1. 3Channel ManagementA GLOBAL COMPUTERSHARE COMPANY

2. Companies have recognizedthat a channel program cannotbe successfully realized withtechnology alone. By focusing onan extensive partnership program,vendors and solution providers aretogether able to increase businessopportunities and turnover.Kelley Damore, Vice President, CRN-Magazin/Everything Channel 3. The challengeResolve conflictssecure market success.Even in the era of the Internet, many companies generate a largeproportion of their sales by selling products via their distributionpartners. In the IT industry, for example, up to 90% of sales arecurrently generated via indirect distribution. This makes thedistribution partner a key link to the end customer. The followingrule could be said to apply: the better the collaboration, the higherthe sales figures.But this collaboration is not free from conflict, since distributionpartner management takes place in a triangle of tensions: themanufacturer, distribution partner and end customer. Althoughmanufacturers and partners pursue common goals, such as increasedearnings and customer retention, both parties are nevertheless moreoften in competition with each other than working together.Only when sources of conflict in the partnership are recognized, andnipped in the bud by means of appropriate partner managementmeasures, can manufacturers and distributors fully exploit availablepotential. 4. The challengeCooperation betweenmanufacturers and resellersis more important than ever.The development of partner programs is not onlychallenging in terms of content but also very ex-pensive. Traditional partner programs often failto bring about the intended result. Being mainlygeared toward a specific service, they are difficultto adapt to the individual requirements of distribu-tion partners and current market developments.It is therefore in manufacturers own interests torethink how their partner programs are designed,since the potential for increasing sales in a har-monious partnership is clear to see. 5. The challengeStumbling blocks in practiceMost manufacturers now rely on partner programs. Nevertheless, only a few have been able to exploit the fullpotential of their programs.There are a number of reasons for this: Communication is limited to exchanging manufacturers logos. Partners are not aware of the range of services offered by the program. The program is too complex, lowering its perceived value.Added to this is the fact that many resellers are not just participants in one program, but use several programs fromdifferent manufacturers. It is therefore all the more important for a program to be transparent and to make sense. Global competition, new technologies, shorter product life cycleInsufficient basis for decisionsregarding budget distribution forManufacturersales and marketing measuresRetailer dissatisfaction with standard offers that Divergentare not individualized business targetsSignificant expenses forbrand building and salespromotions without endconsumer knowledge RetailerLack of control Sales performance according toover end consumer manufacturer wishes depends on contact and consumer qualification and motivation of the satisfaction retail partnerEnd consumer 6. The solutionProfessional distributionpartner management.Partner programs form the backbone of distribution partnermanagement. Depending on how they are designed, they offera range of services (bonuses, marketing support, training, etc.)to support the distribution partners of a manufacturer. As such,they offer the manufacturer the chance to establish long-termprospects for collaboration with distribution partners rather thanshort-term tactical measures. Well-thought-out partner programstherefore create a real win-win situation for all concerned and allowfor collective growth.Establish a legitimate basis right from the start.The starting point for every program development should bethe strategic aims of the manufacturer, and an analysis ofreseller relations. As well as the available investment volume,understanding the requirements, expertise and loyalty of thepartner is particularly important in deciding on the structure of thepartner program (i.e. the framework and the program modules). Thefollowing diagram illustrates by way of example how companies candevelop partner programs and make specific adjustments to these. 7. Review of the relationship status4. Implementation and controlling1. Target and relationship status Program management and administration (strategic ) targets for indirect sales Program adjustments during the year as Definition of partner requirementsnecessary Evaluation of current trade relationships (convicts, Success measuring (e.g. quota, partner ROI)position in the market and market shares) Partner satisfaction and development Definition of program targets Channel partnerprograms3. Program setup 2. Program concept Drafting of program contracts Consolidation of existing offers in the trade Development of infrastructure, program Monitoring of offer attractiveness and awarenessinterfaces/processes and databases Evaluation of partnership competencies and loyalty Development and sending of program Development of complete programs and programcommunicationmodules Definition of criteria for success measurement Planning of trade communicationAdvantages for you.A good partner program has more to offer than bonus points and discounts.Bonuses and discounts are key ways to motivate distribution partners. As monetary incentives are very attractive,they are often centrally located in the partner program layout.However, a successful partner program can do a lot more than that: it can support partners in the distribution ofintegrated system solutions and services rather than individual products.The program also includes elements that empower partners and promote relations. As such, the expertise andconfidence of partners can be increased in the medium term. 8. Our offerLong-term prospectsProgram