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Channelinsight |
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January 27, 2014 Issue |
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The Most Powerful Name In Corporate News and Information |
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Cloud-Based Channel Customer Relationship Management |
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Channelinsight’s cloud-based channel Customer Relationship Management (cCRM™)
solution provides manufacturers who sell through the channel with visibility
into every tier of sales partner and every end customer for every
transaction in real time – allowing them to gain the insight necessary to
drive sales and optimize inventory through the channel. Channelinsight
collects “raw” channel POS and inventory data from tens of thousands of
worldwide channel partners, processing over $100 billion in channel sales
transactions annually. Customers benefiting from this 7x24x365 solution
include: HP, Microsoft, TE Connectivity, AMD, Sharp Electronics, Lexmark and
more. Channelinsight is venture backed by Rho Ventures, Sequel Venture
Partners and Vedanta Capital, and is headquartered in Denver, CO with
offices in Palo Alto, CA, as well as globally.
President & CEO |
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, January 27, 2014
Mr. Smith: Channelinsight provides visibility into ‘any’ organization that has channel sales and provides the same visibility as an organization expects with the direct sales process. An example would be a customer that has Salesforce.com® and is using the application for the direct side of the business; Channelinsight for Salesforce enables CRM visibility for the channel through a series of cloud applications that sit on top of Salesforce.
CEOCFO:
What is the competitive arena? Are there many companies that work in the
same space? Mr. Smith: There are two other companies: One is a small boot strapped, cloud-based, Sales as a Service (SaaS) application (similar to Channelinsight) located in Seattle. The other is a BPO outsourcing company out of India that has 200 employees and they do manually what our application does in an automated fashion. Then, there are a few large companies like SAP, Oracle, and Microsoft that have certain components, but none of them enable what we do with crowd-sourcing. We have a network of distributors, resellers, brokers, and manufacturing representatives, etc. that we reuse each time we on-board a new manufacturer. None of them have the concept of big data. We have now collected, standardized and enriched upwards of seven years of channel point-of-sale (POS) data for our customers. An example would be a customer like TE Connectivity where they compare analytics against channel sales information for predictive analytics, and then use our cloud app to view that data in Salesforce. Neither of the competitors that we deal with on a daily basis can offer this, nor can the big on-premise software providers.
CEOCFO:
Are most of the companies that are working with channel sales aware that
Channelinsight exist? Mr. Smith: Most are not aware that we exist. However, they are aware that they need a more efficient way to manage channel sales beyond Excel or an off-shore BPO vendor. This is much like other technology waves, like data warehousing or enterprise resource planning (ERP) or Cloud CRM. Today, a lot of companies are still processing channel data using spreadsheets or an off-shore BPO service, not doing it at all, guessing at it, or trying to build a homegrown program that has a large cost associated with it. In any one of those scenarios they are looking for a low-cost, cloud-based software alternative, which can exponentially grow channel sales, and that’s typically when we get discovered. However, many conversations I’ve had with channel chiefs say, “We didn’t know that a cloud application even existed.” Another way we get discovered is through our tight relationship with salesforce.com. Because we populate Salesforce with cleansed and enriched channel POS data, we get introduced to their customers who want to use CRM for their channel, but lack the necessary channel sales data. Since we supercharge Salesforce, we solve that problem.
CEOCFO:
How else are you able to reach potential customers? Mr. Smith: There is a finite group of about 450 channel chiefs in the high-tech arena, and 1000’s more in industrial manufacturing, life sciences, and health care. Our target customer is typically the person that manages the sales channel for a company and is responsible for the channel sales number versus the direct sales number. These are the potential customers we are trying to reach and who we want to reach more of.
CEOCFO: Do
you find that channel sales seem to lag behind in terms of technology? Mr. Smith: With regard to companies that are trying to grow channel sales, I think that high-tech companies are the most progressive. One of our larger customers, Microsoft, is very proactive. If you look at Healthcare I think it is somewhat dependent. Life Sciences are certainly progressive, but if you move over to Industrial Manufacturing, perhaps they are not as progressive. There is a perception that when a manufacturer gets data about the channel, they are going to steal the end customer and take it direct, and that is simply not the case. What you actually have going on is high-level economic changes. Many of our customers are growing at a flat rate in Europe and they are somewhat growing in the US. But they growing astronomically in Asia. One of our customers said to me, “I’m never going to put a hundred-person direct sales force in Beijing. The only way I can sell over there and get that growth is through the channel.” In answering your question, a lot of this is pressure from within the high tech, industrial manufacturing, life sciences, and health care verticals because of where the business is coming from. There is a need to move to a channel sales model, which is being forced economically by globalization and they need to research how to accomplish this, which is usually when they end up finding Channelinsight. We get a lot of what I would call stodgy customers and prospects, who used to manage channel sales data on a mainframe or in spreadsheets. Now they are realizing that there is a much more efficient application out there and it is cloud-based.
