In today’s environment your competitors will always be trying to reach your customers. Very few (if any) companies have the scale to reach all customers & prospects with their direct sales teams (nor should they). Many end customers even prefer to buy through a trusted channel partner vs purchasing directly. Indirect channel partners fill this gap, enabling you to effectively & efficiently reach previously inaccessible segments of your market.

As a sales leader, you are always looking for the most optimal route to your customers. When designed & executed correctly, channel partners provide your business an incredible amount of leverage. Correctly managed channel partners can help you expand into new geographies, break into new industries or customer segments, and cover fragmented marketplaces. Conversely, an ill-managed program will result in decreased margins, channel conflict, confuse your customers, and put your business in jeopardy.

 

Download the Partner Prioritization Tool. This tool helps evaluate channel partners based on objective metrics, sets the foundation for continued measurement, and can be used to hold joint-strategy sessions with partners.

 

In order to understand the available options, we’re going to start with a brief overview of the more popular types of channel partners. It is important to understand the different business models of each partner type to understand how much influence you will have in the relationship.

 

Partners that make more margin on services sold on top of your product care less about the actual product. Resellers that don’t provide services will be more reliant on your product to differentiate in the market. Each type serves a slightly different market and provides you with coverage to more end customers (click here for additional information/other types of channel partners):

 

  • Value-Added Resellers (VARs) : VARs will provide services wrapped around your product to deliver a more complete solution to their customers. A large portion of their revenues are from the delivery of services (vs. the discount they receive).

     

  • Resellers: Resellers provide much needed reach and access to new markets and customers. They greatly expand your company’s footprint, allowing you to transact sales across the globe. Resellers are traditionally compensated through the discount you provide your product to, and the price they sell the end-user.

     

  • Distributors: Distributors typically manage multiple resellers. Due to this volume, they will receive greatest discounts. They are also able to fulfill orders (value-added), absorb credit risk, and support the resellers they manage. This two-step distribution (Distributors to Resellers) may results in lower margins for the distributor.

     

  • Systems Integrators (SIs): SIs develop comprehensive solutions through integrating multiple company’s products together. Majority of their revenue is generated from the services required for integration.

     

  • Original Equipment Manufacturers (OEMs): OEMs companies which are selling their own product, and use your product to expand their offering.

     

  • Agents: Are often individuals or groups of individuals who sell your products within their network (social, business, or proximity based). They’ve developed relationships throughout their career, and are using them to advance your products.

     

Managing the many routes to the customer is a complicated endeavor, for the remainder of this article we are going to focus on the most common types; Value-Added Resellers & Resellers / Distributors.

 

A couple key points to consider while creating your channel partner program:

 

Develop Your Channel Program from the Viewpoint of Your Channel Partners

 

  1. Create opportunities for the channel to grow their business & reap the rewards through incentives.
  2. Develop mutually agreed upon goals & objectives (e.g. a revenue plan based on opportunity within their “patch”; or specific customers to acquire)
  3. Enable your partner through activities such as continued sales training & technical certifications, and marketing investment budgets.

     

In other words, think of your channel partners similar to how you think of your own sales reps. What will they need to know about your product, what behaviors do you want to drive, and how will you hold them accountable to agreed upon objectives?

 

Not All Your Partners Are Created Equal

 

In order to properly motivate your channel partners and make the most use of your limited time, it is important to prioritize your channel partners (and example prioritization tool can be found here).

 

Common partner segmentation programs are labeled in a similar manner as hotel & airline affinity programs; Platinum, Gold, Silver, and Member. Creating tiers not only provides incentives to sell more, it serves to protect your top partners.

 

Programs vary across companies and industries, but the most common benefits include:

 

  • Executive Sponsorship: Access to you and other senior leaders with your company for strategy development, co-planning, and co-selling purposes.
  • Price Discounts: Discounts from list price. Greater discounts allow the partner to earn more. This benefit is the key to success in channel partners, and should be carefully created, monitored, and frequently examined for effectiveness.
  • Deal Desk Access: ability to access your company’s resources for proposal generation, subject-matter expertise, and other sales support.
  • Additional Bonuses: sales incentives (and or club trips) developed throughout the year for special initiatives.
  • Marketing Funds: This is funding for agreed upon marketing activities. These activities may include: Online Advertising, Direct Mail, eMarketing, Events/Seminars, Telemarketing, other Revenue Growth Initiatives. (additional information on Partner Marketing)
  • Training & Certifications: Ongoing product training & related product certifications to increase credibility in the market. 
  • Exclusive Events: Special access to industry networking events.

     

Illustration of Potential Benefits by Tier:

 

 

Prioritizing your partners and providing the requisite benefits not only helps you manage your time effectively, but the tiered benefits structure motivates partner to grow with you!

 

Why Can’t You Afford to Neglect Your Channel Partners?

 

In today’s environment your competitors will always be trying to reach your customers. Very few (if any) companies have the scale to reach all customers & prospects with their direct sales teams (nor should they). Many end customers even prefer to buy through a trusted channel partner vs purchasing directly. Indirect channel partners fill this gap, enabling you to effectively & efficiently reach previously inaccessible segments of your market.

 

Download the Partner Prioritization Tool. This tool helps evaluate channel partners based on objective metrics, sets the foundation for continued measurement, and can be used to hold joint-strategy sessions with partners.

 

 

Additional Content

 

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As a guest of The Studio, you’ll get unlimited access to SBI’s CEO, Partners, and a handpicked team of experts.

 

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ABOUT THE AUTHOR

Chris Gosline

Challenges the status-quo to accelerate profitable revenue-growth.

Prior to joining SBI, Chris spent nearly a decade in management consulting, focused on revenue growth. He specializes in sales strategy & execution; including, account segmentation, sales coverage models, resource deployment & sizing, job design, competency models, sales compensation, and quotas. Prior to management consulting, Chris he worked in financial services, where managed a portfolio of structured loan products, and undertook several cross-functional, revenue-enhancing projects within GE Capital. Recently, Chris led the sales model integration of two PE-backed healthcare IT companies. This included product-portfolio rationalization, opportunity-based account segmentation, development of a cohesive go-to-market model, right-sizing sales roles, and expanding use of digital sales. Engagement resulted in accelerated revenue growth, at a reduced cost of sales.

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