The landscape of channel partnerships within the tech industry has undergone a considerable transformation. In times past, channel partner relationships were relatively straightforward and linear, but as technology and buying behaviours evolve, so too must the approach towards effective channel partnerships. This blog explores the complexity of modern channel sales dynamics and how they impact channel partner relationships among OEMs, distributors, tech partners, referral partners, and resellers in the tech sector. Before we dive deep, let’s first understand channel partnerships.
What is meant by channel partnerships?
Channel partnership management aims to manage a customer relations relationship with other vendors and third parties that help deliver their products into customers hands. Channel partnerships consist of agreements and collaborations between vendors and channel partners to promote and sell products or services. Typically found in the tech world, these collaborations often involve manufacturers and software companies partnering with third-party companies, who act as their channel partners, to reach wider markets, increase brand recognition, and simplify access to their offerings.
Types of channel partnerships within tech sector
Channel partnership forms vary in shape and acronyms: reseller, value-added reseller, system integrator, ISV channel partners, alliance channel partners, influencers, managed service providers, and referral agent partners. There’s more than ten flavours available, with a lot of blurs between them. There is just one way to decide what is most suitable for you and your spouse. We look at different channel partnerships. The terminology may differ according to your industry, geography, and even plain old preference in general.
Reseller partnership:
In the dynamic landscape of the technology sector, reseller partnerships emerge as pivotal avenues for mutual growth and market expansion. These strategic alliances empower technology companies to leverage the expertise and reach of established resellers to penetrate new markets efficiently. By entrusting resellers with the promotion and distribution of their products or services, technology firms can focus on innovation and core competencies while simultaneously amplifying their market presence. While considering channel partner programs, reseller partnerships foster symbiotic relationships, granting resellers access to cutting-edge solutions to meet the evolving needs of their clientele, while technology providers benefit from increased sales channels and brand visibility. With seamless integration and robust support systems, reseller partnerships in the technology sector unlock unparalleled opportunities for scalability and revenue generation. Now the question is, how do you foster growth with resellers and how do you get their attention in a crowded space?
To attract resellers and cultivate enduring channel partnerships that drive growth in the technology sector, companies can implement several strategic initiatives:
Clear Value Proposition: Articulate the unique value proposition of the technology solution based on the target market, emphasizing its competitive advantages, market differentiation, and potential for profitability. Resellers are drawn to offerings that address pressing customer needs, help gain access to a new market, and provide tangible benefits.
Competitive Incentives: Develop a compelling incentive structure that rewards resellers for their efforts in driving sales and promoting the technology solution. This may include attractive commission rates, performance-based bonuses, sales contests, and joint marketing initiatives based on market segments.
Flexible Partnership Models: Offer flexible partnership models that cater to the unique needs and capabilities of different resellers. This may include tiered partnership levels, customizable solutions, and support for both direct and indirect sales channels.
Value added resellers (VAR) partnership:
Value added resellers (VAR) partnerships are instrumental for technology companies seeking to enhance their market reach and maximize the value proposition of their products or services. By collaborating with value added resellers, technology firms can leverage the specialized expertise and capabilities of these partners to deliver comprehensive solutions tailored to the unique needs of customers. VARs augment the core technology offerings with value-added services such as customization, integration, implementation, training, and ongoing support, thereby enriching the overall customer experience. These partnerships enable technology companies to gain valuable market insights, penetrate diverse industries, and address complex business challenges effectively. With VARs acting as trusted advisors and solution providers, technology companies can achieve greater market visibility, scalability, and customer satisfaction, driving mutual growth and success in the ever-evolving technology landscape.
How can you embed VARs into your channel partnerships strategy and maximise sales growth with them?
Comprehensive Training and Support: Offer extensive training programs and ongoing support to equip VARs with the knowledge, skills, and resources needed to effectively sell, implement, and support the technology solution. This includes product training, technical support and certification, marketing materials, and access to support resources, enabling VARs to create a competitive advantage their target market.
