Companies can have a variety of partners in Marketing and Sales functions. Channel partners typically refer to Sales Related Partnerships - commission-based affiliate partners, resellers, and VARs value-added resellers (who can provide services component of your offering, or bundle other products needed by the customers). There are other partnerships such as Alliances – which could be about the bundling of products, co-marketing, etc.
This document primarily focuses on channel partnerships related to sales activities as described above.
Some examples of Channel Partners are:
Value Added Reseller (VAR), who don’t just sell the product, but also possess expertise in installation/implementation, and maintenance.
Distributors, who stock the product in bulk and sell it to the next tier of suppliers.
System Integrators, who bring together a variety of products and integrate them to build turn-key solutions for the end customer.
Independent Retailers, who could be stores selling on an exclusive or non-exclusive basis.
Agents and Consultants, who sell for a Commission on the sale price.
Channel Partner Programs, with participation from any combination of the above types of partners, are commonly run by B2B organizations, but such programs can be drawn up and run for B2C businesses too. Computer software and hardware are sold B2B and B2C through various combinations of channel partners, who have markedly different selling strategies depending on whether the sale is to an individual or to a business, besides other factors such as the size of the sale.
Adidas, which sells its merchandise out of its own stores, franchisee stores and multi-brand retail outlets, in addition to selling directly to end-users through its own online store would be a largely B2C example.
Singapore Airlines selling tickets through intermediary sites like Kayak or Trivago is an example of online B2C channel partnering. Other online B2C channel types exist too. Advertising Based channels are where sites like YouTube, which attract large volumes of traffic, make themselves available as channels for advertising and selling. Community-Based channels are sites like Facebook, which can be used to target consumers based on users’ demography and geographical location. Fee-based channels are sites like Netflix, which charge a small fee so that users can access the content that has been licensed to it by content owners.
Channel Partners work on either Commission-based Partner Programs or Discount-based Transfer Pricing Programs.
Why Channel Partners are Important?
Most importantly, Channel Partners give you a head-start. They already have a set of ready customers with whom they can kick-off the sales process. A single Partner Manager can handle multiple Channel Partners and drive the sales process to bring in the same amount of revenue at a lesser cost. Channel Partners help in experimenting with new ideas, products, promotions, exhibitions at a viable cost. With proper training and certification, Channel Partners can help in not just acquiring new customers, but also in extending after-sales support. They also prove handy at the time of maintenance contract renewal, thereby allowing the Partner Manager to focus on nurturing new partners, sales operations management, and escalation measures related to implementation and support.
I do a lot of research into the company to find out what they are trying to achieve. Are their clients matching up with ours? Are their goals aligned with ours? Do they have the skill set they need to for a successful implementation?
For organizations looking to expand their horizons to new territories – domestic or international – Channel Marketing can prove to be the ideal platform to operate with. Instead of setting up a complete organization in new geography for customer acquisition, it can be worthwhile to test new waters by engaging with Channel Partners to reach out to prospective Customers and also to gather competitive intelligence.
Channel Partners can maintain stocks and spares too, which makes quicker deliveries possible, leading to faster realization of revenue.
Channel Partner Program
A Channel Partner Program is an association between the Product Organization and its 3rd party Affiliates who agree to team up and sell to the marketplace under pre-drawn terms of the agreement. The whole idea of this program is to maximize reach, harness the existing customer base of sales affiliates, increase and improve touchpoints, conduct sales, and increase revenue in the least possible time to maximize ROI. This whole process is known as Channel Marketing.
The tool which can put all of these activities together with a Channel Strategy, Channel Model, Sales Management, Operations Planning, Partner Performance, Conflict Management between partners, Pricing Mechanism, and Distribution and Revenue Management is known as Channel Management. It facilitates the principal business to manage partners and aligns internal organizations of the enterprise with the aim of satisfying the customer needs consistently in accordance with the brand promise.