What’s Missing in Your Indirect Channel?

Entering or expanding your presence in the Asia Pacific region invariably requires working with an indirect model engaging channel partners in one form or another, for all or part of your business. There have been many and varied ways of recruiting, enabling and managing your channel partners, just as many agreement types to work with, all well documented, all well researched. We have, over our years of experience, witnessed those that have worked, unfortunately many more that have not. After thirty odd years of business, many organizations in the IT sector continue to struggle with the complexities of an indirect route to market, nowhere more so than in Asia Pacific.

Of course there will be academic nomenclatures for some of the more common scenarios exhibited, however we have provided a slightly more descriptive categorization of those we come across commonly, all have something missing in the relationship.

“Dump and Run’ Model

Mr Vendor recruits Mr Channel Partner, seemingly with all the right criteria followed for selecting the perfect partner. The agreement is negotiated, the contract is signed, hand shakes and bows exchanged. Mr Vendor hands over a box of collateral, some CD’s and manuals, a help desk number, a web address and gets on the next plane returning home, heading straight for the fax machine to collect the flood of orders. Obviously a slight exaggeration, yet not an uncommon approach to partner recruitment.

Clearly partnerships require commitment from both parties. On one side the commitment to enable and transfer skills and knowledge, on the other a commitment to provide capable resources and focus, and a mutual commitment to agree a business plan, with continued review and measurement.

“Show Me Yours First – Stand Off” Model

These agreements take a form where Mr Vendor won’t provide anything or make any significant commitments until Mr Channel Partner first shows some commitment to the ’cause’, maybe hiring dedicated staff, allocating marketing budget or opening the ‘kimono’ up to the customer list.

Mr Channel Partner on the other hand hesitates to provide or commit precious funds and resources until Mr Vendor shows an active desire to support through supplying qualified leads, committing to free training or allocating resources to work with Mr Channels Partner resources. After a time with each waiting for the other to make the first move and not living up to expectations, little if any business is written and the partnership fades with both parties moving on to other pastures.

‘Indirect Is Cheaper’ Model

Many unfortunately still look to the indirect channel model as a free or cheap entry into a market with an expectation of huge success. The indirect model in any of its forms requires discounts, infrastructure and support, by implication there is a cost to this. It should NEVER be considered free.

What should be expected from any indirect channel model is a broader reach into previously unavailable markets with access to domain expertise and or regional experience at a better return for each dollar of outlay. Straight forward, right? Not for all unfortunately.

One all too common example is relatively successful and established organizations making the decision to change to the ‘cheap’ indirect model, significantly downsizing or closing local operations, not implementing a channel enablement and support infrastructure, nor managing the customer expectations. The expectation being revenue and maintenance renewals will continue and grow and the partners would carry on business as usual. The results, not surprisingly, are usually massive drops in revenue, defection of customers, partner dissatisfaction, low staff morale and competitor successes.

‘The Silver Bullet’ Model

Many organizations enter a market such as Asia Pacific looking for the ‘silver bullet’ channel partner, the one that has the contacts, the relationships, technical and sales skills, support infrastructure to sell and support their products – the obvious choice for the desired market segment. Of course this is the perfect scenario. What is often missed is that these channel partners (likely larger organizations) will have a sales force paid on gross profit, already committed to selling known products from multiple vendors with targets like any other sales force.

Ask yourself the question: Will a salesperson focus on a new, unknown, difficult to sell product with a slightly higher margin or will they go and achieve their quota with what they know and what is currently selling, even though the margin may be slightly lower?

‘Committed Start-Up’ Model

Relative to the above, seemingly a reasonable approach. Mr Start Up Partner will be keen to prove themselves, hungry for revenue, eager to impress, often with a specific domain expertise and driven to build their business. Everything that one could want in a sales force. Sometimes. What about resource availability and quality? What about scalability? Smaller organizations will be juggling issues like cash-flow, breadth of relationships, depth of contacts? Again, there are numerous examples of these well intentioned ‘partnerships gone wrong’.

‘You Need Us More Than We Need You’ Model

Typically either Mr Vendor or Mr Channel Partner are a recognized brand in their specific market, sometimes even both. The one more recognized in the market to which the other wants access plays hard ball, or more often, an individual charged with the relationship, suddenly wants to show their value and plays hard ball. A relationship built on animosity from the outset, destined for the ‘seemed like a good idea at the time’ pile. These relationships do have much to offer when executed correctly but can be difficult to manage or negotiate if either party believes they are in the dominant position with little to gain.

If all of these scenarios sound unfamiliar … then credit to your channel people, they should be rewarded handsomely as your channel is most likely working well for you, with mutual benefit.

But if any sound a little too familiar then … the big question! “What IS missing in my indirect channel?”