Continuous Innovation: Invest in ongoing product innovation and development to ensure that the technology solution remains competitive and aligned with target audience and market demands. Encourage collaboration with VARs in identifying new opportunities, addressing emerging challenges, and expanding into new verticals or geographies.
System Integrator (SI) partnership:
System integrator channel partnerships play a pivotal role in the technology sector, offering companies a pathway to deliver comprehensive solutions tailored to the unique needs of customers. By incorporating system integrators channel partners play into their channel partner programs, technology firms can leverage their specialized expertise in integrating diverse technologies, platforms, and applications to create seamless, end-to-end solutions that address complex business challenges. System integrators act as trusted advisors, working closely with clients to understand their requirements, design customized solutions, and oversee the implementation and deployment process. These partnerships enable technology companies to cover the broader market, penetrate new market segments, and capitalize on emerging opportunities by tapping into the extensive networks and domain knowledge of system integrators. With a shared commitment to innovation and customer success, system integrator partnerships drive mutual business growth and enable organizations to thrive in the ever-evolving digital landscape.
How can technology companies maximise their growth with system integrators and get the attention of potential partners?
Joint Solution Development: Collaborate with SIs on joint solution development initiatives to create innovative offerings that address emerging market trends and customer demands. Engage SIs in the product development process, leveraging their domain expertise and customer insights to inform feature prioritization and roadmap planning.
Marketing and Co-selling Support: Provide marketing and co-selling support to SIs to help them generate leads, promote the technology solution, and win new business. Develop co-branded marketing collateral, participate in joint marketing campaigns, and facilitate networking opportunities to increase visibility and awareness.
Strategic Alignment: Align closely with SIs that have complementary expertise, industry focus, and geographic coverage to maximize synergies and market penetration. Identify mutual business opportunities and develop joint go-to-market strategies to capitalize on shared strengths, joint sales strategies and market opportunities.
Alliance and technology partnerships:
Alliance and technology partnerships are essential components of the strategic growth initiatives undertaken by technology companies. These partnerships involve collaborations with other companies, organizations, or technology providers to combine resources, expertise, and technologies to create innovative solutions and drive mutual success. Through alliances, technology firms can expand their market reach, access new customer segments, and capitalize on complementary strengths to deliver more comprehensive offerings. Technology partnerships, on the other hand, entail working closely with other technology providers to integrate complementary products or services, enhance interoperability, and create seamless user experiences. By forging strategic alliances and technology partnerships, technology companies can accelerate innovation, address evolving customer needs, and gain a competitive edge in the dynamic and rapidly evolving technology landscape.
How do you align your strategic objectives with strategic alliances and technology partnerships?
Go-to-Market Strategies: Develop joint go-to-market strategies with alliance and technology partners to maximize market penetration and accelerate customer acquisition. Leverage each partner’s strengths and channels to reach new customer segments and expand market reach effectively.
Co-selling and Co-marketing: Collaborate on co-selling and co-marketing initiatives to increase brand visibility, generate leads, and drive sales. Develop joint marketing campaigns, participate in industry events, and create co-branded collateral to showcase the combined value proposition to customers.
Interoperability and Integration: Invest in interoperability and integration efforts to ensure seamless compatibility between products and services offered by alliance and technology partners. Facilitate smooth data exchange, workflow automation, and user experience across integrated solutions.
Continuous Evaluation and Optimization: Continuously evaluate the performance and effectiveness of alliance and technology partnerships against predefined metrics and objectives. Identify areas for improvement, iterate on strategies, and optimize collaboration processes to drive ongoing growth and success.
Referral channel partnerships:
Referral channel partnerships serve as invaluable growth drivers for technology companies, facilitating the expansion of their customer base through trusted networks and word-of-mouth referrals. With value added referral partners, technology firms collaborate with other businesses or individuals who refer potential customers in exchange for incentives or rewards. Leveraging the credibility and reach of referral partners, technology companies can tap into new target market, and increase sales with lower CAC (customer acquisition cost). By nurturing strong relationships with referral partners and offering compelling incentives, technology companies can incentivize them to actively promote their products or services to their networks, resulting in increased sales opportunities and accelerated growth. Referral partnerships not only enable technology companies to expand their reach but also foster a sense of community and collaboration within their ecosystem, driving mutual success and long-term business relationships.
