uncover partners’ underlying buying behaviors, which is key to successful channel development. Successful companies are able to analyze POS data to track partner loyalty, identify new resellers, identify partners at risk, broaden the product mix, expand partner relationships and segment customer markets.
- Collect Web Scrape Data to Monitor Ecommerce Channel Health: The revenue share of ecommerce channels is growing across product categories, necessitating close monitoring to maximize performance. Traditionally, lack of high-quality data has prevented manufacturers from realizing the full potential of ecommerce. Availability of high-quality web scrape data helps manufacturers monitor and optimize pricing, monitor stock availability across retailers and stores, design customized promotions based on data-driven insights as well as drive product strategy and product mix need to optimize sales.
- Integrate Data Into Existing CRM Systems to Communicate Results to the Field: Once channel data has been gathered and analyzed, the next important step is to make sure field salespeople are using it. This often requires integrating channel data into a CRM system. Salespeople will likely resist logging into a separate business intelligence system, but because they already use a CRM system regularly, integrating channel data into that CRM puts the data right at their fingertips. Having the data readily available keeps salespeople aware of what is going on in their reseller and end-user or distributor accounts. At the end of the day, channel data is the most useful when salespeople can access it in real-time to make on-the-spot decisions.
- Enrich Data to Assess Channel Sales Performance: Once channel data has been collected, cleansed and aggregated, manufacturers can use POS data to assess their performance against their sales plan. To make a meaningful connection between current POS data and the sales plan, however, it’s necessary to enrich the data with sales hierarchy, sales territory and product hierarchy information. This can be difficult – POS data doesn’t contain this information, so partners and products in the POS data must be matched to internal partner and product masters. CDM solutions can add context to POS data that provides important insights on performance to plan and performance as compared with the global technology channel.
- Leverage Channel Data to Eliminate Partner Incentive Overpayments: Most manufacturers overpay partners by 15 percent or more, as they lack timely visibility into accurate channel data. This typically stems from manual, error-prone calculation processes that delay partner payments and increase partner disputes. Sub-optimal incentives management results in dissatisfied partners and low-performing channels. Solving the channel data visibility and consumption problem increases incentives ROI and partner satisfaction.
To increase channel sales by improving relationships with partners and learning about the end-customer, it’s important to understand data blind spots, address problems with global data capture and efficiently manage that data to drive value. A world-class CDM platform enables manufacturers to acquire high-quality channel data from across the world, providing enhanced visibility into the channel. Manufacturers are empowered to make timely, data-driven decisions that optimize overall channel performance. This provides the manufacturing industry an opportunity to achieve cost savings of more than $150 billion in terms of reduced inventory and $200 billion in terms of accurate and timely incentive payments.
Mukund Ramaratnam is Vice President of Strategic Sales at Zyme.