Marketers are starting to realize that they need to build relationships not only with customers but with channel partners, as well. With a renewed focus on selling through these partners, many companies now are considering partner relationship management, or PRM, systems.
PRM can help coordinate partner activities and facilitate connections by providing order management, lead sharing, joint marketing and collaboration. Although the concept of PRM hasnât enjoyed as much attention as CRM, the idea is the same: to use technology to more efficiently gather information, build relationships, save time, cut costs and, ultimately, increase revenue.
"PRM enhances the accuracy of the ordering process by eliminating steps," said Bill Picton, director of information technology for Tharco Containers Colorado Inc., San Lorenzo, Calif., a manufacturer of corrugated and foam packaging with annual revenue of about $250 million.
Previously, Tharco distributors had to create and send orders via phone, fax or e-mail, and then Tharco would re-key each order. Tharco now uses PRM software from Raleigh, N.C.-based HAHT Commerce that automates the process, saving time and reducing staff needs. The PRM system also reduces phone-call inquiries about the status of orders and stock levels; this information is now provided over the Web.
Since launching its Web-based PRM system, Tharco does about 10% of its sales volume over the Web, with distributors handling all of those sales. The company invested less than $1 million in the system.
Other marketers are seeing similar cost savings and increased revenue with PRM software. Vendors that provide such technology include ChannelWave Software Inc., Comergent Technologies Inc., HAHT Commerce Inc. and Click Commerce Inc. Also, vendors of CRM and other enterprise software, such as SAP AG and Siebel Systems Inc., are integrating PRM technology with other product sets.
"The benefits are that you have the ability to solidify channel relationships and make them into really strong assets," said Louis Columbus, senior analyst with AMR Research Inc.
Maintaining good relationships with the channel has become increasingly important, as some 70% of revenue for manufacturing companies now comes from channel sales, Columbus said. A good PRM software implementation can help enhance these relationships, he added.
Benefits can be quantified
Despite the economic downturn, the PRM market is growing. The technology has proven to be dot-bomb-proof because proponents can demonstrate the business benefits in terms of reduced cost and increased revenue opportunities. Enterprises can expect to see a 30% reduction in the cost of order processing, plus 25% to 30% increases in sales, Columbus said.
But many companies havenât taken full advantage of their PRM investments, he said.
"In general, thereâs more functionality in applications that have been purchased than is actually used," Columbus said. Lead management and lead generation features are popular, while collaboration and joint product introduction features often get ignored, he said.
For example, Tharco is using its PRM software exclusively for e-commerce, processing orders on the Web. The company is poised to deploy a catalog application on the Web that would allow its distributors to create their own branded online catalogs of Tharco products on the distributorsâ own Web sites, which then would send orders electronically back to Tharcoâs system.
"In effect, we could create a partner Web, where their customers order from them and they order from us, and itâs seamless, with minimized data entry," said Tharcoâs Picton.
But the company has had difficulty signing distributors on to the project because most of these channel partners have tightened their belts in the rough economy, Picton said.
"In a down market, itâs hard to get people to pony up to try new things. We are queued up to pull the trigger as soon as the market turns around," he said.
DuPont starts slowly
Similarly, DuPont Performance Coatings has installed a PRM system from Redwood City, Calif.-based Comergent, but the manufacturer has signed up only about 100 of the largest distributors from its network of 2,500.
"We went with a very vanilla version and wanted to take it slowly so we could add the things they were looking for as enhancements," said Catherine Marchand, e-business strategy manager for the DuPont division. The $4 billion business unit of E.I. DuPont de Nemours and Co., Wilmington, Del., provides paints and other automotive coatings to collision repair shops.
The company now uses its PRM system for order management, and it hopes to attract new distributors to the system by adding enhanced functionality. For example, it may add the ability to order products from companies other than DuPont and directly interface with distributorsâ point-of-sale systems.
"Going from a manual system to an automated one gives you an awful lot of ways to improve overall performance, and thatâs what weâre looking to do," Marchand said. The company uses PRM software to communicate with distributors over a Web portal, using technology from Bowstreet Inc., Portsmouth, N.H.