“To partner or not to partner, if this is the question you are trying to find answers for, you have come to the right place. The usual answer to this question is: let’s hire a full-time channel chief who will build out and manage the channel partner program, but it often happens without prior determination of an acceptable ROI, an agreed-upon partner program strategy, or without envisioning the end goal in mind. Regardless, channel partner programs are a proven, excellent source of revenue and market growth; however, like everything else, they bring new risks, complexities, and operational challenges and often fail with poor execution.
Therefore, this comprehensive guide on building a successful channel partner program covers every aspect that you need to know, including whether you should have a partner-led growth strategy, what are the risks and benefits, what are the common reasons behind the failure of a partner program, and how do you accelerate your partner program?
Now, let’s cover each aspect in detail:
What is the purpose of the partner program?
The purpose of the partner program must be clear: to drive revenue acceleration, enable product innovation, enter new markets, or/and attract a broader customer base. This is not just a nice-to-have, but a strategic imperative for the business. Partners can be a force multiplier, allowing the vendor to scale faster and expand into new markets in ways that would be difficult to achieve on our own.
The data shows that customers who engage with the partner ecosystem see higher satisfaction and retention rates. And the partners can also benefit from vendors’ technology, resources, and go-to-market expertise. It can be a win-win relationship.
So, if you’re looking to supercharge your growth by winning new customers or retaining your existing customer base, crafting a compelling partnership program and finding potential partners is an effective way to do it. However, to build win-win relationships, vendors must commit to making it a seamless and rewarding experience for their partners and focus on long term partnerships.
What are the benefits of channel partners?
One of the primary advantages of channel partners is their ability to bring new expertise and market insights to the table. These partners are deeply embedded in their local communities, giving them a nuanced understanding of customer needs, preferences, and pain points. This invaluable knowledge can inform product development, accelerate marketing efforts, improve the sales process, and ultimately drive better business outcomes.
Moreover, channel partners can act as a seamless extension of a company’s sales and marketing team, amplifying its reach and ability to connect with potential customers. By tapping into the partner’s established relationships and distribution channels, businesses can gain access to new markets and customer segments, accelerating their growth trajectory.
Importantly, channel partners can also provide a crucial local presence, allowing companies to better serve their customers with personalized attention and support. This localized approach fosters stronger customer loyalty and enhances the overall brand experience.
Finally, channel partners fill gaps by bringing subject matter expertise in niche areas, offering specialized knowledge and capabilities that help create other solutions and complement a company’s core offerings. This synergy can result in the development of innovative solutions that better address the evolving needs of the market.
What are the main types of channel partnerships?
There are several main types of channel partnerships that organizations can pursue, each with their own unique benefits and considerations.
The most common and traditional channel partnerships in the partner program include resellers, distributors, and referral partners. Resellers purchase products or services from a company and then resell them to end customers, often providing additional value-added services. Distributors take on the logistics of storing, shipping, and sometimes marketing products to retailers and other resellers. In addition, referral partners actively promote a company’s offerings to their own customer base in exchange for a commission.
More nuanced types of channel partnerships in the partner program include alliance partners and strategic partners. Alliance partners typically have complementary products or services that they co-market and sell to customers. Strategic partnerships involve a deeper, more collaborative relationship where the partners work together on joint initiatives, share resources, and align on long-term business goals.
Carefully evaluating the different channel partnership models and selecting the right fit for your business objectives is crucial. Companies must ensure clear roles, responsibilities, and compensation structures are in place to foster successful, mutually beneficial partnerships.
What are the capabilities of channel partners?
Channel partners have a wide range of capabilities that can be leveraged to drive business success. It’s crucial to understand that these capabilities can vary significantly from partner to partner. Some partners may excel at influencing deals throughout the customer buying process, while others may be better at sourcing partner deals. Additionally, certain partners may be particularly skilled at servicing customers or co-building solutions with your organization.
Recognizing and leveraging the unique strengths of your channel partners is paramount. By aligning their capabilities with your business needs, you can create a powerful synergy that drives growth, enhances customer satisfaction, and ultimately, boosts your overall competitiveness in the market.
What are the risks behind a partner program failure?
A partner program can fail for a variety of reasons, and the specific causes of failure can vary depending on the type of partnership and the circumstances involved. Based on my 30 years of partnership strategy development and execution, Chip Said, here are the five top reasons why partner/channel partner programs fail:
Lack of focus, resources, and commitment
The key questions to consider are the following:
- Are you operating your partner program by committee?
- Do your key stakeholders (e.g., C Suite, GM, sales, marketing, and engineering executives) understand partnerships and working with partners?
- Are you fully committed and staffed for partner/channel GTM execution?
Lack of partner/channel strategy and plan
The key questions to ask are the following:
- Do you have a strategy that has executive commitment?
- Has the strategy been communicated and rolled out to your organization?
- Do you have an onboarding, training, and enablement process?
- Are you using a focused approach to recruit partners or spray and pray?
Incomplete channel ROI assessment
The key questions to consider are the following:
- Do you even have a partner/channel play?
- Have you collected the data and done the analysis to support a partner/channel GTM program?