CEOCFO:
When you are speaking with a prospective customer, is there an “Ah Ha”
moment when they understand the value of what ChannelInsight provides? Mr. Smith: It’s usually when they realize that they can get a combined view of sales, both direct and indirect, from all of their channels, from thousands of distributors and resellers, and have all of that data cleansed, enhanced, matched, and married to their direct sales so they can see all of their sales bookings in one place for the Channel Chief, Chief Revenue Officer or VP of Sales, with all of their commissions being paid, all of their spiffs, all of their rebates, where their inventory is in the distribution channel, and which distributor has which widget. When they realize that they will be able to see all this information in real-time and proactively make changes to the selling aspect of the channel, and have one view of sales in Salesforce - that is the “Ah Ha” moment!
CEOCFO:
What’s the plan for next year? Mr. Smith: We are currently growing at 58%. We have about 100 people providing a state-of-the-art cloud application. We do have a global presence; some of our largest customers are the largest semiconductor and software companies on the planet. We have hardware companies like Lexmark, chip companies like AMD and Fairchild, component companies like TE Connectivity, Elo Touch Solutions and software companies like Microsoft. Our business model is not only to continue to grow with other customers like these, but also to increase penetration with our existing customer base. Our model is based on both the number of transactions and the number of resellers, distributors, and partners we on-board. So, as their business grows, our business grows. It is very much like the cellphone minute model. When they are selling more stuff through the channel, we earn more revenue from them. So, it’s not just about obtaining new customers. It’s also about permeating and growing with our existing customers as well.
CEOCFO:
What have you learned from your customers that has encouraged you to tweak
your product? Mr. Smith: That is a really good question. We have a very, very tight business relationship with salesforce.com. It spans from Marc Benioff and on down through his executive team. What we’ve learned from our customers is that they like that tight relationship and that they want to view their channel sales in the same user interface that they view their direct sales. Our customers want a strategic relationship that is based off of sales, commonality of vision, technology and the ability to look at channel information in the Salesforce user interface because they have invested a lot of money in that. Our relationship with Salesforce has actually even gotten tighter and that is something that makes our customers very, very happy.
CEOCFO:
Are there particular areas of your offering that tend to be used more by
your customers? Are there areas that they should be using more? Mr. Smith: When you take a look at Channelinsight and realize that you have a cloud application and big data that customers can do regression analysis and very sophisticated predictive analytics with channel POS data, that is an feature that customers are just beginning to take advantage of. With access to several years of channel POS data, they are now able to load that data into memory databases like SAP/Hana and use IBM predictive analytics. This is an area that is underused, but that’s starting to get lots of attention, just like retail POS data did about 10 years ago. The second area is that we now have roughly 80,000 end-user customers in our directory and tens of thousands of distributors, resellers, manufacturers, wholesale distributors. Our channel partner network is starting to get heavy re-use and is great leverage of crowd sourcing for our customers. For example when Microsoft became a customer, we re-used relationships with resellers and distributors from other customers. Crowd-sourcing is very significant for our customers when it comes to getting them live and into production using our cloud application. Big data and crowd-sourcing are key areas after the adoption of the cloud application.
CEOCFO:
Are you funded for the push that you would like to make and all the steps
needed to get more attention? Mr. Smith: We are venture-backed and we are profitable, so it is not an urgency. We are growing organically and funding ourselves, and that is preferable. If we got from 58% to 100% and strategic investment lets us go to 150%, those are always good conversations for us to have. It is just very much about keeping our customers happy and growing large ones and new ones like we are doing, and doing it the old-fashioned way: throwing off cash and investing it.
CEOCFO:
What have you learned from your prior ventures that has been most helpful
with Channelinsight? Mr. Smith: My last company, ISYS Enterprise Search, was sold to Lexmark, which ironically is a Channelinsight customer. We had Australian investors and it was run on a profit-loss model. Prior to that, I had been at several other venture-backed companies and I’ve learned that you do not always have to get equity and venture capital. Just pay your own bills, make the trains run on time and have strong customer references. One of the reasons we got Microsoft as a customer last quarter was because they were referenced by another large customer, which happens to be major chip company in Silicon Valley. It’s sort of back to Business Basics 101. Having learned that at ISYS and having very conservative investors from Australia allowed me to bring some of that old-world, profit-loss mentality to a venture-backed company – and that has served us well.
CEOCFO:
Why should the business community pay attention to ChannelInsight today?
Mr. Smith:
If you do not pay attention today, but eventually adopt or move to a channel
model to augment or even replace your direct selling model over the near and
long term, you are going to need a low-cost, cloud-based, big data, partner
friendly, easy to implement application to manage your channel growth.
Whether you are in industrial or high-tech manufacturing, life sciences, or
health care – if you sell through a channel, you’re going to need an
application to manage your channel sales, and we are your guys. |
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