What Is Channel Management?

What is channel management?

Channel management involves several aspects of the marketing and sales process: 

• Marketing and sales strategies to reach and satisfy prospective and existing customers
• Techniques for supporting distribution partners 
• Vendor management 

Most companies use customer relationship management (CRM) software to monitor each channel’s performance and provide appropriate support, such as printed sales materials, advertising, content and partner compensation. The best CRM software solutions often include robust channel management capabilities.

How to create a good channel management strategy

When establishing a channel management strategy, you must do the following: 

• Set clear goals for each channel. 
• Define policies and procedures to manage your channels.
• Identify the right channels for your products.
• Develop sales and marketing programs for each channel to meet your target customers’ needs. 
• As a final step, Caitlyn Wells, founder of Upwell Strategies, suggested that businesses “establish a regular cadence for reviewing and analyzing channel performance for each channel.” 

When you’re identifying a channel management solution to complement your business, consider the big picture. Internal and external communication are key to finding a channel management strategy that helps you meet your company’s goals. 

“A good strategy needs clear communication,” said Raviraj Hegde, senior vice president of growth and sales at Donorbox. “The [channel] partners should know about updates, incentives and goals. If not, it’s very easy to lose focus or cause confusion.”

Why is channel management important?

Here are some of the many reasons channel management matters.

Multichannel sales success is much more likely.

Channel management is essential for organizing all of your sales paths. “Channel management is important because it serves as the backbone of a successful multichannel sales strategy,” Wells said. “By effectively coordinating different sales channels, businesses can maximize their market reach and revenue potential.”

Your brand becomes more consistent.

Channel management ensures brand consistency across all sales paths, including online, social media and physical locations. “Channel management is essential because it helps you keep everything consistent across different customer touchpoints,” said Layla Sawyer, email and editorial coordinator at Yabby. “For branding, this is particularly important, and [it] helps make sure your brand strategy remains cohesive.”

You fortify your relationships with key business partners.

Hegde noted that each channel has its own relevant parties and that channel management gets all of these parties on the same page to improve outcomes for everyone. “Channel management is about helping businesses work better with partners, resellers or distributors,” Hegde said. “It’s all about alignment to ensure that each party in the sales channel is gunning for increased sales and customer satisfaction.” [Read related: What Does a Great Customer Experience Look Like Now?]

What to consider when managing sales channels

Consider these key aspects of sales channel management:

• Channel architecture: Channel architecture is a channel’s basic framework. It encompasses how the producer provides the product to the customer.
• Channel strategy: Channel strategy involves your sales and distribution channels. It includes how you plan to expand your market and specific action plans to improve your e-commerce channel.
• Channel design: How will you implement new channels? For example, you may create an affiliate marketing program to encourage specific types of people and companies to help sell and promote your product.
• Sales management: Sales management involves how you’ll manage sales and other partners. This may include the incentives you’ll offer to drive sales, the sales quotas you’ll set and the promotional support you’ll provide for channel partners. [Learn more with top blogs on sales management.]
  
• Channel conflict: How will you handle conflict between channels? For example, if you use an e-commerce solution that undercuts your affiliates, you must resolve this conflict. If a direct sales rep competes with a distributor for the same business, you must either change the distributor’s pricing or separate their territories. When you design channels, pay careful attention to potential conflicts.
• Relationship management: Relationship management is about establishing and managing relationships with vendors, affiliates and other strategic partners over time. You must support existing channel partners to help them succeed. However, if they consistently underperform even with ample support, you may need to replace them.
• Brand experience: It’s crucial to develop a consistent customer experience across all channels, including online, social media and physical locations. For example, if your brand voice emphasizes making customers feel loved and appreciated, this sentiment should be present wherever your customers go. For instance, beauty brands pamper customers, which is easy to do in person. However, the brand’s online experience must also go above and beyond to provide the same personal touch by offering exclusive deals, using positive words and more.
• Pricing: Channel-based strategies must inform pricing. For example, you must set wholesale pricing for products sold through that channel and retail pricing for direct-to-consumer channels. Or, you may want to consider that wholesale might be over and instead focus solely on direct-to-consumer sales.
• Sales and operations planning: You must match your goods or services to general demand. For example, if your product is more popular during certain times of the year (for example, the holiday season), you should increase production in the spring or summer and add or remove new channels or salespeople according to market fluctuations. For instance, a real estate broker’s office may hire more agents during a real estate boom and then lay them off when interest rates rise and depress demand.
• Revenue management: How will you optimize revenue for your available inventory? For example, a retailer may sell swimsuits at full price until near the end of summer. Then, the retailer would likely discount the inventory to make more room for fall and winter products.
• Distribution: Distribution is about how you’ll deliver on your obligations to channel partners and customers. Distribution aspects could include the proper management of logistics such as shipping, product exchanges and returns.