It’s not difficult to search out the plethora of material on the ‘6 things’ or maybe even ’12 things’ you must do to make a channel partnerships work. Or, on how to select your channel partners with what criteria etc. All these will have valid guidelines, all will have important aspects you should take note of and incorporate in your channel approach. Most will highlight aspects of company alignment, market segmentation, sales processes, clear rules of engagement and documentation of mutual expectations combined with constant, open communications, some identify a need to support your channel partner through resources and infrastructure, even funding of direct sales support during the enablement stage. All of which is correct and important.

Personally I like to boil things down to their simplest level, a common denominator or two. In this instance there is a fundamental state of mind that determines whether the partnership will succeed or fail, the one thing in the scenarios above that is missing.

A level of desire and ability to INVEST.

Each of the scenarios fail due to a lack of investment and we are not talking only of financial investment. We are talking about investment in all its forms – time, resources, focus, commitment and financial.

The ‘dump and run’ model lacks investment in support and commitment; ‘show me yours first’ lacks investment in the relationship and building trust; ‘indirect is cheaper’ lacks investment in many areas and so on. I’m sure you get the point.

Think of it this way, you would not expect your bank to pay you a dividend or interest income if you have zero dollars invested in your account. So it is amusing and somewhat worrying when speaking with seasoned and generally successful executives who seek to expand into Asia Pacific, actively avoiding investment in their channel development, yet they maintain high expectations of results. This is no more important than in Asia Pacific, a region accepted as requiring a strong indirect channel strategy to succeed, built on commitment, relationships and mutual trust.

The summary

The key to a successful channel partner strategy and in turn a business that will grow and gain strength year on year is simply, a commitment to invest appropriately based on the returns required and expected. Namely in the areas of:

o Understanding the market through research and segmentation.

o Partner selection and due diligence.

o Partner enablement (resource allocation & execution support).

o Support infrastructure and partner management.

o Communication, relationship and trust building.

o Regular and focused reviews.

Like all good things, successful, mutually beneficial relationships require commitment, focus and effort – there are no short cuts, there is no money for nothing. Your outcomes, returns and profit is directly proportional to your desire and ability to invest in your channels.

No Competitor Against Singapore Airlines in Southeast Asia

Singapore Airlines runs its office from its primary hub at Changi Airport in Singapore. Being the one of the biggest airlines, Singapore airlines mainly operates in the regions of Southeast Asia having connections with the routes of the region performed by the subsidiary “SilkAir”. Airlines extends the many flights to international destinations compared to other airlines of Southeast Asia. The Airline has the membership of network airlines of Star Alliance and has the code sharing agreement with Virgin Atlantic Airways, Malaysian Airlines and SilkAir. Singapore Airline was the initial airline to run the A380 type of aircraft running the aircraft between Singapore and Sydney. The Singapore Airlines at present operates A380 aircraft to the destinations that include London and Tokyo and it has plan to increase the number of flights for London twice daily from the month of September. The Airlines runs its main popular routes from Australia which include services to the Europe via Asia for the passengers having International flight tickets.

The Singapore Airlines has three types of classes for its different flights which are Economy class, Raffles class and First class. During the flight of the Airlines, entertainment facilities for the passengers named KrisWorld having personal televisions are being arranged. In this personal televisions Nintendo games, TV shows, movie channels and music stations can be viewed. Business class and first class passengers holding International flight tickets can avail the lounges of SilverKris, while moving towards destinations like Manila, Singapore, Sydney and Osaka. Partner lounges may be available while moving for other destinations of selected nature. SkySuite seats extends the facilities for comfortable seat in the lounge for lying back in a spacious cot and ensuring for the passenger to get a homely feeling after arriving at the destination.

SpaceBed ensures type of seats where a passenger having International flight tickets may rest in position lying on his back in a special type of chair and for maintaining one’s privacy one divider with adjustable screen. For passengers of business class there is the facility of priority checking in. Seats for economy class have the facility of winged headrests and footrests for allowing passengers to become comfortable. Cuisine of world class is catered together with complimentary type of beverages. Magazines and newspapers are also made available for the passengers. The Airlines arranges flying programme frequently which contains three types of membership from different type of institutions.

An Overview of Multi-Channel Banking

Banking Turns Increasingly Digital

It is not an exaggeration to say that digital consumers are like no other. They belong to a generation that is more educated, more technology savvy and better connected socially than any other that came before. If they need information, they will research it on the Internet; if they want advice about a particular purchase, they will ask their social network. Their demands fuel innovation in the technology and communications space, giving rise to new, better products that they can’t get enough of. They seek convenience, reach, availability and instant gratification.

These expectations have split over to their banking activities too. Now, digital consumers want their banks to acknowledge these needs and fulfill them, just like other retail businesses are doing. Banks are responding by delivering their services over a range of digital channels including the mobile and the Internet.

Digitization in Africa and the Middle East

Today, digitization is a worldwide phenomenon. The following data indicates how it has pervaded banking in this part of the world.

