In this paper, we’ll take an in-depth look at how you can optimize your channel offering and enjoy more accuracy in predicting program revenue.

1. Channel
TUNING YOUR
Program
for More Profit
Analytics clarify the channel options with more payback
A Crimson Brief
CONTENTS
Predicting Payoff of Channels Programs 2
1 Evaluation Factors 2
2 Using Analytics 3
3 What Crimson Has Learned 4
Conclusion 5
About Crimson Consulting 5

2. C R I M S O N C O N S U LT I N G G R O U P
Predicting Payo of Channel Programs
How do you measure the success of stimulus spending? It’s an obvious question
for the Government, and it’s one that channel marketing professionals should
also pose when it comes to money spent for demand generation. The ugly truth
is this – money you spend to boost channel sales often disappears into a black
hole. Sadly, your campaign can spend millions of dollars and tie up scarce
resources with no viable return. Unfortunately, instead of boosting sales, it reaps
just a meager blip. If managed e ectively, these programs should bring stories
TUNING CHANNEL of success. Instead, channel partners congregate to heap undesirable blame on
PROGRAMS you for hampering their success with “sub-par” support. To make matters worse,
• Establish Elements your CFO blames you for nuking the budget.
• Weight value of
Before you spend a dime, you need to counter these risks with better modeling
each element
of channel program options. In this paper, we’ll take an in-depth look at how
• Use conjoint or logit
you can optimize your channel o ering and enjoy more accuracy in predicting
1
modeling for analysis
program revenue. The goal is to know, in advance, how a change in discounts,
MDF funds, contracts or other elements will impact competitive challenges and
return on investment.
Evaluation Factors
Identifying and weighting factors for your channel program
A channel program analysis will be tailored to each specific program.
One cannot assume that program elements are interchangeable between
business sectors, companies, or even the individual brands within a single
company. Quite often the lessons learned in one program are confidently
BENEFITS applied to another and fail miserably. Your channel program will blend a
FOR MARKETING unique combination of brand, technology, business plans and other channel
• Lead Profiling program elements.
• Lead Qualification
• Integrating Leads
The evaluation will use the same analytical tools you employ with many
for Channel Partners other areas of marketing. An analytical process such as conjoint or logit
FOR SALES modeling demands precision in defining program categories and prioritizing
• Leads will be
each element. One requirement is to objectively quantify elements in order to
qualified, receptive, avoid emotional judgments in the evaluation. Avoid skewing the analysis with
ready to buy negative reactions by channel partners who tend to voice frustrations on what
cost them the last sale.
The table below provides examples of elements you may identify in a channel
program. The examples show ways to group the elements and weightings for
analytical modeling. Specific elements in your evaluation will vary based on
requirements of the particular channel program.
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3. C R I M S O N C O N S U LT I N G G R O U P
PROGRAM CATEGORIES HIGH-PRIORITY PROGRAM FEATURES LOW-PRIORITY PROGRAM FEATURES
Marketing • Marketing tools • Marketing training
Resources • Marketing planning • Partner conferences
• Marketing Development
Funds (MDFs)
Sales • Field sales engagement/ • Sales tools
Resources lead sharing • Sales planning
• Sales coverage/rules • Sales training
of engagement
• Relationship management
Technical • Technical tools • Technical training
Resources • Technical planning • Professional/technical
• Technical support certi cations
• Technology/product
integration and alignment
• Product certi cation
Infrastructure • Partner portal, directories,
partner networks, partner
relationship management
Rewards and • In-house use products, proof-of-
Incentives concept funding, OEM and resale
discounts/rebates, in uence/
referral fees, non nancial
recognition (non-cash awards)
2
Source: Crimson Consulting Group, IDG
Using Analytics
Statistical program modeling “unpacks” economic
impact of tradeo s
A key challenge in developing a successful channel program is to anticipate
the economic impact of implementing one element versus another. Bear in
mind, there’s never enough money to test every element. Determining the
Evaluation factors such as those described above will become the input
variables for conjoint or logit modeling of your channel program. Use of
a rigorous statistical analysis will provide you with data to make the hard
choices. It will provide evidence to share with channel partners who
challenge your choices.
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4. C R I M S O N C O N S U LT I N G G R O U P
By so doing, it will help build confidence with your CFO as you deal with the
usual internal budget wrangling. Specific benefits of program modeling
include:
C O N J O I N T A N A LY S I S • Identifying innovative program elements
• Determining the value of each program element
Methodologies • Implementing smarter cuts in program costs
• Deploying the best program elements to maximize channel revenue
STIMULUS CONSTRUCTION
• Providing the evidence you need to sell changes to your organization
Two Factor at a Time;
• Strengthening your channel relationships
Full Fractional design;
Fractional Factorial Design; The ability to value nuances is a big benefit of conjoint or logit modeling.
