PRM vs CRM
While many debates will still rage about PRM's (Partner Relationship Management) relation to customer relationship management (CRM) (i.e., whether the first is only a cousin or a child of the latter) and about its stand-alone viability, it is certain that there has been a need and demand for PRM, albeit the area has been a moving target ever since its relatively recent advent. While even during the dot.com euphoria many were dreaming about disintermediation, i.e., reaching their customers directly (often even hoping it to be at the expense of their partners), the more realistic ones have always known the importance of the indirect channel, starting with some enterprise application vendors, whose entire success has always relied on their value-added resellers' (VARs) execution.
Now that back-to-basic reality has indisputably triumphed, almost every company has been scrutinizing more closely their relationships with partners, and figuring out how best to reach and nurture them. Some pundits are predicting as much as 80% of business going through indirect sales channels in the next five years. Given ever-shorter product lifecycles and companies' ever-increasing reliance on third-party channel partners to drive sales and increase customer satisfaction, the need for some form of PRM should not be questioned.
Still, many surveys have purported that there are twice as many manufacturers that cannot integrate their ordering systems with those of their partners and distribution channels than those that can, leaving them vulnerable in terms of brand management due to poor visibility. Likewise, a vast majority of manufacturers are still unable to provide online inventory and delivery information or account status to customers even though the information is available in their ERP systems. Possibly the worse situation would be with product returns, since only a small portion of enterprises will initiate product returns through an automated online system.
To that end, definitely a sort of a relative to the much more publicized and known CRM counterpart, PRM (also sometimes referred to as demand chain management (DCM) or channel relationship management (ChRM)) software was designed to help organizations that mainly sell through distributors and resellers. Unlike business-to-consumer (B2C) e-commerce systems that would put manufacturers or service providers in a conflict with their channel partners through disintermediation, PRM should rather bring efficiencies and eventually instill trust within often complicated channel relationships by enabling manufacturers to e.g., distribute leads, assist partners with co-branded marketing promotions, and/or even steer direct buyers directly to partners' web storefront checkout.
In turn, PRM should give vendor enterprises better visibility into, and, possibly and ideally, more control over the outcome of the entire partners' sales. By helping their partners become more efficient, manufacturers and service providers are then likely to increase sales, market share and brand recognition, and build loyalty among distributors and resellers, not to mention gain invaluable insights into buying patterns and customer preferences that were previously unavailable to them. Also, with partners often working with several competing suppliers at once, manufacturing and service organizations need to know whether their resellers are happy with them, because otherwise they will exert more effort while working with somebody else.
While traditional CRM solutions help companies to better manage similar relationships directly with end-users, customers or consumers, they are often not necessarily straightforwardly useful if the customer is contacted via an intermediate third party, be it a reseller, broker, agent, dealer, or a distributor if you will. Indeed, because sometimes many partners with different idiosyncrasies can be involved, the indirect channel is by far a more complicated part of the value chain than the direct sales force. Nonetheless, PRM is still usually associated with CRM and expected by some to be eventually subsumed by CRM, since the two software sets share a number of similar functional areas, such as after-sale services and support, helpdesk functions, and both use the portal model for displaying information, as most links with users are through a web-browser or a thin client extranet setup.
Organizations that sell their products/services through complex networks of partners (e.g., dealers, affiliates, VARs, resellers) are indeed leveraging Web-based solutions to better service and sell via these channel partners, owing to the increased technophobia and aversion to the IT going downstream the channel, and to a consequent training simplicity imperative. Thus, a solid functional PRM system might have many of the features of a traditional CRM package, plus specific functions so that the most functional PRM systems could allow businesses to capture, analyze and optimize customer data and feed back new ideas and better information to the partners who have these direct customer relationships.
