TGG Service: Partner Channel Development

Three basic ways to sell your products or services:

> Direct to customers

> Through a distributor that sells to customers

> By licensing your offerings

Partner Channel Development focuses on the second approach: selling through a distributor who then sells to the end buyers.

> Identifying high-value opportunities hidden within existing value chains and delivery networks.

> Designing value propositions to prove to partners why they need our client’s products or technologies in order to be able to sell more of their own products or services.

> Building partner channels to maximize revenues by increasing “feet on the street” while minimizing time-to-market, operational costs and investment requirements.

Channel partners are typically value-added-resellers (VARs) or original equipment manufacturers (OEMs).  Other models are also possible.  VARs are companies that will sell your offerings, but who will also provide some type of value beyond order fulfillment. VARs may offer a range of professional services as their primary value-add.  OEMs are firms that take  components or subsystems obtained from other firms, add these to their own offerings, and then sell the combined offering through either direct or indirect direct channels.

While channel partners do not necessarily create an automatic demand for specific products, using them to market and sell your product offers numerous benefits, including a powerful ability to drive growth, when done right. That is why as revenue strategists, we have detailed a few key points to focus on in order to successfully use channel partners to market your product.

Approaching Each Channel with the Right Mindset

Developing a partner distribution channel requires by being straightforward and honest about your motivations.  This allows for more effective communications and understanding between you and your partner. Thinking and working with partners also requires understanding and respecting them, sharing information and looking out for their best interests as well as yours, and staying continually invested in helping them develop and grow as well as in growing your own business.

To ensure the greatest success, we work with clients to develop strategies that will support building a strong, cross-functional team between the client’s organization and each partner organization.   We also focus on finding ways to ensure that partners market your product independent of other offerings they might be selling.  Our strategy work ensures that you understand your partner’s business model and motivations, respect their relationship with their clients, and are able to prove that you are looking to build a long-term business relationship. We identify the specific elements you need to build into your program to help your partners grow and succeed in their business.

As part of our work, we educate internal team members and partner prospects to help them understand how the channel model will work for all those involved, and commit to eliminating channel conflict.  We help you minimize or eliminate channel conflict by avoiding direct orders or establishing explicit rules on how potential conflicts are handled.  This ensures that each partner is never at risk of losing a deal to your direct sales team – an essential component to establishing trust.

Designing a Well-Strategized Partner Program

We focus on listening, learning, and confirming during program development, so that once executed, we can provide clear, aligned, and scalable solutions. Going with what strategy will work best in the channel is okay, but talking to customers and potential partners to see what their struggles are and how we can help is essential.  This allows us to incorporate into your strategies what would help them build their respective businesses by researching partner prospects and their business needs upfront. Exerting additional due diligence once we start seeing wins ensures that you can stay on top of things and guarantee scalability.

Core elements of a successful channel partner program include:

> A stable product or technology

> Formal outline of the partner program

> Initial contractual framework

These are essential if you want to be agile, build a solid strategy that will sustain and support your program, and be able to scale and grow your program.

The process for defining a strong channel strategy must include:

> Foundational Research and Analysis.  We can help you to gain an internal consensus of the big picture concepts and ideals.

> Operational Alignment.  We determine what it takes to bring the vision and strategy to reality: resources, skill sets, and organizational adjustments.

> Thoughtful Execution.  Part of our strategy effort establishes protocols for protection against miscommunication and oversight to build further trust and accountability.

> Continuous Evolution. We pay attention to how relationships and processes are changing and influencing your business.

Setting smart goals for your channel

Managing your expectations when setting both long- and short-term goals for partner recruitment, enablement and adoption, and sales and revenue will help develop trust and not lose momentum.  A distributor is mostly concerned about:

> The level of profit they can make on your product

> The cost of stocking and fulfilling your product

> How scalable and extensible your product is

We research what other companies are doing with their partner programs to determine what to do and what not to do and how to set realistic goals.

Pitching potential distributors needs to be tailored to each 

So before you pitch a potential distributor, we are able to put ourselves in their shoes. Doing so allows us to be prepared and to get you prepared to answer questions like these from a potential distributor:

> How much profit can we make off this product – both per unit and in total?

> Can we make a better profit selling this product compared with selling a similar product?

> How will our marketing efforts help drive our sales?

> What inventory levels will we need to maintain?

> How will stocking and fulfilling this product affect our cost of distribution?

> Are customers asking for a product like his? Does it serve a need we have already identified?

> Do you have other products we can sell?

Building a Solid Team

The channel touches every aspect of your business, and even influences your product based on partner feedback in regards to features and usability. We help you build cross-functional teams to ensure survival and scalability and allows for engagement and support. You want to have company-wide support from the top-down and the bottom-up, and make sure that all involved are fully versed in and committed to your channel philosophy.

Aiming for Flawless Program Execution

We do the research to make sure you find the right partners. Your partners can make or break your channel program, so ensure that they are compatible philosophically, operationally, and in terms of proficiency to perform.

We help you to focus on getting the right partners on board through recruitment. To do this we pitch prospects on the value of becoming a partner. Think marketing, not sales. Show how you solve reseller’s challenges first, then sell a platform (not a product), and keep your barriers to entry low.

And finally, we help you to enable your partners and help them succeed. This is where our strategy requires your company to invest in empowering your partners in their own business. Start by establishing an on-going dialog for continued engagement, and choose the right materials to create and distribute for your channel.

Measuring and Optimizing Channel Performance

It is our responsibility to help your company understand what drives the success of software products: acquiring, retaining, and monetizing customers. Following general measurement best practices like having clear goals, tracking progress, and watching partner channel sales versus direct sales performance will allow you to gain insights into what is and isn’t working well for your channel. We can help you then use what you learn to optimize your channel performance.

A company that has seen great success with their channel partner programs is Salesforce. As of January of this year, Salesforce reported that last year they brought in over 40% of their customers through their partner programs, which is a testament to the powerful potential of the channel partner.

Remember, a product is something that you “build once, sell many times”.  Therefore, it’s not a product until it gets sold.