How to choose channel management software

Follow these steps as you search for a channel management software solution. 

1. Identify your channel management needs. 

Ask yourself the following questions to identify your channel management needs: 

• How many channels do you use? The number of channels you use will dictate your channel management needs. If you have only two channels, you don’t need to pay for a system that supports 10.
• Do you exclusively use external channels? If you only use outside channels, you must support these partners with promotional materials.
• Do you have a mix of internal and external channels? You may sell directly through a sales team and also sell online via an e-commerce platform. If so, your in-house sales team will need tools for lead generation, brand awareness, successful lead conversion and follow-up. You must also provide compensation management and quota tracking.
• Do you sell directly to customers? If you “own” the customers (that is, you sell directly to them and have their contact information and purchase history), you must be able to follow up with them and interface with fulfillment centers and customer service.
• Do you sell to wholesalers? If you sell exclusively to wholesalers, they’ll handle everything. You won’t need to provide additional support materials.

2. Decide if you need an industry-specific solution. 

Consider your industry when you’re choosing channel management software. Some industries, like healthcare, require special handling of customer data. For example, HIPAA laws require healthcare organizations to protect patients’ information. Other industries, such as hospitality, have unique considerations. If you are strictly a business-to-business seller, you may want a solution that focuses on direct client communication instead of mass communication methods.

3. Evaluate the technology your channel partners will use.

Technology updates, communication and enterprise alignment are vital to success. View your company as a whole, and understand how each part interacts with the others, from the smallest purchase at the local office supply store to complex technology systems. Never lose sight of the most crucial aspect of your company: your customers.

4. Compile a list of must-have features. 

Based on the previous steps, create a list of must-have features for your channel management solution. You should also list your “like-to-have” features. “Define your growth projections for the next three to five years,” Wells said. “Ensure your must-have list includes specific scalability requirements, like user limits, data storage capabilities and channel expansion capacity.”

5. Look for CRM solutions that meet your criteria. 

Research and evaluate CRM solutions and channel management software with the right features and functionality for your business. Ask for product demonstrations, pricing lists and a breakdown of features. 

It’s also important to consider each CRM system’s integrations with your existing software. When you’re selecting channel management software, potential solutions must be “closely connected with tools already existing in your arsenal,” Hegde said.

6. Ensure you understand the pricing structure. 

CRM systems are priced in various ways. Some have higher upfront costs, while others have high monthly per-user costs. Others offer various pricing tiers. Calculate the total cost for each of your top four contenders at your current usage. Consider reasonable growth over the next several years to ensure the solution scales with your business. Eliminate any systems outside your budget. 

7. Take advantage of free trials from CRM vendors. 

Some CRM system vendors provide a free trial that allows you to test the software’s features and functionality. By trying out a CRM solution, you can see if it meets your needs and is easy to use. Set a reminder to cancel if the software doesn’t fulfill your requirements.

8. Choose a channel management solution.

Once you’ve found a channel management solution, sign up and take advantage of the company’s implementation assistance. Access the company’s training materials to properly train your channel manager, marketing manager and sales manager.

All kinds of channels, all kinds of results

Effective channel management ensures that you get the most out of every avenue through which you make sales. It’s somewhat easier said than done, but this guide can help you create a stronger brand and more revenue.

Max Freedman and Marisa Sanfilippo contributed to this article.