- September 22, 2022
- Posted by: Channelnomics
- Category: Blogs
Picture this: Somebody from the finance department approaches you, tells you that there’s some belt-tightening in the works, and passes along a mandate from the C-suite that you slash your channel budget — ASAP. It’s not an unrealistic scenario based on what’s going on in markets around the world.
Managing a channel business is difficult even in the best of times. Recessionary conditions make it even harder. And you might be surprised to discover how few business leaders really understand the economics of indirect sales.
Several factors give rise to the “trickiness” of navigating a channel biz. For one thing, channel management tends to be decentralized, with little global accountability when it comes to controlling costs. Second, channel budgets and spending can be spread across corporate divisions and sales geographies. And third, traditional accounting practices often bury channel-related investments and make it hard to measure return on investment.
The decentralized nature of channel businesses makes it extremely difficult to create a single source of truth — consolidated data that can be routinely collected and analyzed by company leaders. What’s even more significant is the lack of data that can be trusted.
So, what’s a channel leader to do? How can said leader approach C-suite execs armed with the data necessary to prove the value of their channel org, especially in times like these, when the battle cry for budget cuts and redirects is louder than ever?
To help channel executives and sales leaders understand the costs and benefits of their indirect-sales orgs, Channelnomics offers the Channelnomics Fiscal Optimizer (CFO), a series of workshops and tools that measure, model, and report the impact of specific routes to market on a company’s profits, investments, and expenses. The reports generated through the CFO process clearly define the value of indirect routes to market in the form of expense-to-sales and sales-to-investment ratios. They also provide guidance for optimizing those RTMs for greater performance.
The CFO provides channel professionals with the evidence they need to inform their management teams and stakeholders of the value of channel partners, the risk that comes from curtailing channel investment, and new opportunities for increasing indirect-sales contributions. The offering allows channel leaders to take control of their destiny and create a deeper appreciation of channels within their organizations.
Given the complexity of channel businesses, it’s easy to see why so many organizations are vulnerable when economic challenges call for a rebalancing of channel funding priorities. Without key data and accurate financial models, channel professionals can’t make sound financial decisions or even push back against directives that may ultimately diminish results. But with them, they can help their executive management teams better understand the full breadth of options available and the economic ramifications of any hasty financial moves.
The channel is replete with examples of vendors that clamped down on channel investments only to suffer significant setbacks in revenue generation and market share. The CFO can prevent that from happening.
To get more information about the Channelnomics Fiscal Optimizer, to schedule a free consultation, or to get help developing methodologies and putting your data to work, visit www.channelnomics.com/cfo.