Most common, but still not all-inclusive, PRM features and functions would therefore include:
partner management (e.g., profiling, recruiting, training/certification, training
materials management and distribution, partner location and search, surveying
and feedback, knowledge repository for sharing best practices across a value
chain, partner-to-partner communications, partner metrics, partner compensation,
lead management (e.g., lead routing, lead follow-up, territory management,
lead analytics, etc.),
forecasting (e.g., revenue projections and growth),
management (e.g., campaign management, promotion management, trade fund management,
marketing analytics/ market intelligence, etc.),
brand management (e.g., collateral distribution, content sharing, etc.),
product information (e.g., catalog services, catalog aggregation, search capabilities,
product content syndication, etc.),
collaborative inventory management (e.g. order management, order tracking,
joint order fulfillment, joint order status, available-to-promise (ATP)/capable-to-promise
(CTP) cpability, etc.),
vendor support (e.g., warranty/guarantee management, installation/repair management,
labor scheduling, loyalty programs, etc.),
collaborative commerce (e.g., personalization, two-way communication, shared
Web storefronts/merchandising, request for proposal (RFP) support, guided
selling, product configuration, dual content delivery, dual action bars, etc.),
pricing management (e.g., multiple language/currency support, localization
capability (e.g., value-added tax (VAT), pricing engines, pricing schedules,
Consequently, by deploying some or all of the above capabilities, manufacturing or service providing companies should be able to better measure their channel's performance and revenue generation, and then make better business forecasting and planning decisions for such areas as marketing campaigns.
PRM software should allow companies to manage the amount of information that goes out to partners, as well as managing partners' contacts with customers more effectively, so that, for instance, a customer does not receive multiple calls from channel partners all pushing the same solution since channel partners should have leads or territories logically allocated to them.
Another key benefit of PRM should be to allow vendors to address the all-too-known 80-20 Pareto principle, i.e., to identify which 20% of partners (often referred to as gold' or platinum') deliver 80% of the turnaround. For instance, a supplier should initially forward leads to a particular reseller that it felt would be suitable to handle that customer, and then follow the reseller's progress with the lead. If the reseller fails to close reasonably enough leads for the vendor, the vendor should then be able to decide whether to forward in the future such leads to that partner. The vendor should also able to decide how much of its marketing budget and resources to allocate to particular partners in the future, rather than pour money arbitrarily.
Pioneering PRM Vendors
as many times seen before in the enterprise software market, many specialist
start-up vendors have already jumped at the opportunity and have come up with
by and large partial answers to the above market needs. A number of still existing
pioneering vendors that first offered specific PRM offerings a few years ago
would include Allegis, whose Sales Partner
module (now a part of much wider Allegis e-Business Suite) featured a funds
manager, business planner, program manager, and best practices mentor; ChannelWave,
whose Partner Loyalty System product (now within ChannelWave
5) featured a range of partner functions, including pre- and post-sales
support, marketing fund management, training and service management, lead management,
sales forecasting, literature fulfillment management, opportunity management,
and order/quote configuration capabilities; and Comergent Technologies,
whose Distributed E-Business System featured an online selling
process, letting partners offer co-branded sites, cross-selling, and order tracking
capabilities. The list could contain many more candidates such as Webridge,
iMediation that was purchased in 2002 by a like vendor Haht
Commerce, very subsequently after it acquired arcadiaOne,
and OnDemand, whose portal solution had long offered sales
and marketing information, training and certification programs, and tracking
and reporting functions, and which was also acquired in 2002 by Chordiant
after itself acquired North Systems in 2001.
the above vendors focusing more on partner relationship side of the business,
companies like Comergent, InfoNow, Art Technology Group,
Haht, Entigo and Click Commerce add a channel-centric
e-commerce sell-side and/or aftermarket element to the mix, designed to keep
track of transactions across multiple tiers of suppliers and to let manufacturers
automatically route customers to the right partner and close a sale. Moreover,
while specific PRM software solutions have for some time appeared on the market,
CRM and ERP vendors have also been adding PRM modules to their own software
suites. To achieve this, most enterprise applications suite vendors have launched
portal initiatives that should tempt partners to share information about customers'
demands in turn for deeper product knowledge and training and for more efficient
ways of sharing leads.
addition, CRM leaders like Siebel Systems, Pivotal
and Onyx, are extending their suites with PRM functionality.
Particularly Siebel's system goes far beyond lead management and pretty portals
to include modules for managing market funds, lead management and distribution,
delivering current product and pricing information, and generating quotes and
orders, and offers a 360-degree review of the relationship between a company,
its partners, and its end customers. This is accomplished through integration
of the PRM system with its sales force automation (SFA), call center and other
CRM modules, while various versions of the system target eight different vertical
markets. Still, while the above broad, well-balanced and integrated functional
footprint is staggering, PRM may still hope for some autonomy over CRM, because
a vast number of businesses could not reach customers without multiple tiers
of channel partners, and do not necessarily need a direct contact with those
customers, where CRM still excels.
