An effective channel management strategy is pivotal for companies that rely heavily on sales and distribution channels to bring their products to market. Top-performing channel organizations support partner relationship development by leveraging a comprehensive contract management process that automates and streamlines contract lifecycles to enable informed analysis and decision-making, optimize channel revenue and ensure terms, conditions and milestones are met.
While contracts alone hold significant value for businesses by defining relationships, outlining expectations and solidifying intent, contracts are only as effective as the system that manages them. Investing in a purpose-built contract management solution enables organizations to streamline the contract creation lifecycle while also guaranteeing that payments are made accurately and on time. Channel partners immediately benefit by ensuring contracts include only the most favorable terms and that all milestones and obligations are met in a timely fashion.
6 Potential Problem Areas of Your Channel Management Strategy
An underperforming solution for managing contracts – or worse yet, the absence of any solution at all – strains high-value partner relationships, opens both parties to risk and can slow the contracting process to a halt. Without an effective contract management strategy in place, companies could lose a significant source of revenue.
If so, don’t blame bad performance on your partners. Instead, take a hard look at your contracting systems in order to identify problem areas. If you find that your system is suffering from any of the six symptoms below, it might be time to seek a new approach.
1. Sluggish Contract Cycles
How often does information go missing in action inside your organization, whether it’s lodged in someone’s inbox, misfiled or simply forgotten? If this is a common occurrence, you’re not alone.
Many companies suffer from improper workflows that can significantly delay contract cycles, pushing agreements to the next reporting cycle, or worse yet, losing out on a contract to more responsive competitors. No business can afford that. With proper contract cycle workflows, organizations can streamline creation of meaningful contracts and expedite revenue.
2. Inadvertent, Unfavorable Contract Terms
Contract creation is key to developing effective agreements. Yet when individuals hastily assemble documents and use outdated templates or simply copy and paste, they place the company at risk. Without a single, authoritative repository for contract terms and conditions, rogue legal language can slip into agreements and hold organizations liable for unfavorable contract terms, exposing them to significant legal and financial risk. Contract lifecycle management solutions include a single, approved repository of legal terms, so organizations can completely remove the possibility of inappropriate terms being utilized.
3. Absence of Automation
Validating high volumes of channel invoices and incentive claims against contract terms is no easy task, especially when companies rely on human memory or spreadsheets to manage complex terms and conditions.
Automation cures that ill by prompting, tracking and managing contracts, thereby capturing all possible opportunities while optimizing revenue streams. With a solution designed to automate all aspects of the contracting cycle, from front-end creation through back-end execution, organizations can remove manual processes, eliminate human errors and streamline the entire process.
4. Lack of Insight into Partner Performance
While understanding partner performance is key to identifying and creating lucrative incentives, few companies have the ability to track partner activity and identify key drivers of performance. In an increasingly complex channel environment, companies should never simply rely on existing terms and incentives. Instead, they should be constantly evaluating their incentives based on their ability to drive sales and profitability.
To be successful, companies must identify strategies that encourage the most profitability from partners, and then use those insights to create more lucrative terms in future promotions. Automated contract management solutions simplify this process, making it easier for organizations to sift through, analyze and convert tremendous amounts of contract data into value-add information.
5. Shrinking Market Share
Not all channel partners are the same. Some will inevitably under perform. But when the majority of channel partnerships fail to meet expectations, the issue could be ineffective and insipid incentive agreements. If competitors are offering a better deal, companies will begin losing market share ‒ a scenario that can be difficult to turn around.
Instead, companies need to react quickly and strategically by evaluating current channel sales relationships and establishing high-value programs that drive sales and revenue up and down the channel. Dashboards and reports present in contract management software give organizations immediate visibility into performance of all partners, ensuring the appropriate corrective actions can be made in a timely fashion.
6. Unhappy Partners
As an organization relying on partners, it’s your mission to keep your channel partners happy. If partners incur missed, late or inaccurate incentive payments, they’ll lose interest in pushing hard to maximize sales and revenue from your products. To maintain the relationship, companies need to pay on time and according to contracted terms and conditions. There’s no simpler way to strengthen the relationship and create a win-win environment than through well-constructed incentives that deliver the greatest possible return for all parties.
The key to developing an effective channel strategy is implementing a contract management system that connects all phases of the contract lifecycle. Companies must seek an automated solution that streamlines workflows, optimizes revenue and provides insights into partner performance to ensure successful current and future agreements. If your channel strategy is failing your organization, it’s time to re-evaluate your contract management plan and implement an effective channel strategy to boost performance.
Ready to start your search for a contract management solution that will streamline your contract lifecycle and improve relations with your channel partners? Begin by downloading our free report on the Top 10 Contract Management Software tools, which you can use to peruse leading industry solutions and compare key features, pricing and delivery models.
[Photo courtesy of Flickr user Gabriel Saldana.]