What is Channel Marketing? Definition, Benefits, Best Practices and More

Reading Time: 6 minutes
Reading Time: 6 minutes

As we all know, usually producers or manufacturers do not sell their products directly to consumers. The reason is simple: It puts a lot of restrictions in distributing products from a single location. Hence, the products are sold through a channel partner. Channel marketing in business is a link that facilitates movement of products from manufacturer to consumer. Also referred to as intermediaries, channel partners ensure that the products reach its intended audience.
Such business partnerships help to reduce cost of delivery, improve efficiency and allow manufacturers to expand their capabilities in turn helping them to grow their business. Value added resellers, distributors, alliance partners and wholesalers are some of the best examples of channel partners that do the job of transferring products from manufacturers to consumers.

Channel marketing is all about finding new partners and building better relationship with them. The primary aim is to sell more products via channel partners. Manufacturers or vendor initiate a range of activities so that their channel partners drive customer engagement and increase sales.

  • Ways to Support Channel Partners

Ways to Support Channel Partners

    • To-Partner Marketing

This approach gives channel partners the reason to deliver your products to consumers. It is all about persuading the partner to maintain relationship with the vendor. As a vendor, you provide various services for your channel partners that include product and marketing training, technical support etc. Many vendors also offer lead-generation, discounts, access to vendor technology and even certification programs for their partners. In simple words, the vendor provides all the marketing material to the partners. This not only boosts channel partner-vendor relationships but also makes channel marketing well-versed in their vendor products. It makes channel partners better equipped to handle customers and provide good customer service.

Vendors often design and develop channel partner programs to recruit, engage and retain partners. Vendors also give regular updates of new offers as well as provide information about channel marketing program. The aim is to engage channel partners in vendor’s channel marketing program so as to drive revenue growth forward.

    • With-Partner Marketing

In this approach, vendors provide their channel partners with opportunities for joint marketing and co-branding. Vendors use ‘With-partner marketing campaigns’ when they are offering a custom solution for their end-buyers. It identifies joint marketing initiatives that generate demand and revenue for both the parties. For instance, a vendor product complemented with value added services offered by channel partners makes it a tailored solution for customers. Promoting vendor products in addition to partner brand is the main purpose of ‘With-partner marketing activities’.

    • Through-Partner Marketing

Vendors often use through-partner marketing to grow their sales. As a vendor, you empower your channel partners to market your products more aggressively so that you get better results in your marketplace. It is all about enabling your partners so that they communicate your message in a more compelling and engaging fashion to the customer. As a vendor, you provide all the resources to your partners so that they initiate and execute very effective marketing campaign that will propel your business forward in the marketplace.

    • For-Partner Marketing

In for-partner marketing scenarios, the vendor markets his products/services directly to end customers, while the channel partners manage the follow-up. As a vendor, you take care of all activities that help generate leads. This approach is simpler as you have all the necessary resources to communicate your message well to the market.

For instance, many vendors have the brand awareness and the expertise to drive leads to their business. They are capable enough to bypass partner collaboration and execute their own sophisticated advertisement campaigns. Channel partners can then handle the leads, follow-ups and even the actual sale. This approach enables vendors to have better control over their marketing process.

  • Myths about Channel Marketing that need to be Debunked

Myths about Channel Marketing that need to be Debunked

    • ‘One-Size-Fits-All’ Approach Works

When it comes to a sales pitch, one size does not fit all. A message that resonates well with your end customers, might be completely off with your channel partners. Keep in mind that your potential partner will consider several criteria when evaluating your partner program. On the other hand, a typical customer may choose you as a vendor without much investigation.

Any potential partner will look at your current customer base, the product/service offering and evaluate whether it addresses a timely need, makes life easier for customers and improves productivity. You will have to design varied channel partner programs that support various business models.

Overall, when dealing with potential channel partners, you will have to vary your sales pitch so as to meet their unique business needs and at the same time ensure that it supports your growth.