- Do you know what metrics to measure and optimize in your partner programs?
Partners are not being prioritized according to their fit with your partner/channel strategy
The key questions to ask are the following:
- Are you recruiting partners primarily based on the biggest/best brand?
- Have you developed a comprehensive partner taxonomy to support your strategy?
No test market of strategy and plan
The key question to ask is about doing a pilot before executing a wider plan.
What are the risk mitigation strategies for a successful partner program?
The following strategies can be used to mitigate the risks associated with the failure of the partner programs:
Asking the right questions from the outset
All these reasons result in disappointing channel performance, a loss of incremental revenue, and wasted time. There are ways to reduce the risk of failure and design a successful partner program. How? Ask these questions:
- Do you even have a channel/partner play?
- Have you collected the data and done the analysis to support a partner program?
- Are you recruiting partners primarily based on the biggest/best brand?
- Have you developed a comprehensive partner taxonomy to support your strategy?
- Are you taking your channel partner program to market prematurely?
Market entry strategy with partners
Before you devote too much time and resources, have you tested your plan with prospective partners? A Very Common Partner Strategy Execution Plan: Fire, ready to aim! So, let’s say it does make sense to move to the next step of leveraging the partner/channel ecosystem. First, ensure that the goals and objectives of the partner strategy align with the company’s overall plan. Then create a plan that includes the prioritization of target partners that can deliver against the partner strategy KPIs.
A cost-effective alternative to hiring a full-time resource is to engage with experienced, fractional channel executives that can apply a proven methodology to assess and validate your GTM strategy with partners. This step will determine if investing in a partner or channel strategy makes sense based on your company’s goals and objectives. To that point, determine if you want to pursue an operational versus a strategic partnership.
Would you buy a car without a test drive? Most people would not. Then why would you start a partner or channel partner program without a test market of your GTM strategy and plan? The stakes are much higher for the future of your company when it comes to effectively working with partners. In today’s cost-conscious, fast-moving business environment, you’ll likely only get one “at bat” to make sure your partner strategy is on point.
Always test your partnership strategy before going all-in. This means creating your partner’s joint value proposition and aligning it with a prioritized partner target list. Initiate a partner recruitment campaign for those selected partner targets, get the initial meeting, and pitch the JVP.
Market testing is a way to test the waters to see how well a product, service, or offering will perform—or not (Entrepreneur’s Encyclopedia).
Choosing the right types of partnerships
Operational Partnerships = Revenue
- Exponential scale vs. organic direct sales growth
- Increased sales and market share
- Lead generation
- Expanded market reach
- Lower Cost of Sales
- Expedite procurement
Strategic Partnerships = Increased Valuation
- Multi-year committed revenue agreements
- Identify potential suitors and strategic investors for business growth.
- Business development leads to corporate development.
- Market and product positioning insights
Patience and appropriate expectations
These are key factors in executing a fruitful partner program. Remember, Rome wasn’t built in a day! Recruiting partners is only the beginning, enablement, execution, and measurement are what drive positive returns from your partners. Platforms such as Mindmatrix provide the rigor required to guide your channel managers to enable partners and execute the formal processes. One final point, you must give to get. To accelerate engagement with channel partners, bring them a lead(s) as you start executing the partnership. This will no doubt raise your mindshare, and it is mindshare that you are competing for with your partners.
Partnering with fractional partner leaders
Accelerating results (leads, revenue) from the channel is the ultimate goal. Based on the economic challenges in today’s technology market, more companies are considering fractional resources as a cost-effective approach to help accelerate their partner programs. Why consider fractional resources:
Expertise on Demand
Fractional channel resources bring extensive experience and specialized expertise to the table immediately. Companies can leverage their skills and knowledge for specific projects or periods without committing to the costs associated with an FTE. This cost-effective expertise is a great way for companies to kick start a partner program or augment their current channel team.
Flexibility
For companies just setting out on their partner program journey (ex. partner test market), starting with fractional channel resources is not only cost effective but also offers a flexible way to scale resources based on market conditions. Fractional resources can validate your partner program prior to bringing on the costs associated with an FTE.
Access to a Network
What better way to accelerate a partner program than by bringing on the right fractional resources with established networks that span multiple industries and technologies. By hiring someone on a fractional basis, you also gain access to their network, which can be utilized to rapidly establish partnerships, collaborations, lead generation, and business development.
Partner Program Acceleration
After understanding the nuances, risks, and benefits of partner programs, it’s imperative to define a strategic implementation plan to realize the benefits of partner-led growth strategy. Whether you are moving from direct to indirect sales motion, integrating partner program with your existing direct sales program or just leading with partner led motion, the following five steps will pave the way for your partner program success:
Partner Program Strategy
When defining your partner program strategy, it’s critical to take a deliberate and assertive approach. During the strategy phase, you must clearly define your partner GTM motions, identify the key partnership types to go after, determine your geo selection, conduct a thorough investment analysis, and establish the key KPIs to track.
Don’t be passive; take charge of your partner program strategy. Clearly articulate the roles and responsibilities for both your company and your partners. Aggressively pursue the partnership types that align best with your business objectives, whether that’s technology partnerships, reseller relationships, or something else.