How can we drive growth with referral channel partnerships and can create a low-cost channel partners play?
Referral Incentives: Offer attractive referral incentives to motivate partners to actively promote the technology solution within their networks. This may include monetary rewards, discounts, free products or services, or other incentives that align with partners’ interests and objectives.
Streamlined Referral Processes: Implement streamlined referral processes and systems to make it easy for partners to refer leads and track their progress. Utilize referral tracking software or platforms to automate lead capture, attribution, and reward distribution, ensuring transparency and accountability.
Partner Enablement: Provide comprehensive partner enablement resources and support to equip referral and affiliate partners with the knowledge, tools, and resources needed to effectively refer customers. Offer training, sales collateral, demo accounts, and dedicated support channels to facilitate smooth referral processes.
Recognition and Rewards: Recognize and reward top-performing referral or affiliate partners for their contributions and achievements. Highlight their success stories, provide public recognition, and offer exclusive rewards or incentives to incentivize continued performance and loyalty.
Independent Software Vendors (ISVs) channel partnerships:
ISV (Independent Software Vendor) partnerships are integral to the growth strategy of any tech company, enabling them to broaden the scope and functionality of their offerings through seamless integrations with complementary software solutions and specialized knowledge that ISV channel partners possess about a product. In ISV partnerships, technology companies collaborate with software vendors to develop joint solutions that address specific customer needs or industry requirements. By leveraging the expertise and specialized capabilities of ISVs, technology firms can enhance the value proposition of their products or services, extend their market reach, and create differentiated offerings that resonate with customers. ISV partnerships foster innovation and collaboration, allowing technology companies to tap into new market opportunities, penetrate diverse industries, create a significant revenue stream, and stay ahead of competitors in the fast-paced digital landscape. Through strategic ISV partnerships, technology companies can drive mutual growth, deliver greater value to customers, and solidify their position as trusted leaders in their respective markets.
How can you win ISV channel partners mindshare and drive growth?
Targeted Outreach: Identify potential ISV channel partners whose solutions complement the tech company’s platform or align with its target markets. Conduct targeted outreach efforts to establish connections and initiate discussions about potential partnership opportunities.
Partner Enablement Programs: Develop comprehensive partner enablement programs designed to support ISVs throughout the partnership lifecycle. Provide training, resources, and support to help ISVs integrate with the tech company’s platform, market their solutions effectively, and support joint customers.
Incentives and Benefits: Offer attractive incentives and benefits to incentivize ISVs to partner with the tech company. This may include revenue-sharing agreements, co-marketing opportunities, access to resources or technologies, and other value-added benefits that demonstrate the mutual benefits of collaboration.
Transparency and Communication: Maintain open and transparent communication channels with ISV partners, providing regular updates on product roadmaps, market trends, and partnership opportunities. Solicit feedback from ISVs and incorporate their input into decision-making processes to foster a collaborative and mutually beneficial relationship.
Influencer channel partnerships:
Influencer channel partnerships represent a powerful strategy for technology companies to amplify their brand presence with tailored marketing strategies, engage target market segment audiences, and drive growth in the digital age. By collaborating with influencers who possess a significant following and influence in relevant niches or industries, technology firms can leverage their credibility, authority, and reach new markets to promote products, services, or brand messages to a wider audience. Influencers serve as trusted advocates who can authentically endorse and showcase the value proposition of technology solutions, thereby increasing brand visibility, credibility, and trust among their followers. Through successful collaboration with strategic influencer channel partners, technology companies can create a unique marketing strategy to effectively connect with target demographics, effective sales campaigns to established customer base, and drive conversions, ultimately contributing to enhanced brand awareness, customer acquisition, and business success in today’s competitive marketplace. Many technology providers partnering with influencers for new product launches and bringing them in the sales process, expanding their market access and supporting sales teams to maximize their sales efforts. Influencers have become pivotal to support marketing efforts of many tech companies.
