The Telco Training Academy

   

Channel Management

The telecommunications industry has seen change in almost every area of management, technology, and control. So it is not surprising that the telco's understanding of channels and how they use them has undergone a similarly radical metamorphosis.

Channel management represents yet another growth area for telco managers as they struggle with the many complex issues involved in this complicated and critical part of a telco's go-to-market strategy.

 

Channels, a Critical Competitive Advantage

Telcos, like all modern, high technology businesses, must continuously develop and redevelop a corporate strategy that provides them with an attainable and sustainable competitive advantage in the market.

Traditionally, most telco management teams have tried to establish their advantage through technology and infrastructure (the mainstays of the incumbent telco and engineers). However, as the number of competitors increases and the markets they service are fractured, carriers need to find new competitive advantages.

The development, maintenance, and intelligent leveraging of multiple channels is a key ingredient in the success of many telcos and will play an ever larger role of defining success in the future.

 

Key Areas of Concern in Telco Channel Management

Channel management, like so many other areas of modern telecommunications, forces telco managers to take a fresh and objective look at the role channels play in their go-to-market strategy, and forces them to consider new options and deal with new sets of consequences.

Go-to-market costs and internal vs external channels

The undeniable reality of the telco business today is that management needs to figure out how to drive down sales costs and increase market exposure. For many telcos, development of partnerships and other relationships with external channel organizations (retailers, agents, distributors and others) can make a lot of sense. These organizations have infrastructure, location-based facilities, trained staff, and customer relationships already in place and they can aggressively promote your products and services. Many companies are finding that channels, at least initially, are veritable goldmines of new customers and low acquisition costs.

The hidden costs associated with external channels

Outside channels might appear to offer managers a free ride, but there are many long term consequences that need to be taken into account such as:

  • The market begins to associate the channel and its characteristics (cost, value, friendliness, quality) with the telco. The two identities become merged.

  • Parts of your customer base will become dependent upon those channels and count on them.

  • You need to keep the business model and compensation at an attractive level. Otherwise, the channel may abandon you, or worse, take your customers to a competitor.

  • The more channels you add, the less interest each channel has in supporting your products and services.

  • The more channels you add, the more channel conflict and customer identity confusion you risk creating.

Commitments made to channels are long term contracts, made with many long term consequences, both good and bad.

The "channelization" of products and services

Working with channels also means that you need to reexamine how you do business. You will need special channel-based issues of the following:

  • Pricing plans

  • Product packaging

  • Promotion and support

  • Advertising and brand image management activities

Among other considerations, and have to put together the following:

  • A channel management organization

  • Channel partner tracking and monitoring capabilities

  • Channel management key performance indicators

  • Channel budgets

  • Channel sales and product penetration quotas

  • Channel compensation, billing and accounting

  • Inventory, supply and control capabilities

In other words, you will have to built another mini-business model just to support the activity.

 

Channel Management Value Propositions

The reasons to measure, manage, and optimize channel activities are clear. Channel management enhancement provides managers with the ability to:

  • Track and measure the activity and delivery levels of various channels by product, region, and profitability

  • Determine appropriate levels of sales, revenue generation, and expense to be allocated to each channel

  • Measure and evaluate channel performance

  • Select the appropriate channel for a given market, program, or product

  • Balance, trim, reallocate and right-size channel activities

  • Reduce channel costs

  • Increase manageability of channel partners

  • Increase quality of sales delivered through channels

  • Decrease risks associated with channel activity

  • Increase volume of sales through channel organizations

 

TTA Channel Management Offerings

TTA has worked with a number of telcos in the development of analysis, evaluation, measurement, and optimization techniques associated with telco channel management activities. Offerings in this area include:

  • Channel performance evaluation and analysis

  • Channel balancing (setting appropriate targets and budgets for each channel)

  • Channel allocation (aligning the right channels with the right products and markets)

  • Channel selection (identifying and incorporating a new channel partner)

  • Channel initiation (setting up the processes, systems, and mechanisms for management of a new channel)

  • Channel strategy