Carefully select the geographic markets that offer the greatest opportunity, and back that up with data-driven investment analysis. And put metrics in place from the start to measure the success of your partner initiatives. This assertive, strategic approach will set you up for partner program success.
Partner Program Recruitment
During the partner recruitment phase, it is crucial to be proactive and assertive in your approach. This involves carefully selecting the ideal partner profile, gathering a comprehensive database of potential partners, running targeted marketing campaigns to attract the right candidates, and identifying the key potential partners to extend the discussion.
Firstly, you must clearly define the characteristics and requirements of the ideal partner. This will serve as the foundation for your recruitment efforts, ensuring you find the right partners that are the perfect fit for your business.
Next, invest the time and resources into building a robust database of potential partners. Leave no stone unturned in your search—leverage industry connections, online directories, and networking events to uncover the best candidates. There are some tools, such as PartnerOptimizer, out there that help you get the potential partners database.
Once you have your pool of prospects, it’s time to take action. Implement strategic marketing campaigns that effectively communicate your value proposition and the benefits of a partnership. Be assertive in your outreach, and don’t be afraid to follow up persistently to secure meetings with your top targets. Don’t shy away from taking the help of external agencies, such as BDMethods, to run your partner recruitment campaigns if you don’t have the time, experience, and resources.
Finally, when engaging with potential partners, approach the discussions with confidence. Clearly articulate your expectations, negotiate favorable terms, and be prepared to make decisive decisions. The partner recruitment phase is not the time for passive behavior; take charge and find the right partners that will drive your business forward.
Partner Onboarding & Training programs
During the partner onboarding phase, you must have a self-serve onboarding workflow in place for your partners. This allows them to get up and running quickly without requiring extensive hand holding. Align your internal resources to effectively support these new partners as they come on board.
Create a structured training process with a clear 30–60–90-day plan. This will ensure your partners receive the training and support they need to be successful. Importantly, secure executive and internal buy-in, especially aligning sales teams and marketing partners or teams on the ongoing partnership strategy and motion. This high-level alignment is critical for scaling your partner program effectively.
Don’t leave anything to chance when it comes to onboarding and training your partners. Take a proactive, assertive approach to set them up for long-term success. In case you want to understand the nuances of partnerships strategy, you can refer to this article.
Partner Program Enablement
During this phase, you must create a digital and people-first approach towards partner enablement by providing user-friendly partner relationship management platforms like Mindmatrix to your partners and assigning dedicated Channel Account Managers (CAMs) or Partner Account Managers (PAMs) to different partners to ensure personalized support and guidance.
In addition, make sure to create the right content, marketing materials, and partner marketing campaigns and deliver them to the right partners to empower them with the necessary knowledge and resources. Third-party agencies like Marketlogic or 7Demand can come to your rescue if you need help in this area. Moreover, your partner marketing efforts must be combined with a robust MDF/Co-op funds program if required to generate demand and drive pipelines with and for your partners.
Finally, establish a clear communication process to keep your partners informed about product updates, campaigns, and any other important information. Regular check-ins and feedback sessions will help you optimize the enablement program for better results.
Partner Program Measurement and Optimization
Establishing a robust partner program measurement and optimization process is crucial for driving sustainable growth. During this phase, you must create joint business plans with key action plans, measure key partner performance and engagement KPIs, monitor in regular cadence, and optimize the partner programs bi-annually.
Develop comprehensive joint business plans with your strategic partners, outlining clear objectives, responsibilities, and timelines. Ensure these plans are aligned with your overall business goals and enable you to track progress effectively.
Meticulously measure the performance of your partner programs using relevant KPIs, such as partner sourced revenue contribution, deal registration, marketing campaign engagement, and program satisfaction. Monitor these metrics on a regular cadence to identify trends and areas for improvement.
Continuously optimize your partner programs based on the insights gathered from your performance monitoring. Refine your partner recruitment, onboarding, and enablement processes to enhance partner engagement and productivity. Adjust your incentive structures, marketing strategies, and program policies to better support your partners and drive mutual success.
Key Takeaways
First and foremost, thoroughly assess your business needs and goals. What are you hoping to achieve through partner programs? Increased market reach? Shared expertise? Diversified revenue streams? Clearly defining your objectives is crucial to building an effective program.
Next, carefully evaluate and dig deeper into potential risks and rewards. New partner programs introduce new complexities around data sharing, financial arrangements, and accountability. Weigh these factors against the upsides of expanded distribution and co-marketing opportunities.
Finally, develop a structured, five-step implementation plan that holistically addresses people, processes, and technology. Recruit and onboard the right partners, establish clear policies and procedures, and leverage the right tools to manage the program. Only with this balanced approach can you build a partner ecosystem that drives sustainable revenue and growth for your business.
Call to action
If you are still not sure how you would like to proceed with your partner programs or how you can test out the market first, you can reach out to BDMethods for its fractional partnership services. You may also book a call with Mindmatrix to understand how its platform can help you implement the strategic plan of your partner programs.
This article is co-authored by Chip LeBlanc and David Canavan, founders of BDMethods.