    • Your New Channel Partner will soon become a Source of Additional Revenue

It is a myth that new channel partners give good returns within 4 to 6 months. Channel partners are not an instant revenue opportunity. You will have to wait for a while (at least 1 to 2 years) before your channel partner becomes a strong source of recurring revenue. Moreover channel performance will depend on various factors including market demand, product offerings, marketing strategy etc. Keep in mind that as a vendor, you had a tough time building your own sales team to sell your own products. But it is even tougher to convince someone else’s sales team to market and sell your products. Hence, it is not right to expect quick sales results from your partner.

    • You and Your Channel Partner do not have Different Set of Priorities

Although you are completely focused in selling your products, it does not mean that your channel partners will also put all their efforts in driving your business. Channel partners will be more interested in products that are in great demand and provide good returns on their investment. In most cases, it takes a lot of persuasion to get partners to sell your products. You will have to convince partners that your products offer value for money and can generate acceptable ROI.

    • Your Channel Partners will generate more Demand

They will sell your products depending on how the demand grows. It is observed that channel partners put their marketing and sales efforts on products that are already in high demand. To be more specific, partners prefer to promote what they know customers will buy. So if the demand for your products in the marketplace is already low, then it is wrong to assume that your channel partners will create additional demand. In such circumstances, you will have to create your own marketing strategies in order to increase demand for your products.

    • Once you Recruit your Channel Partner, your Sales Goals will be Achieved

Keep in mind that channel partnership is not a ‘set-it-and-forget-it’ arrangement. Engaging with channel partners is critical to growing your business. You will have to nurture and provide support to your partners on an on-going basis in order to drive better channel results. Give them access to all the necessary sales tools and material, train them regularly and provide them updates about your products and services. It is important to work closely with them so that your sales take off and that you attract more new business.

  • Tips for Creating an Effective Channel Marketing Strategy

    • Select the Right Channel Partner

Choosing the right partner is critical to developing a successful channel marketing strategy. An appropriate channel partner can increase your brand awareness, and generate new revenue streams. Evaluate whether your partner is a good fit for your business. Your potential partner should be committed to your brand and moreover is ready to invest time in understanding your business.

  • 3 Factors to consider when choosing the right channel partner:

    • Target Market

You are selling through channel partners so that your products reach the intended audience. So the partnership will be a fruitful one only when your target audience is similar to customers they are selling to. This will enable you to acquire new customers and expand your business reach.

    • Company Size

When you want to broaden your market reach to potential customers globally, it doesn’t make sense to connect with a partner that has a small audience. The partnership should be such that it brings wide customer reach to your brand, in turn helping to drive growth.

    • Partner Product Portfolio

When choosing a channel partner, ensure that his products/services complement and does not conflict with your core business. If two portfolios of products complement each other, market value increases with a seamless vendor-partner model. Vendors often want partner services that are wrapped-around the sale of their products. For instance, if the vendor is offering various products, the channel partner can handle delivery, support and maintenance services. Offering such complementary services will enable vendors to build a profitable business around their brands.

  • Develop and Nurture the Relationship

Your potential channel partners will be ready to sell your products only when the partnership is mutually beneficial. The relationship should support business goals of both the parties. So discuss with them the benefits of joining your channel partner program. Demonstrate to partners that they are fully supported by you. Equip your channel partners with all the necessary sales tools that make them easier to sell your products.

  • Maintain the Relationship

Just signing up partners is not enough. Significant efforts have to be taken so they engage with your business. If you want to grow your business, it is important to forge closer ties with your existing channel partners. Devise and implement strategies to increase traffic to your partner’s site. Paid search, social media advertising, display advertising, email marketing and optimizing website content for search engines are some of the ways by which you can increase website traffic.

In order to reduce partner work and maximize results, it is necessary to collaborate and automate day-to-day processes using an appropriate Business management platform. The software tool can help streamline business processes, save cost and time, and boost productivity.

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