What’s a Dirty Little Secret in your industry?

Dirty little secrets are not limited to TV soap operas and Perry Mason’s defense of Harlan Merrill in The Case of the Renegade Refugee (a terrific episode, btw).

If you’ve ever interviewed for a job where a rosy picture is painted for you and then, after joining the firm, experience Hell on earth, you know what I’m talking about.

Every industry and market (and dare I say, company) holds a dirty little secret, known only to insiders and current and past customers. Whoa to Prospects who look to a new vendor with less than open eyes, anticipating nirvana. Watch out, there’s a giant banana peel in your path on the other side of “Yes.”

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What questions do Channel Partners get most often from Customers?

A few years ago I made the move up to a digital, flat screen television. I did my usual amount of research. You know, Consumer Reports + telephone calls with some buddies who “know” the latest and greatest. My next stop was shopping, beginning with Best Buy, where I could physically compare the units.

I was just about ready to go all-in on a unit when my oldest son called the department manager over and asked him a question I hadn’t considered. You see, my son John Jr. worked at Best Buy during his college years and I could tell he had a trick up his sleeve.

“Matt, my dad’s shopping for a new flat screen and has narrowed his selection to these three. He’s ready to buy one right now. But before he chooses one, could you do a favor for me?”

Matt shook his head, agreeing to help us.

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How much relational capital must Channel Partners put at risk to sell your products?

I want to introduce you to a concept called, “Risk-Reversal” and then tell you about one real life example of how it worked so well the company became #1 in their market and went from startup to a $6.6B acquisition.

The idea behind Risk-Reversal is not just to reduce risk or bring it to near-zero for your customer and Channel Partner, but rather—reverse it—so you, the vendor, take on ALL the risk.

My good friend Perry Marshall, author of the bestselling The Ultimate Guide to Google AdWords: How to Access 100 Million People in 10 Minutes, recorded a short video for a seminar/workshop in which Risk-Reversal was one of the main topics in his syllabus.

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When your executives travel, do they make a point of visiting Channel Partners?

Somewhere along the line I learned this truism: More is caught than taught.

While there’s no substitute for textbooks and classroom instruction and the discipline of good study habits, I’m pretty sure I’ve learned a lot more useful stuff by just being observant.

One of my best “instructors” was my first boss, Bill Roach. In the four years I worked for him at Intel I can’t recall a moment when he went to the whiteboard to sketch out some principle or got out a pad of paper to outline his thoughts. In fact, I don’t remember him ever taking a note (must have had a photographic memory…really!).

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What is the name of the President or Owner of your top-performing Channel Partners?

Made to Stick recounts a story about the power of names:

While many publishers pay lip service to the value of local focus, Adams is an extremist about it. He’s willing to hurt the bottom line for local focus. He’s willing to be boring for local focus.

In fact, asked why the Daily Record has been so successful, Adams replies, “It’s because of three things: Names, names, and names.”

Yep, names matter. A whole lot.

In fact, there’s a body of research describing what happens to our brain chemistry when we hear our own name:

“Using functional magnetic resonance imaging, brain activation patterns were examined in response to hearing one’s own first name in contrast to hearing the names of others. There are several regions in the left hemisphere that show greater activation …”

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If you formed a Channel Partner Advisory Council, which Partners would you want to participate?

The road to Hell is paved with good intentions. That’s my subtle warning about Advisory Councils.

Advisory Councils are worth the effort, believe me. Properly managed, they provide insight you couldn’t duplicate in 100 focus groups. And while it’s true that in some industries Advisory Councils can be a bit of a boondoggle, the majority are all business.

The key question you first need to answer is, “Why?” –once you go down the [Advisory Council] rabbit hole, it’s nearly impossible to return. (think: red pill vs. blue pill)

Here’s the process I recommend:

1. Why do we need a CP Advisory Council?

Perhaps no surprise, the most common reason isn’t “market insight/feedback” or “better decision-making” or “improved communications.” Nope, it’s Politics. One vendor summed up this way…

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How many employees can name the Channel Partners responsible for 80% of your revenue?

Pareto was an Italian economist who became famous for his work, published in 1906, which observed that 20% of the population owned a whopping 80% of the real estate in Italy.

Known now as the 80/20 rule, Pareto’s Power Law has got to be the most often cited and over-abused (sorry for the Bushism) rule-of-thumb for defining income inequality, poverty, size of earthquakes, the frequencies of words in most languages and the concentration of revenue from just a handful of Channel Partners.

Not many names to remember

And that’s the beauty of the 80/20 rule. Your list of top producers is a short list. A small number. For many of you, you may be able to count them on one hand.

So there’s absolutely no excuse for making sure that everyone in your company knows who these Channel Partners are. Not just the sales staff—everyone.

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Do you expect your Channel Partners to prospect for new business?

You build relationships, play matchmaker, keep everyone’s interest front and center and because of this, have one heck of a nice Rolodex.

Over time, however, you’ve learned the hard way that all introductions don’t work out. And despite the fact that you’re offering no guarantees (aka caveat emptor/caveat venditor), when things go south it’s not unusual for one or both parties to complain loudly… to you, the go-between.

Because of this, I’ve learned to be much more cautious with my introductions. I don’t want to risk any of the relational capital I’ve built over the years because of some screw-up on behalf of a person who failed to show up for an interview or propositioned the owner’s spouse (yes, these occurred, among many other professional gaffes).

Are you asking Channel Partners to Pimp Their Lists?

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What are the tangibles and intangibles Channel Partners get from you?

This question is a litmus test for all channel marketers. Just when you thought you could put everything into a spreadsheet and manage from a to-do list, along comes this question asking about intangibles. The stuff you can’t easily measure.

In fact I’d say it’s impossible for you to measure it because you’re just too close to it. You know the players and the products all too well.

Yes, you could hire a consultant to help you figure it out (shameful plug), but if I asked the question differently, you might be able to get to the answer on your own.

Instead, ask this question …

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How does your product help Channel Partner sales reps sell their other lines?

“Co-opetition” entered business vocabulary in the mid-1990’s, popularized by a book by the same title. Written by professors Adam M. Brandenburger and Barry J. Nalebuff, Co-opetition is an instruction book for achieving market leadership through the use of game theory.

The very best part of the book (aside from the fascinating history of Nintendo’s NES rise to near-monopoly, pp 111-117) is a simple, yet powerful, strategy tool called Value Net.

The Value Net diagram shows interlocking, incestuous relationships between customers, suppliers, competitors and complementors. Putting names on the board, organized as described, is incredibly useful. We utilize Value Nets in most of our strategic consulting projects.

Here’s a simple Value net I sketched out for Scala, the leading networked digital signage software company (and client). If you’ve ever been in a Tesco or Best Buy, you’ve seen those massive video walls. Networking and controlling the content on all those screens is what they do.

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