Banks in Africa and the Middle East record the highest number of average monthly ATM cash withdrawals. In 2009, this figure was 3,914 compared to 1,631 in North America, 2,797 in Western Europe and 2,789 in the Asia Pacific region.

In the Middle East, Internet penetration is 33.5% which is 3.3% of the world’s Internet penetration. Mobile penetration in the UAE is already in excess of 200% and broadband penetration is expected to reach 100% by 2012. On the African continent, mobile adoption has crossed 50% in 26 nations; South Africa achieved twice that number at the end of last year. As a natural progression, this region will surely see high rates of adoption of these media as banking channels in the Middle East and African regions.

What is Multi-channel Banking?

With the availability of alternative modes of banking, consumers started to use more than one channel. They went to the ATM to withdraw cash and enquire about their account balance. Then they started to use Internet banking, first to monitor their accounts, and then to make payments and transfer funds. At the same time, they also made visits to the branch. This was the time when consumers “banked on multiple channels”.

The drawback of this kind of banking was that each channel was isolated from the other. Data generated on one was not visible on another, which meant that if a consumer initiated a transaction at the call center, but resumed it at a branch, he would have to explain the entire situation all over again to the staff. Banks too lost the opportunity to render efficient service or cross-sell, to these channel siloes.

With the integration of channels on a single platform, multi-channel banking became reality. Today, banking is integrated across devices, channels, products, and functions to provide seamless experience to customers across all touch points. Accordingly, banks have a 360-degree view of customer activity on every channel at any point of time. Customers enjoy similar visibility, and are also able to seamlessly transition from one channel to another, even during the course of a single transaction.

What Multi-channel Banking brings to Banks

A recent report by a research firm indicates that although branch investment still tops the list of a bank’s spending, investment in other channels like Internet and mobile banking is on the increase. In Middle East and Africa, spending on online banking channels is expected to touch US$ 50 million in 2012.

Banks stand to gain substantial benefits by investing in integrated multi-channel banking.

• Cost reduction

Multi-channel banking helps banks optimize operating costs and resources. For instance, branch staff engaged in routine operations such as cash disbursement may be deployed in other, more critical functions. With fewer customers walking in, branches can be smaller, and more cost effective to establish and maintain. Channel integration reduces data duplication. Overall, it is estimated that the cost of serving a customer or transaction through Internet and mobile banking is a fraction of that incurred at a branch.

• Customer satisfaction

Seamless multi-channel banking makes banking convenient for customers as it allows them to transact from anywhere, at any time. Since transactions and data are updated in real time, customers have access to the latest information irrespective of the channel. Integration also provides customers a single view of all the accounts held by them at the same bank. These facilities improve customer satisfaction and with time, loyalty.

• Customer acquisition

Banks with an advanced multi-channel banking system can attract customers of other banks, which are lagging in channel integration. They can also use channels – such as mobile banking – to make in roads into markets where they have insufficient branch presence.

• Revenue enhancement

By providing a unified view of customers and enabling tracking of their channel usage, integrated multi-channel banking improves banks’ cross-selling efficiency to bring them more business from existing customers. By reducing cost per transaction as mentioned earlier, and improving sales, multi-channel banking can make a reasonable impact on banks’ top and bottom lines.

The Profile of an Ideal Multi-channel Banking System

A multi-channel banking system should be simple, convenient, affordable and anytime anywhere accessible, providing a unified view of customer’s banking relationships for customers as well as for relationship managers. True multi-channel banking extends beyond the provision of banking access over multiple channels, to add value through:

• Superior user experience

Seamless customer experience is the essence of multi-channel banking. A customer should be able to use a bank’s service on any of its channels. Also, having initiated a transaction, he should be able to continue it on another channel without obstruction. For instance, if he receives an offer about a new high interest deposit on SMS, he should be able to buy into it using his mobile, but send all the supporting documentation via the Internet banking channel.

• Personalized banking

Today’s consumer has a strong sense of uniqueness that he would like service providers to acknowledge with personalized products and services. He desires personalized banking facilities that enable him to set reminders, quickly access links and”favorite activities”, and choose the channels on which the bank must send alerts or initiate contact. Not only that, he may also want to personalize each channel separately. Multi-channel banking must be able to fulfill all these expectations.

• Interactivity

While customers are happy to conduct routine transactions on self-service channels, they invariably seek human assistance when faced with a problem. If ready help is not available at that time, they may give up the channel altogether. Banks can prevent this eventuality by making help available to customers on every channel, at the touch of a button. This can be achieved with a text chat facility – already provided by many – or an audio/video help service, or even co-browsing, whereby a customer care representative can remotely see the customer’s desktop and walk him through the solution. What’s more, using social media, banks can not only make these situations more interactive but also enable a customer to seek assistance from other customers who have had similar issues.