How do you establish your marketing strategy for influencers?
Identify Relevant Influencers: Identify influencers whose audience demographics and interests align with the target market and objectives of the technology company. Look for influencers with a substantial following, high engagement rates, and credibility in relevant niches or industries.
Build Authentic Relationships: Foster authentic relationships with influencers based on mutual respect, trust, and shared values. Engage with influencers genuinely, demonstrate an understanding of their content and audience, and offer value through collaboration opportunities that align with their interests and goals.
Leverage Influencer Expertise: Tap into the expertise and creativity of influencers to develop engaging and impactful content that resonates with their audience. Empower influencers to share their authentic experiences, insights, and opinions about the technology solution, thereby enhancing credibility and authenticity.
Amplify Reach and Engagement: Utilize influencer partnerships to amplify brand reach, increase visibility, and drive engagement across social media platforms and digital channels. Leverage influencers’ reach and influence to access new audiences, generate buzz, and spark conversations about the technology solution.
Track and Measure Performance: Implement robust tracking and measurement mechanisms to evaluate the effectiveness and ROI of influencer partnerships. Monitor key performance metrics such as reach, impact on channel sales pipeline, engagement, conversions, and brand sentiment to assess the impact of influencer campaigns and optimize future initiatives.
Managed service providers partnerships:
Managed service providers (MSPs) partnerships play a pivotal role in the growth and success of technology companies, offering a pathway to extend the reach and capabilities of their solutions through strategic collaboration. In MSP partnerships, technology firms collaborate with managed service providers to deliver comprehensive and scalable solutions that meet the evolving needs of businesses. By leveraging the expertise, infrastructure, and customer relationships of MSPs, technology companies can enhance the value proposition of their offerings, streamline implementation and support processes, and accelerate time-to-market. MSPs act as trusted advisors, providing managed services such as IT infrastructure management, cybersecurity, cloud computing, and network monitoring, thereby enabling technology companies to focus on innovation and core competencies while delivering end-to-end solutions to customers.
How can you drive business growth with MSP channel partners?
Targeted Partner Recruitment: Identify and recruit MSP partners whose expertise, capabilities, and customer base align with the target market and objectives of the technology company. Focus on establishing partnerships with reputable MSPs that specialize in complementary services such as IT infrastructure management, cybersecurity, cloud computing, and managed hosting.
Continuous Engagement and Support: Foster ongoing engagement and support with MSP partners through regular communication, collaboration meetings, and performance reviews. Maintain open channels of communication to address issues, provide feedback, and iterate on strategies for ongoing growth and success.
The Shifting Channel Partnership Landscape
In the early days, channel partnership involved a simple exchange: customers wanted products, affiliates or resellers coordinated with OEMs, and distributors managed logistics. As technology progressed, this process repeated with barely a hiccup. However, the SaaS-driven, solution-centric market of today necessitates a paradigm shift from straightforward product push to complicated value propositions centered around customer outcomes. This paradigm shift has become apparent due to several industry megatrends:
The Buyer-Centric Approach
Modern customers are savvy; they’re less impressed by technical jargon and more focused on how technology can solve their specific business challenges. Moreover, the decentralization of budgets from IT to line-of-business leaders has intensified the need to address explicit business needs rather than mere technological capabilities.
Access to New Markets and Customers
Exploring different market areas or customers may require considerable effort. Businesses can overcome this problem by leveraging channel partners’ reputation and reach. Distributed goods in foreign countries can help you find information regarding customers, regulations, and markets. It is important to enter the marketplace efficiently.
Emergence of the Value-Added Partner
As the customer needs evolved around solving business challenges in the tech sector and products became more complex, the VAR emerged as a key player. These partners not only sold products but also added their own services or enhancements, making the technology more useful and customized for end-users. Value Added retailers have gone beyond traditional sales activities offering a customer-centric solution through customization, integration and support. The VARs tailor the product offerings for each client and often combine several products into complete bundles. VAR offers a wide selection of value-added reseller programs for software companies.
