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How Can Effective Channel Partner Management Help Your Business Grow?

How Can Effective Channel Partner Management Help Your Business Grow?

In today’s environment, if B2B organizations are going to make it, they need to grow. Partnerships can be a big help.

One thing all companies have in common is the need for growth. For most, it is about revenue growth and for others, it is more about impact or influence. A fast pace offers a competitive advantage in the markets that would otherwise take months or years to bring about. Yet achieving sustainable fast growth purely through a company’s own resources is an enormous challenge. B2B companies in particular can benefit from partnering with other companies to help drive their growth.

For B2B technology companies especially, growing revenue through channel partners (Resellers, VARs, Distributors, System Integrator, Managed Service Providers (MSPs) and Channel consultants can be a highly effective business strategy to pursue.

Formalizing the partnering process through a channel partner program is essential to rapidly scaling a business through third parties. A channel partner program brings systems, structure and templates to create a coherent channel strategy that can be implemented systematically.

A channel partner can be defined as a company that partners with a manufacturer or vendor to market and sell the vendor’s products, services, or technologies. This is usually done through a co-branding relationship. Channel partners may be distributors, vendors, retailers, consultants, systems integrators (SI), technology deployment consultancies, and value-added resellers (VARs) and other such organizations.

The channel partner is part of the vendor’s indirect sales force, meaning that they sell the products and services on behalf of the vendor but they are an independent company. They may also sell products and services produced by other vendors as well as items they develop themselves.

The right channel partners have the market knowledge, distribution channels, sales expertise, templates and customer relationships to successfully sell your products and/or services. Managing these relationships can be a very complex and time consuming task and significantly impacts profitability. Finding ways to improve collaboration is clearly a factor of success.

Effective and efficient interaction between your company and your channel partners, and even between channel partners directly, has benefits for all involved. These may include:

  • Increased productivity
  • Increased loyalty and engagement
  • Greater profitability
  • Greater consistency and predictability of the interactions

Other benefits that vendors and manufactures derive from a formal channel partner program include:

Increased Revenue

Channel partner programs can create significant growth in sales and distribution of a product or service. The best part about template partner programs is that both sides benefit from the increased revenue. For the vendor each new partnership not only generates revenue for your company, but it also grows your sales footprint. At the same time, the vendors’ partners can also grow revenue for their businesses.

Drive International Growth Through Localized Channel Partners

As well as driving sales, international Channel Partners can help decrease time to market and provide access to new competitive markets. Partners local to the region can help with language barriers, local customs and international business law and taxation.

Reduce Cost of Sales

For all manufactures, reducing the cost of sales is important but it is especially important for start-ups and small businesses. Establishing an indirect sales channel rather than employing an in-house sales team can save on employee salaries and benefits as well as travel costs to visit prospects and the time wasted on unqualified leads which never convert to sales.

A great example of successful growth through building a channel partner program is accounting software publisher Xero. On 1 October, 2009 cloud accounting program Xero was celebrating 12,000 customers. “Just 12 months ago we had 2,200 customers,” CEO Rod Drury wrote that day on the company blog. In three years it shot up to 135,000 customers, 65,000 in New Zealand alone. How? The secret behind this stratospheric rise was a bold go-to-market strategy that aimed to turn accountants and bookkeepers into an endorsement channel for the software. The plan was a huge success – as much as 60 percent of Xero licences are sold through accountants and bookkeepers.

Encouraging partners to participate in your channel partner program is a critical activity of channel partner management and but can present significant challenges. Collaboration at the initial stages of the channel partner program can set the stage for an effective business relationship by letting your partners know that you value their perspective. Without effective collaboration, you may find that channel partners do not have a high level of engagement with your company. In any non-captive channel, your partners represent other companies, so their sales teams have options when it comes to what products and services they choose to focus their time and energy on.

Before building a channel partner program it is essential to understand exactly what type of partner best suits your solutions, customers and strategy. Creating a template for channel partner management that clearly answers the following questions will help your company engage with the most ideal partner candidates:

  • Are they ready? Do they have the resources to invest in the partnership?
  • Are they willing? Will the partnership help them reach their goals?
  • Are they able? Is there a technical, customer and strategy fit?
  • Do we have similar values? Is there a culture fit?

Using these questions, and their answers will ensure that you select the most suitable partners, giving you the best chance at building a successful channel partner program.

In Conclusion.

For business executives that are looking to rapidly scale their business, especially from a global perspective, building a channel partner program should be a serious consideration. From geographical coverage and multi-cultural considerations to higher revenues and increased profitability, the benefits of a successful channel partner program are considerable. Nonetheless, this route-to-market is not suitable for every business, and executives must take their time to carefully research and plan their strategy. Partner selection and channel partner management require unique skills and resources. Each company must decide for themselves if this should be a key part of their business strategy.