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Elron shifts to partner sales strategy

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Elron Software is investing in partner relationship management technology as part of its migration from a direct sales model to a channel sales model. The Burlington, Mass., company makes filtering software that allows companies to control their employees’ Internet access to objectionable Web sites, such as pornography or gambling sites.

The company is looking to boost revenue generated by channel sales from 20% of total revenue last year to 65% of total sales by the fourth quarter of this year. As part of that strategy, Elron implemented the ChannelWave 5 PRM system from ChannelWave Software Inc., Cambridge, Mass. The system enables the company to connect with partners for lead sharing, online training, demos and co-marketing.

Elron is changing its strategy because its product is conducive to channel sales, said Rosette Cataldo, director of channel sales for Elron. Companies aren’t necessarily proactive about seeking content filtering; often they don’t ask for it or are not aware of its potential usefulness, she said. Enterprises need to be sold on the software, and Elron believes channel partners can sell the software as part of an overall IT solution or as part of an overall security solution.

Everyone on the same channel

A year ago, Elron restructured its sales organization. Rather than having just a few salespeople focus on the channel, each of 15 salespeople was given channel responsibilities, Cataldo said. Elron recruited its 100 top partners to participate in the PRM network.

The PRM software helps automate channel relationships and leverages Elron’s relatively small staff to maximize support, Cataldo said. "We had to find a way to communicate with partners without needing to get the partner on the phone," she said. Now, partners can go to the company’s DiamondMine portal for the information they need.

For instance, Elron launched a new product last month and was able to distribute information automatically through the portal. The company designated which partners should receive the news and identified an individual at each partner company to receive it.

Elron also uses the software as part of a lead-sharing program. Once a partner inserts a lead into the system or receives a lead from Elron via ChannelWave, Elron can coordinate sales support efforts.

The company is now receiving more than 50% of its revenue from channel partners, and is on track to receive 80% of its revenue from channel partners by yearend, exceeding its initial goal.

Not all partners want closeness

The PRM installation brings the company and its partners closer together, but at least one Elron partner would just as soon keep his manufacturers at a distance.

"If you’re a VAR [value-added reseller] that’s dependent on the supplier for leads and support, you will turn into a vanishing VAR," said Allan Cowen, principal of Datamex Technologies Inc., a Vancouver value-added reseller. "While all the other VARs are messing around with a contact management system, I’d rather be engaged with the contact."

Moreover, he said, entering leads into the lead management system is time-consuming, taking up to 30 minutes per lead.

Also, the program requires partners to act quickly; Elron will assign the lead to a competitor if Datamex doesn’t act on it within 48 hours. Cowen said he is working with Elron to improve the usefulness of the PRM system.

Technology companies such as Elron are aggressive implementers of PRM technology because they are, in general, early adopters of computer technology, said Louis Columbus, senior analyst with AMR Research Inc. Also, the entire industry is becoming more cost-conscious, he said.

Lead management—converting leads to sales—is the lifeblood of PRM, Columbus said. And part of lead management is "injecting your channels with a sense of urgency" about following up on leads.

"Respecting the relationship with channel partners while at the same time escalating leads that do not get followed up on can be a tightrope for companies to walk," Columbus said.

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