I had the pleasure of catching up with Channel Marketing expert, Stewart Townsend, last week and thought I’d share some of my/our takeaways.
But why was I even discussing channel marketing?
Back in my Latitude days, we created a search product for SMEs that was white-labelled for partners with access to a large SME customer base. It was called Latitude White….see what we did there?
We didn’t sell this product direct to SMEs only through contracted third-party agreements, with the likes of BT and 1&1.
I learnt a lot through that process and it’s a sales approach that I think is underutilised by many start-ups and scale-ups.
One of the companies I’m involved in, Ruler Analytics, has been selling via partners for a couple of years now, with great success, and I wanted to catch-up with an expert to see if how we could further improve the strategy.
In comes Stewart.
Having worked at Sun Microsystems, Oracle, and more recently ZenDesk, Stewart now advises multiple organisations on the creation and growth of their channel marketing.
So what did I learn from catching up with an expert?
Firstly, there are a number of things companies don’t like about channel marketing
It takes time
Establishing a partner programme, building relationships with those partners, contract negotiations, training their sales team…. It all takes time, as opposed to your standard direct sales approach.
Like any client relationship, partners need to be managed too. This will include regular reporting, product updates and staff training, as a minimum.
Partners need to be incentivised which can eat into your product margin.
Loss of control
Since other companies are selling your product, there is a fear that they might not represent your product in the best light. Contracts, training and support material can minimise this, but it’s always a risk.
So why do it?
Extended sales team
OK, so this is pretty obvious. Rather than recruiting , training, managing and incentivising your own team, you can leverage the sales and marketing capabilities of the partner business. Sure you’ll need team members to manage those relationships, but in a much lower number.
More chance of selling
Research highlighted in my favourite sales book, Let’s get real or let’s not play, suggests that introduction from a trusted partner can convert at up to 44%….a damn sight higher than what you’d normally see on a cold-calling approach. There’s a whole loads of reasons for that, including established trust.
Then there’s the actual process of building a channel plan. Not all partners are equal they can contribute differing volumes of sales and want different types of relationship. Here are some examples:
The most straightforward is a referral agreement, where the partner simply recommends your product and makes the intro.
Then we have the reseller agreement where the partner is transparently selling your product and either receiving a commission or adding a markup to a wholesale price.
White Labeling is a more in-depth partnership where the partner is positioning your product or service as their own, but the delivery is up to you. Commercials for these can be more complicated since there are often set-up costs to be considered and SLAs to be agreed.
Finally, there will often be different “tiers” applied to any of the programmes above to incentivise volume. We’ve all seen the platinum, gold and silver schemes.
So that’s my summary. I’ve not touched on software to manage these programmes, or the detail required for commercial agreements. There’s certainly much more to explore and you can read more on Stewart’s own blog, or leave comments below.