services primarily increasing turnoverfor collective growth. (immediate effect on turnover) Bonus incentives Bonus/turnover Cash-bonus for certain products/The modules that make up a partner program, services compensation Point collecting system for turnoverand the rate at which measures related to that can be exchanged for prices/sales or promoting relations are used, depend trips/cashon the individual manufacturers situation.Rebates Rebates based on increase ofAnd, depending on your requirements, Pepper turnovercan support you with individual components, Rebates on specific products/forspecific customer groupsto acquire new partners or to strengthenexisting partnerships. ME-budgets Market development budgets Training budgets Training and partner support budgetsThese program services, composed of modules,allow you to choose appropriately for a widerange of requirements, taking into accountyour strategic goals. Turnover/sales supportThis will result in some interesting benefits: Generating of Identification/forwarding of leads by Being able to control investments inthe manufacturer customers/leadspartners, in order to generate a higher Lead prioritizingpartner ROI Access to databases of manufacturerand pdf files Less complexity for the partner Marketing support Classical print advertising material Option to adapt to new/altered distribution Online advertising materialpartner business models Common newsletter Web-based services (download of Option to adjust to different stages ofinformation/logos images etc.)maturity in local markets (in the case Cooperation campaigns/programsof manufacturers present in a number Integrated campaignsof regions) White papers and case studies Shop equipment Product demos Tradeshow support Events (yearly sales summit) Free advertising in Yellow Pages Free software updates Technical support Expert contact person for generalsupport Expert contact person sales/product/technical Technical support for pre-sale phase Process support Quick turnaround for questionsregarding pricing Service quality monitoring Service hotline for partners (deliverystatus, technical questions) 9. Program services primarilypromoting relationships(immediate effect on turnover)Trust developing measuresCommon marketing Common marketing for service/leasing programs Summary: it is not the number of Multi-vendor service contracts services partner programs offer but their Common sales force attractiveness and user-friendliness fromContractual Development of an aligned customer a resellers perspective that make themlist with the resellerself-obligations an important tool in distribution partner Reimbursement for the reseller forexpenses, even if customer decides management. Pepper can help youto buy directly successfully implement all necessary Resellers are compensated fordeveloping accounts, even if the criteria successfully.customer decides for a competitorin the end Contractual regulation of the quotaand the conduct with customers incl.penalty systemPartner support and knowledge buildingKnowledge building/ Product trainingtraining Sales training Further trainings, (i.e. marketing,CRM management etc.) Virtual new product seminars/technology workshops Quarterly technical update CDs/current online product registerProgram Program communication incl.welcome pack, newsletter, faxcommunication shots, e-mail news, etc. Making available of furtherinteresting articles regardingthe industry/solutions etc.Company insight- Video streaming of importantmeetingssharing Quarterly update meetings regardingcompany status and strategyProgram execution Individual access on demand ofstatus of incentives, training andsupport technical support (automated) Online status report for salesachieved by resellers includingstatus of compensation Online price/offer and orderconfiguration tool Online complaint managementtools 10. Case studyHolistic distribution partner evaluationas part of a partner program.Pepper overhauled the entire partner program ofa leading IT company and realigned offers andmeasures. As part of this realignment, a partnerevaluation model was developed which avoids apurely sales-oriented classification of distributionpartners.The three pillars of sales, loyalty and expertiseallow for a much more effective arrangement ofthe partner structure, enabling the manufacturerto understand the characteristics and requirementsof partners and provide them with more targetedsupport. 11. The individual measures taken include: Definition of target profiles for the acquisition of new channel partners based onexpert discussions and secondary research Development and implementation of a development plan for joint masscustomization activities Management recommendations for effective allocation of distribution funds and staff Improved transparency of management and multidimensional overview of theperformance of channel partners in over 40 countries More effective allocation of distribution and marketing funds (short-term) Identification of opportunities for channel partner development (longer-term) More efficient, better-quality account planning 12. Your point of contactAnswers to your questions.As an agency with offices all over the world, Pepper can also pro-vide you with a contact partner with a high level of experience inchannel marketing in close proximity to where you are located. Inother words, we are waiting for your call anywhere in the world,and your specific requirements can be met on a regional, nationalor even international basis. Give us a try.Your contacts at Pepper:MunichChicagoChristian von Vietinghoff Brennen RobertsDirector Consulting Managing DirectorTel +49 89 30903 553Tel +1 312 588 4774christian.vonvietinghoff@pepperglobal.com brennen.roberts@pepperglobal.comViennaSingaporeAlexandra WolfCaroline LimClient Service Director Managing DirectorTel +43 1 71 30 110 14Tel +65 6221 3312alexandra.wolf@pepperglobal.com caroline.lim@pepperglobal.compepperglobal.com PEWP1107_US_16