A channel partner helps a business to market and sell its products and services, typically through a co-branding relationship. The benefits of a channel partnership primarily depend on the specific partner, which is why choosing a channel partner is essential for all industrial sectors. Channel partners include a variety of specific organizations such as the following:
- Systems Integrators
- Value-added resellers
Channel partnerships have been important since the mid-twentieth century, although their use has changed significantly in recent years. The traditional model focused on improving profits from products through the use of margins, resale and upfront revenue. However, channel partners are now transitioning into services industries along with businesses in general. Today’s channel partners must also provide flexibility, responsiveness and strategic enablement in addition to the traditional requirement for good technology.
The types of channel partners include a referral partner, managed services partner and outsourcing channel partner.
A referral partner refers new customers to a business and is typically an existing customer, consultant or sales professional. Businesses are increasingly using this type of channel partner due to the increase in independent consulting. Consultants who refer their clients to solutions providers are an inexpensive way for businesses to manage their sales efforts.
Managed services channel partners offer essential business services, often those that aren’t part of their client’s core business. These services should be based on best practices for the client’s industry to ensure they provide a business value that’s greater than their cost.
An outsourcing channel partner is most useful for a business that’s assuming the management of assets across a range of technologies. These assets are often IT resources that exist in geographically separate locations.
The most obvious benefits of a channel partner are that they can share resources with their clients, including education, consultants and other experts. Channel partners can also share tangible resources, such as capital, marketing materials and technology. Additional advantages include gaining access to business tools that would otherwise be unattainable. The most effective channel partnerships also allow businesses to leverage their brand influence and IT solutions.
Choosing The Right Partner
A business must choose the right channel partner before it can realize its benefits. The wrong choice can leave a business stuck with a partner that’s poorly suited for its business needs. A channel partner must be willing to spend the time needed to learn about its clients’ business objectives. Partners that are also vendors need to deliver services that meet those objectives if the partnership is to be mutually beneficial.
Collaboration is essential for a successful channel partnership since it allows the partners to strengthen their trust and realize their shared goals. The effective promotion of some products and services will also require particularly close collaboration between channel partners. Businesses should look for channel partners that have already developed a comprehensive strategy. Pricing considerations should include several factors, including discount options, channel categories and the resale model.
An engagement with a channel partner may require both parties to make changes to their business. For example, a client may also need to tweak the products or services that it provides to accommodate the partnership strategy. A channel partner may also need to modify its resources to optimize distribution for a particular client. Furthermore, partners with international clients frequently need to adjust their distribution strategy to accommodate local demand.
Businesses should recruit their channel partners carefully and cautiously. They also need to onboard them proactively to minimize the time needed for the partnership to become beneficial. A channel partner should already have a management structure in place that ensures its client’s success is as important as its own success. The degree of collaboration often determines the partnership’s success, so it’s essential for the employees of the two parties to work well together. Finally, a channel partnership requires an effective rewards program to re-enforce the desired purchase behavior.