Self Explicated; Adaptive When managing a multi-million dollar channel program budget, the cost
Conjoint Analysis;
of changes is often understood—but the cost of revenue lost is overlooked.
Hierarchical Bayes Estimation
It’s in your best interest to incur a minor cost for the research; this is a drop
DATA COLLECTION in the bucket compared to the high cost of implementing the wrong program
Two Factor at a Time Tradeoff elements. Analytical modeling provides you with a cost-effective way to
Analysis; Full Pro le Concept make better decisions, reduce the price of your channel programs, and
Evaluation; Feature and Level maximize revenue.
Evaluation; Combinatorial
Approaches Modeling also enables economic simulations that may not be obvious to
your team or they may not appear in qualitative surveys. Results can reveal
MODEL TYPE cost saving measures by eliminating elements that are expensive or generate
Compensatory and a miniscule return. You will be able to justify program designs and changes
Non-Compensatory Models; by using the objective analysis shown in the Revenue Forecast and Program
3
Part Worth Function; Vector Costs modeling. Modeling will help you maximize return on the program
Model; Mixed Model; Ideal
investment based on your strategic alternatives. As an added plus, it can
Point Model
also simulate competitive responses.
MEASUREMENT SCALE
Rating Scale; Paired
Comparisons; Constant
Sum; Rank Order
What Crimson Has Learned
ESTIMATION PROCEDURE
Metric and Non-Metric
Regression; MONANOVA; Lessons from channel program modeling by our clients
PREFMAP; LINMAP;
Non-Metric Tradeoff; Crimson Consulting has effectively helped its clients to evaluate channel offers
Multiple Regression; and optimize programs with sophisticated research design, implementation
LOGIT; PROBIT; Hybrid; of program modeling, and analysis of results. Each analysis recommends
TOBIT; Discrete Choice Self which programs elements meet the business objectives, and which ones are
Explicated Additive Models counter productive. While each analysis is different, we have discovered
several themes that are common to many hi-tech marketing campaigns:
SIMULATION ANALYSIS
Maximum Utility; Average
Utility (Bradley-Terry-Luce);
• The decision to purchase based solely on brand may overwhelm
LOGIT; PROBIT all other elements
• Increasing discounts seldom matters to the channel
Source: Scott Smith— • Returns processing time is inordinately important
The Concept of Conjoint Analysis
• Technical support is often cited in qualitative research, but seldom
affects choice
• Contract length can affect choice
• Larger channel players often need custom programs
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5. C R I M S O N C O N S U LT I N G G R O U P
In one case, a major distributor found its industry amidst a shift from one
type of channel program to another. It was imperative to learn if there would
be enough potential sales growth to o set the market hit. In this situation,
bankruptcy was a distinct possibility. Modeling with conjoint and logit analysis
revealed a need to change virtually the entire channel program, and illuminated
which new elements would provide the best returns. After implementing the
new channel program, the client increased its annualized revenue by 60 percent
in the first quarter. As a result, it went on to become one of the top three
distributors in its market.
Conclusion
Your company may be looking to improve the e ectiveness of its channel programs.
In today’s environment, it’s crucial to create correct programs, messages, value
propositions, and go-to-market strategies. By so doing, these will help you to
better engage your channel and partners, and enable them to sell your products.
By using the same analytical modeling tools you apply to other areas of marketing,
you can take control of these challenges and apply them to channel programs.
With modeling you can optimize your channel programs with confidence—
and know that you are deploying the correct elements that will reap the biggest
benefits for lead generation and revenue growth. Crimson Consulting provides
services to help you in this e ort. Crimson Consulting Group’s Channels &
Partner Service is designed to help F100 companies improve channel and
partner program results.
Crimson is an end-to-end marketing consultancy. We specialize in Channels
and Partners; Products and Markets; Interactive; and Lead Management.
Our clients include Adobe, Cisco, eBay, Hitachi, HP, IBM, Intel, Microsoft,
Oracle, SAP, Seagate, Symantec, and Verizon.
Email Dylan Charles, Partner leading
the Channels & Partners Service at Crimson Consulting Group:
dcharles@crimson-consulting.com
engage
or visit our website at
http://www.crimson-consulting.com
H E A D Q U A RT E R S
Crimson Consulting Group, Inc.
4970 El Camino Real
Los Altos, CA 94022
Phone: 650.960.3600
Fax: 650.960.3737
info@crimson-consulting.com
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