Communicating with the channel

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Kestler Financial Group resells financial and insurance products for large mutual funds and insurers through a network of more than 6,000 independent agents. Since rates can change quickly and new products are announced often, Jason Kestler, VP of the Leesburg, Va.-based company, realized early on that communicating with his reseller channel wasn't just important, it was a necessity.

"We would probably send out anywhere from 15,000 to 30,000 faxes each week. We tried to get in front of [our resellers] at least once a week to touch them in some way," he said.

But fax is an inexact technology; there was, for example, no way for Kestler to tell if an intended recipient got a fax. So five years ago, Kestler Financial switched to e-mail marketing.

E-mail was deemed so important that the company conducted a phone campaign to gather its resellers' e-mail addresses; it even set up e-mail accounts for about 1,200 people who didn't have their own. Almost immediately, the decision paid off.

"[After switching to e-mail], we noticed our response rates went up both via e-mail and on our inbound phones," Kestler said. "We actually had to schedule [personnel] around the e-mails we sent out because our switchboard would blow up. Our outbound agents were now turning into inbound agents."

Out of sight, out of mind

Despite the benefits, fewer companies market to their channel partners than might be expected. Many companies either don't know about online channel marketing or, if they do, can't justify the cost, said Elana Anderson, principle analyst with Forrester Research. The problem, she said, has little to do with being online. Rather, companies don't know how to work effectively with their channel partners or track marketing results through them.

"That's the big conundrum," Anderson said. "It's proved very challenging. Most distributors are reselling for many, many companies. How do you make sure that what you're doing is actually benefiting your company?"

Nancy Koenig, VP-product operations with Click Commerce, a channel marketing company, said marketers are also facing another problem: "In today's environment, people are not inclined to make investments without a valid business case. The channel-your indirect channel-sometimes comes in second as far as priority," she said.

When companies do engage in the practice, the methods they use range from e-mail to extranets to Web sites. Portals are generally used for all types of support, from lead management to product and service information dissemination to handling quotes and reseller orders. They are also a distribution point for branding and marketing messages. Resellers can download print campaigns-even customize them-as well as other marketing collateral.

Both portals and e-mail can feature custom applications designed to feed prospects to resellers. For instance, Kestler Financial has created custom survey tools using ExactTarget's e-mail service that let its agents get quotes for customers in 15 minutes or less. Agents fill out the e-mail-based quote forms using pull-down menus. As a result, Kestler Financial has increased production 40% and saved a significant amount of time on a process that previously took take half a day.

Saab Cars USA is using its portal to manage reseller leads with good results, too. The Norcross, Ga.-based company saw its reseller lead follow-up go from 38% to 70% after installing Siebel Systems' Partner Relationship Management suite.

The application works like this: Saab Cars executes a marketing campaign, gathering prospects for its dealers. The leads are placed on a Partner Portal, one of four components of the Siebel PRM product. Saab dealers then follow up, posting their success or failure on the same portal so Saab Cars can do closed-loop campaign analysis after the fact. Saab is in good company with its strategy, said Steve Roof, senior director of Siebel's PRM.

"About 90% to 95% of our Siebel PRM customers are using the Partner Portal," Roof said. "It allows [resellers] to work collaboratively with the brand owner. It gives them a single point of entry across all business units."

Production savings a start

One of the most significant benefits of channel marketing is reduced printing costs. Jeff Rappaport, president of Outlook Marketing Services, recently helped Woodhead Industries build an electronic catalog for its resellers. The catalog acts as a marketing library so resellers can download logos and product photos. Not only does the library create a uniform set of product descriptions, it also saves the company printing fees.

"By deploying [marketing materials] via online technology, you are literally saving 80% of the cost of your resellers developing an ad," Rappaport said.

Even more important, the life cycle of an ad campaign is shortened. The production and printing process for marketing materials such as specification sheets can be up to three or four months. Once you take it electronic, resellers always have the most up-to-date specifications, often in as little as a few weeks.

Click Commerce's Koenig said electronic marketing does one more thing: It provides an electronic paper trail that proves you're giving all your channel partners equal and fair treatment, something that's required by law-specifically, the Robinson-Patman Act, a federal law designed to thwart monopoly pricing.

Samsung Electronics America has reduced its printing costs significantly within its reseller marketing program. The company, which uses a Click Commerce program to reach its Digital Information Technology division resellers, decreased its overhead and marketing spending 25% by implementing a reseller portal. The portal features catalog information in addition to details about pricing, promotions and marketing campaigns. Resellers are segmented, so promotions are more targeted; someone who sells laser printers isn't going to see promotions for hard drives.

Chris Baggott, co-founder and CMO of e-mail service provider ExactTarget, said his clients use e-mail marketing to raise their visibility and get special pricing and offers out to their resellers.

"One of our clients sells medical mattresses. There's a lot of education involved, sharing of best practices. He's able to give people information about the industry; say here are the questions people might be asking," said Baggott. "This guy is now making $1 million selling his product." 

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