The Cloud Effect
As the cloud has become the de facto delivery model for technology, the nature and structure of deals have altered dramatically. Gone are the days of large upfront payments followed by a trailing service fee; the SaaS model favors recurring, predictable revenue streams. This shift has necessitated that traditional channel partners reinvent themselves, while those native to the cloud thrive with the status quo.
The Shift to Strategic Alliances
With the establishment of global markets and the rise of the Internet and cloud, channel partnerships began to prioritize strategic alliances. Partnerships have become no longer just about selling; they are about combining strengths to access new markets, integrate complementary technologies, and develop joint solutions.
This paradigm shift led tech companies to invest in partnerships with industry giants, startups, and service providers, leveraging each other’s technology and market presence to drive mutual growth. By forming strategic alliances, tech companies are able to share risks and reduce their exposure to market uncertainties. Partners are able provide support and assistance during challenging times, such as economic downturns or industry disruptions. This shared risk is helping businesses navigate through uncertainties and maintain stability.
Expanding Market Reach
Imagine what could be done if a company joined its channel partners.Through forming alliances with these strategic partners, you gain a broader customer base while expanding your market presence instantly. Your business is now able to attract much wider audiences than your competitors. It increases brand visibility allowing you to drive sales and profits up to a new level. Tell us the case that you own small businesses focusing on the sale of natural cosmetic products.
Complex Deal Structures
Today’s deals often require the collaboration of a network of multiple parties, from resellers to alliances to consultants and integrators, each vying for their share of revenue. With the advent of new technologies and services, no single partner is able to meet all of the evolving needs of your customers, encouraging each party to collaborate and provide an integrated solution to end customers. This complexity demands a new level of strategic partnership management to ensure collaboration, equitable and profitable arrangements. Due to such deal structures, managing relationships in this interconnected partner ecosystem have become complex; however, if done correctly, can help companies identify some untapped market opportunities.
Financial Landscape Changes
Until a few years ago, we all lived in a world of cheap money. Interest rates were low, credit was easy, and liquidity was a secondary consideration. Those days of easy, cheap money are a distant memory and for many resellers, the cost of financing a large client engagement is prohibitive. In the past, cash was king and the ‘vanity’ of revenue often won over the ‘sanity’ of profit. Today, the technology environment is all about sweating assets to maximize margins. As a result, former resellers are often happy to forgo revenue on deals and take a referral fee, preferring to build their consulting and integration skills to leverage higher margins.
Adapting Measures of Success
Traditionally, the way in which partners are measured has accelerated changes as partners modify their behavior to maximize revenues. Previously, the top partner would be the top seller of goods. Of course, sales are still a key metric, but the nature, longevity and future pipeline of sales is increasingly key. In a SaaS world, repeat revenue is often compensated at a different rate to net new business. Generally, we’re seeing more emphasis on training, co-innovating, and co-marketing, which increasingly focus on business benefit over technology and addressing specific personas in the business.
Today: Ecosystems and Platforms
Today, the focus is on ecosystems and platforms. Companies like Microsoft, Salesforce, and Amazon have constructed vast ecosystems around their platforms, encouraging partners to develop on their infrastructure and integrate with their services.
These ecosystems have created an interdependent relationship where both the company and its partners grow and innovate together. They also provide a more comprehensive offering to the customer, who benefits from the integration of various services without the need for multiple relationships. If you want to learn more about the modern ecosystem, refer to this article.
Emphasis on Training and Enablement
There is a growing emphasis on training that focuses on business benefits and persona-specific education over pure technical knowledge. Aligning skills with business needs is becoming critical for continued success in sales. Training and enablement programs can also focus on co-marketing and co-selling initiatives. By providing partners with marketing collateral, sales tools, and joint marketing campaigns, businesses can enable partners to effectively promote and sell their products or services. This collaborative approach strengthens the partnership and expands the reach of both parties, leading to mutual growth.
