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Even in these days of Internet disintermediation, it is unusual for manufacturers to sell directly to end customers. Instead, products are sold through a complex web of distributors, wholesalers, and retailers, with value-added retailers (VARs) and original equipment manufacturers (OEMs) thrown into the mix. To manage all of these sales channels, companies use channel management software. We wrote this buyer’s guide to help buyers untangle this market’s web of solutions and conduct a proper system comparison.
Here’s what we’ll cover:
Channel management is not what you use to program your Tivo. Channel management, also known as partner relationship management, tracks goods and services from the seller to the ultimate consumer. These programs are valuable for automating sales and marketing processes through indirect company channels. One might think of channel management as sales force automation (SFA) for OEM and VAR channels.
Channel management functions include partner recruiting, partner life cycle management, compensation planning, channel marketing, channel sales management, activity tracking, pipeline forecasting, territory management, account management, leads management, product configuration, and order management. Most systems will include partner tools that give visibility from the partners into the system. More advanced systems will also track cooperative advertising dollars and compliance.
In keeping with classic supply chain design, the supplier firm (the upstream partner) and the customer firm (the downstream partner) should have systems that interact. This integration allows orders, inventory, and other information to be passed securely between the partners as necessary.
|This type of buyer...||Should evaluate these systems|
|Manufacturer buyer||SAP, Oracle, GoldMine, Microsoft Dynamics CRM, Salesforce|
|Distributor buyer||SAP, Oracle, GoldMine, SugarCRM|
|Wholesale and retail channel buyer||GoldMine, Salesforce, Microsoft Dynamics CRM, Sage ACT!, InfusionSoft|
|OEM/VAR channel buyer||SugarCRM, Microsoft Dynamics CRM, Salesforce|
There are dangers in this level of integration. Problems can propagate through the system. The Wall Street Journal reported that Amazon recently listed the book The Making of a Fly by Peter Lawrence for $23,698,655.93, plus $3.99 for shipping. Used copies were available for $35.54. The problem? Amazon has two channel partners that provide pricing information and in this case, the computer algorithms used by the two partners were competing against each other and raising the price in a loop.