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Are you a Cow, Dog, Star or Problem Child?

by Heather K. Margolis on August 22, 2009

We all know the BCG matrix with Cash Cow, Dogs, Stars, and Problem Children but how does that play out in reality?  How should vendors cater their partner programs to each of these product groups?

Cash CowCash Cows are product lines that have high market share in a slow growth industry, they basically sell themselves, think Microsoft Office.  Partners are comfortable selling these products and are confident in their performance.  Partners who don’t have a high growth strategy in their own companies may be perfectly content to continue selling these products without looking for other somewhat risky product acquisitions.

These products require minimal demand generation assistance. While a partner wants materials letting end-users know they are a Platinum/Gold/Professional/Uber-Certified Reseller, customers know enough about the product that major partner-driven campaigns don’t need to be launched.  Incentives should focus on volume rebates and maybe a cross sell rebate of one of the lesser products because again, Cows sell themselves.

Stars have high market share in a fast growing industry.  Think of that shiny new object that everyone is talking starabout and standing in line to get, like an iPhone.  For a partner to take on a new product line they need to see a positive ROI, but Stars tend to be an easy addition.

To keep Stars growing, partners need a decent amount of support.  Materials ‘To’ the partner, quickly ramping them up on how to better position, sell, and implement the products as well as materials ‘Through’ partners to use for demand generation to end-users.  Incentives should be aggressive and upfront around net new customers and Deal Registration is a must.

Ah, the Problem Child (also known as the Question Mark), lower market share in a high growth industry.  Burning problem childmoney to gain market share, will they become a shining Star or are they going to end up a Dog?  Partners play a huge role for a vendor with these products in gaining market share.

Partners need more demand generation support above and beyond mailings or banners for their site.  Field Marketing assistance, sales and technical support are a must as partners struggle to push the Problem Child to Star status.  Incentives should be very aggressive and focused on multiple types of upfront discounts and promotions.  Much attention should be given to the Problem Child in hopes that, like a real child, they will try to impress and subsequently, flourish.

And finally the Dog.  Generally breaking even, Dogs have enough market share to offset the cost of their production DSCN0483though a partner won’t be influenced to sell it unless they’ve already built it into their offerings.

Margins must be large, incentives must be great and demand generation must be, well, it must be done FOR the partner.  In other words, Dogs are most likely better left alone when it comes to your channel.

The important thing for vendors to realize is that though an overall partner program (tiers, training, requirements) needs to be straight forward without a lot of changes, partners that sell different products need different tools and incentives based upon the product line itself.

How are your programs different by product?  What have you found works or doesn’t work well?

4 Comments

  1. Which is the better way to establish a channel strategy: by market or by product (or product line)?

    Seems like by market would simplify relationships with partners, provide a framework for decision making, and set expectations effectively with customers.

    Then, decisions in the single-product context would be more straightforward for any given market – are we trying to grow awareness, improve support, penetrate new customers, etc. Those market goals would then drive the value/objective of partner-related activities.

    Or are you already assuming this is a market that is already assigned to (and forever assigned to) partners for ownership?

  2. David Locke says:

    Since product/technology crosses markets over its life, there is more to the issue than product or market. Channels are definitely organized around markets, as market hubs. A product needs an enabling architecture focused on making these market/channel transitions.

    Given Christensen’s separation recommendation, each of the lifecyle phased markets would be its own company through which products would flow.

    Those labels: stars, cows, etc. would be applied to any and all products at different points in the technology adoption lifecycle. PCs created wealth in the early market and became commoditized in the late market. Typical.

    That said, Moore technology adoption lifecycle needs a few modifications. For everyone except the market leader, fast followers drive price-based competition. This moves the onset of price-based competition forward to the exit of the tornado, rather than the entry into the late market. Entry into the late market still signals the end of growth to the financial markets.

  3. MoeWestcon says:

    As to the question ” Which is the better way to establish a channel strategy: by market or by product (or product line)?” I would add “or by reseller needs” to this question. Vendors sometimes forget that it’s the reseller’s relationships, knowledge and skills that really drive the sales.

    Partner programs have always been a challenge as to effectiveness in meeting the resellers goals as in most cases they are designed to meet the vendors immediate sales quarterly goals. I don’t see a lot of vendors that have taken the time to take a deep dive as to finding out what their solution providers really need to execute in the long run. Pity the poor reseller that has to cobble together various partner programs to take advantage of a multi-vendor solution sale.

    I look at Microsoft as having one of the best partner programs around as it is based on a foundation of long term “Knowledge is Power” enablement through providing easily accessible solutions knowledge, multi-audience training, industry leading selling tools, P2P portals and self-service and fee based marketing offerings that cross the Cow, Dog, Star or Problem Child boundaries easily. And what is amazing is the ease of becoming a partner, no hoops to jump through.

    The vendors that take that approach are the ones that will be the winners in the long run.

  4. [...] going to make money selling your product then what’s the point.  As I wrote about in “Are you a Cow, Dog, Star, or Problem Child” make sure your margins fit the [...]

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