Times have changed. Today, thanks to the internet, geographic boundaries are vast. A software manufacturer in Sydney can now sell to an end-user in San Diego. With a language tweak, they can also sell to South America. Small Channel partners, solely focused on a very local geography, are now being squeezed. Software and Hardware are easier to install, and complex products are increasingly sold directly to better educated customers. Gone are the “Mom and Pop” Channel Shops, in their place are the Megastore Channel Partners and Nation-Wide Partners.
1) Partners Who Can Scale with Their Product
If I’m a manufacturer who is a releasing a new product with exponential growth possibilities, I want someone who is capable of bringing my product to the masses. I don’t want to be locked into a contract with a reseller that is unable to keep up with demand in a rich geographic territory. As my product grows, I want my Sales Channel Partner to scale up their effort, and increase revenues. If I can sign one large partner with the ability to effectively reach more of my customers instead of seven smaller firms, it’s a win-win. I get easier monitoring, better collaboration, and a more robust sales force. One of the biggest concerns of manufacturers is a lack of transparency and communication with their channel partners. If I can vastly reduce my network and reach the same amount of customers, I will.
2) Partners Who Sell To Customers They Cannot Access
One of the fastest areas of channel growth is in Emerging Markets with high barriers to entry. Many times, firms attempting to expand internationally run against geopolitical hurdles that can’t be easily overcome. The solution is to find a trustworthy channel partner with an established presence in the area. The manufacturer avoids many of the cultural, economic, and political risks of expansion. Also, in exchange for a slice of their product margin, they get exposure to the fastest growing economies in the world.
Key Takeaway: As Manufacturers are able to access more customers directly, Sales Channel Partners must either be able to bring their product directly to a wider audience quickly, or bring it to an audience previously unobtainable.
These are two of the biggest trends in the market, but surely not the only ones. Channel Managers, what other criteria are you increasingly seeking in a Value Added Reseller or Distributor? Please post in the comments below.
Also, for instruction on how to properly sequence Sales Force improvements, please refer to Matt Sharrer’s book, Promoted to VP of Sales, starting on page 21.