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CHANNEL CO-OP

Written by: Andy Marken

Article Overview: ... CREATIVITY WITH CONTROL

CHANNEL CO-OP

Every organization that sells through a channel partner network offers a co-op promotional program of some type or another, formal or informal. But since most business-to-business
sales/marketing people have little experience in the "consumer" marketplace, such programs are often haphazard efforts that waste the time and money of everyone involved.

While there is considerable flexibility in how firms can establish and carry out their channel partner co-op program, there are also a lot of restrictions. In recent years, the FTC has established a number of regulations and requirements that must be followed closely to ensure that you don't find yourself slapped with an antitrust suit.

While it is beyond the scope of this article to go into these regulations in detail, you can obtain copies from the Federal Trade Commission to ensure that your program stays within their guidelines.

In recent years, very few firms have done a good job of developing a comprehensive and effective channel partner co-op program. But even they are the first to admit that the vast majority of the channel partners who received a copy of the program haven't used the programs and probably haven't even studied the materials provided.

So, once you've established a co-op fund, you should develop a comprehensive, creative program that you can provide to your resellers. You're going to find that you'll have to continually prod them to use the program to help their sales ... and yours.

But, it's worth the effort. You'll be helping them do a better job of marketing, and you'll get greater localized exposure for your company and products ... for only a portion of the total cost.

The key to the success of your program is putting together all of the creative elements as well as all of the necessary checks and balances. A co-op program should have two basic promotional strategies ... do-it-yourself materials and company-developed materials. Whether these are provided in binders or in loose form is totally immaterial.

The first part of the program should be the retailer's guide. This will spell-out the duration of the co-op fund, the maximum contribution you will make, policies regarding approvals, types of advertising and forms of media that qualify, how channel partners are reimbursed (either in credit toward future purchases or outright payment) and reasons for the rejection of claims.

The second part of the program should be a short tutorial on retail advertising and hints on how they can make their promotional expenditures more effective. This will describe the goals of the co-op-advertising program, discuss the timing of their advertising and profile the prospective customers as they pertain to your product lines and corporate/marketing direction.

Next, discuss the media available--newspapers, radio, TV, outdoor, magazines, online and direct mail. Include discussions of timing and position of advertising as it pertains specifically to your products. This is important because ad position and airtime used to reach housewives are different from those used to reach business people. Finally, give a recapsulization of your advertising policy.

It's important to continually state your policy because you want to make certain that the channel partners carry out their programs properly so that you don't have to turn down their requests for reimbursement. Those you turn down only become disenchanted and disillusioned with you, your products and your program.

The next item in the package should be an annual planning calendar. This will assist the resellers in planning their advertising, sales promotion and direct mail activities in a coordinated manner. While it will help the channel partners in working with other suppliers, it will also keep your name in front of the channel partner, and it shows them that you're concerned abut them and their success.

You should also include an explanation section that discusses how the channel partner can qualify for co-op funds by using the various components provided and submitting copy to the company for approval. Included in this section will be the debit information and forms that the channel partner uses in debiting against their co-op funds. These include "pre-approval" and "proof of publication" forms.

With the administrative and financial sections out of the way, you're finally ready to provide materials that will promote your products.

Since most of the channel partners will be using print ads, include a number of pages of ads of varying sizes that promote and support your marketing and advertising programs. These are complete ads that include product/benefit headlines, illustrations of the products, strong copy blocks and sections
for the channel partner to simply add his own sign-off. This sign-off will include the store name and address, phone number, hours, payment methods available and other channel partner-oriented information.

You'll be surprised how many channel partners will simply use the materials you supply, rather than "create" their own ads. That's why we also recommend that you develop not only straight product/feature ads, but also special theme ads. These are ads that are targeted for key buying periods ... spring, fall, graduation, Easter, Halloween, Christmas and so forth. With a little creative thought and effort, you can provide them with a series of ads for all reasons and all seasons.

To provide the channel partners with flexibility, develop a series of pages of photo mats that show products, benefits and home or office illustrations in varying configurations. These will allow the channel partners or the local space representative to cut and paste the illustrations into ads for the channel partner.

In conjunction with these illustrations, include pages of copy blocks, headlines and company logos. These will be copy blocks that discuss the various products, their uses and benefits. Since the channel partner is rarely a wordsmith himself, he will cut out the particular headlines, copy blocks and illustrations and prepare his own ads.

By providing these materials, you're giving channel partners the flexibility to tailor the ads to their market, but you're also controlling the messages that are presented. Remember that you always have the right of final approval of the ads, if the channel partner wants to qualify for co-op funds.

Since the Yellow Pages provide an outstanding medium for retailers, provide the channel partners with preformatted ads that they can supply to the Yellow Pages salesperson. All they'll need to do is include their names, addresses and phone numbers. In preparing these materials for our clients, we stress company and product name visibility for improved recognition in the local market.

As the channel partner becomes stronger and more sophisticated, he will begin using radio and TV more, but the cost of providing radio and TV spot tapes to every channel partner is prohibitive. Therefore, while you can prepare them, you should only offer them in letter form and have the channel partner request copies for use on their local stations. You can provide 10-, 30- and 60-second scripts and, in the case of TV, storyboards. In many instances, they will provide these scripts and storyboards to the station salesperson, and the station will prepare slides for the channel partner and do live voice-over for them.

For outdoor advertising, include glossy reprints of tight, comprehensive layouts of boards that are available, along with the dimensions offered. Channel partners are finding that outdoor advertising is an excellent medium for long-term identity building and can provide both of you with very cost-effective exposure.

Depending upon whether your products are aimed at the end user or the business community, you may include a direct mail section. If your products go into businesses (or you want them to go there) direct mail pieces and programs can be a very strong, rifleshot approach for the channel partner.

Because your channel partner will be able to select exactly who he wants to receive the message, you can customize the direct mail materials and your messages. For example, you could develop an entire series of direct mail pieces aimed at accountants, lawyers, architects, contractors, real estate and even advertising agencies.

You'll have to explain to the channel partner how he can acquire these lists, but if he segments his markets in this manner, he can have an excellent return on investment. Again, in this area, show the channel partners only the comprehensive layouts along with a brief discussion of what the mailer says and its objectives. They can then order the quantity they need, pre-printed with their store name, address and phone number.

Once you've developed your own outstanding channel partner co-op program, you can't sit back and relax. Even the most comprehensive and most creative program won't be aggressively used unless you continually promote its benefits and availability to your resellers.

Encouraging them to carry out a strong co-op ad program is good business. You get valuable local exposure, you build up your reseller in his area, and you only pay a portion of the total costs.

Not a bad investment compared to the potential return.
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