Evaluating Partner Program
In the previous year, many companies have downsized their partner program for either becoming more efficient with a smaller number of partners or reducing their overall channel operations costs. Evaluating a channel partner program every year is crucial for businesses in the tech sector to ensure its effectiveness and success. By regularly assessing and analyzing the performance of the program, businesses can identify areas of improvement, make informed decisions, and maximize the benefits of their channel partnerships. EY’s simple partner evaluation framework based on cost, control, customer insights can be considered to run your yearly checks. In this framework, cost refers to the cost of managing the channel, control refers to the level of control the vendor has over their channel, and customer insights refers to the end information passed on by each channel.
Redefining Performance
Tools like Microsoft’s “Partner Capability Score” illustrate how performance is increasingly measured by factors beyond raw sales numbers. The scoring system takes into account new business, the partner’s commitment to training, upsell value, and customer success, gauged primarily by cloud services uptake. In addition, the business planning with each partnership type must be set with clear objectives, KPIs, goals, and go-to-market activities that both vendor and partner envision. To know more about annual business planning, you can refer to this article.
Align Goals and Expectations
All channel partnerships must meet goals for optimum success. It is critical that you talk directly to your partner about the goal and the realistically possible results. This involves setting specific dates, budget requirements and resources and defining specific objectives and expectations. Give them something to read and clarify. The old adage of ‘under promising and over delivering’ applies here. Also, agree and document a plan – set specific KPIs so you can measure results in context of expectations.
Model Your Channel Partnership Strategy
A well-designed partnership plan can improve business sales and profitability. Instead of selecting a partner randomly, you should understand what the partner wants. How can I identify a suitable partner? And in a dynamic market, how can I be sure that my existing partners are still best fit for my business going forward?
Channel Partner Marketing
Channel partner marketing is an effective strategy to increase business profit. Using your channel partners’ expertise to grow your product and service, you will gain new customers and increase sales by using their services and products. Strong partnerships with trusted channels provide a win-win situation, fostering mutual expansion. To know more about channel partner marketing, Mindmatrix has curated a free certification with its 26 years of industry experience. You can visit here to get it certified.
Increased Sales and Revenue
Channel partners have their own loyal audience. Unknown businesses are likely to gain credibility and sales if their partners have an established name. If companies partner to promote their products or services, they’re providing support to their partners to boost sales and visibility for their products.
Mutual Growth and Long-Term Relationships
Channel partner marketing promotes mutually successful growth and fosters long standing relationships. Building reliable partnerships is an important component of your success. Your partner’s growing customers become a source of sales opportunities directly benefiting your business. Imagine if the software company is developing software tools combining IT consulting services. As clients grow, the consulting company recommends and implements software to suit your client projects.
In the end..
For technology vendors, overcoming the challenges of today’s complex sales ecosystem is critical. Evolving channel partnerships take more than just a product-first mentality; they require a nuanced understanding of customer needs, a collaborative approach to distributing profits, and strategic, ongoing skill development.
In the increasingly interconnected world of tech, where products, techniques, and customer demands are constantly changing, channel partners need to be agile, informed, and strategic. A flexible and adaptive platform like Mindmatrix can help manage these intricacies, align interests, help scale, and drive growth. To better serve channel strategy, development, and implementation, Mindmatrix has partnered with Connection2Channel , which brings decades of experience in the tech sector, to help tech companies navigate through the channel partnerships process.
Leveraging the insights and approaches in this blog can not only prevent channel conflict but can also lead to a thriving, dynamic sales environment that benefits vendors, partners, and customers alike. As the tech sector continues to expand and diversify, the companies that will stand out will be those that recognize the nuances of modern channel partnerships, create mutually beneficial relationships with all stakeholders in its ecosystem, and adapt accordingly.
Next steps:
Book a call with us today to understand how Mindmatrix can help you orchestrate the modern channel partnership ecosystem.
This article is co-authored by the founder of Connection2Channel, Andy Gilbert.