The Evolution of PRM
Most early adopters' initial PRM projects revolve around lead generation and distribution and content management (i.e., partner lifecycle management) with the immediate aim of these initiatives is to increase sales. However, enterprises are increasingly expanding their PRM efforts to strategically restructure their channel network relationships and information flows as to minimize potential conflict and enhance value for all constituencies.
PRM is still a moving target in part because different industries, however, have very different needs in their PRM solution. A chemicals company, for instance, will start with order management, while a more consumer-focused company will be more interested in looking at brand management. Telecommunications will pay attention to order management and commissioning, which is a complex process based on partner agreements and rate structures, and will be interested in giving their agents a single point of interface to many back-office systems, such as billing, order management and pricing, which would require a flexible integration framework. In the energy sector, the emphasis will be on the service side.
That PRM is still a morphing matter stems also from the fact that different folks need different strokes. The mix of traditional brick-and-mortar and online channels (so called click-and-mortar) is adding to the confusion. As the systems become more sophisticated, they are moving from single-channel capability to delivering multi-channel capability and enabling users to reach their customers through a variety of channels, including distributors, dealers, online marketplaces and direct sales. Capabilities range from traditional paper-based mail, phones, fax, computer-telephony integration (CTI), secure virtual private network (VPN) communication between manufacturers and indirect channels about specific deals to detailed Internet-based portals that enable everything from downloads of vendor product information to e-mail campaigns about important events. Ever-growing number of companies sell and serve clients through multiple, distinct channels, rendering applications that handle only one channel increasingly irrelevant.
last year's demise of PartnerWare, another PRM pioneer, whose
TCX Insight product included components for channel marketing,
closed-loop lead management, and extended team selling, as well as a number
of earlier mentioned recent mergers and acquisitions, indicates rapidly more
difficult competitive position of pure PRM players (i.e., insufficient client
base traction and recurring revenue, narrow functional footprint (e.g., without
order management functionality), while almost impossible to find a new investment
funds infusion), although not yet jeopardized like the marketing management
niche CRM players (see Xchange
Adds To The List Of CRM Point Solutions' Casualties).
The initial step for companies thinking of investing in PRM is to develop their overall business strategy regarding their indirect partners' channel. Manufacturers and service providers should give as much attention to their demand side as they do to the supply chain in terms of more advanced online facilities beyond simple shop windows and web catalogues. Also, PRM software should only be used to work alongside existing inter-personal relationships, and not to replace them. PRM is just a facilitating tool while it does not replace people, it can nonetheless free them up to do the quality relationship building. An undefined channel strategy, an unclear channel purpose and role definition, insufficient channel program support, and/or unrealistic expectations from the channel would be perfect examples of disastrously poor foundation practices onto which one should attempt to graft PRM software.
Companies can generally chose a PRM system that is either a focused solution that addresses specific complex partner network needs or a larger, versatile solution with deep integration to CRM and other parts of the enterprise applications. Choosing a solution will also depend on the company's market size, its vertical focus, and the most compelling parts of channel design and the customer lifecycle. The solution also has to address mission-critical issues, to provide tangible payback, and to be easy to use.
If you have only 20%-30% of your turnover through the channel, the real benefits of PRM might then come mainly when it is integrated with a CRM system. Conversely, manufacturers that make over 80% of their sales through multi-tiered distributors, a focused but flexible PRM might be a better choice. Enterprises should look for solutions that support a dynamic and potentially unlimited number of channel relationships and the specific, complex business processes that flow within the tiers of the channel. Since the PRM market is shifting from being single-channel-centric to delivering multi-channel platforms, the single-channel solutions will likely provide only short-term results, as they will not easily scale to serve multi-channel needs, and may force a duplication of subsequent efforts across multiple channels.
On the other hand, single-channel focused PRM solutions are naturally less expensive, faster to implement and tend to fit better within existing organizations, since they usually offer deeper functionality in pre-sales, sales and post-sales operations. More complex multi-channel management solutions, conversely, should offer consistency across channels and integration with core business processes, but will likely exhibit more shallow PRM functionality while imposing longer, more complex and expensive implementations.