Feature Article - July/August 2016

Fostering-Positive Partnerships

Navigating the Latest Trends in Channel Partner Programs

By Rick Dandes

In this highly competitive modern-day marketplace, where literally thousands of products and services are available at the click of a computer mouse, businesses would do well to consider a channel partner program to encourage and engage collaborators, such as dealers, distributors or brokers, to sell or represent them to customers.

The majority of brands today use channel partners to sell their products in one way or another, noted Ira Ozer, president, Engagement Partners, of Chappaqua, N.Y. "For example," he said, "almost every brand of electronics and computing equipment uses CDW Corp. to sell to businesses, because they can do it more efficiently than the brand can do it themselves. Channel partner programs use marketing, training, incentives and other initiatives that educate the channel partners and their salespeople and engage and reward them for focusing their sales efforts on their brand's behalf and not their competitors."

Manufacturers mostly work through independent channels, added Maggie Wenthe, solution manager, ITA Group, of West Des Moines, Iowa. "So partners, distributors and customers have a choice of what products or services to purchase. How do you get them to buy more from you? A well-thought-out channel loyalty program will help." Common channel players include: the manufacturer or creator of items (vendor, supplier); the distributor, the warehouse that holds and sends items to retail stores; the channel partners that sell the item to end users (dealer, store, reseller, value-added reseller or VAR, retailer); and finally the customer, or end user.

It's important to understand, Wenthe said, that manufacturers usually don't know when their product is sold to an end customer. "Obtaining this information is extremely valuable. What regions are performing? What products move through the most quickly? They know what they sell to distributors and channel partners, but are unaware of how long it sits before being purchased by a customer."

When you throw in services it gets even more complicated: Was it part of a packaged deal or bundle? Did the reseller, dealer or partner add on to what you manufacture?

While partner programs exist in nearly every industry, the tech sector has really changed the ballgame and relies heavily on incentives to get their products to customers. "I believe this has to do with the nature of the business," Wenthe said. "You don't need to have a tech vendor or distributor in your back yard like you do with building products."

A successful channel partner program helps organizations ensure their sales teams will become highly motivated, emotionally connected brand advocates, while also achieving key business goals for program success and return on investment, said Kurt Paben, AIMIA, president, Channel and Employee Loyalty, U.S. "You need to consider all the audiences," he said, "to implement a robust and useful program."

Those audiences are:

  • The partner company owner of the business you sell to that sells to an end customer.
  • Partner sales reps: the people who actually recommend products and sell to the end customer.
  • Your own sales reps, who can be very influential with channel partners: Are they on the same page as your incentive strategies? What benefit do they get for getting partners enrolled and participating?
  • Distributors, as applicable. If you use distribution in your channel, it's important to keep them looped in on what you're doing. In fact, you can both profit from well-thought-out incentive programs.

Engage Your Channel Partners

From the start, the brand launching a program must have an authentic relationship with the channel partners and earn their trust, Ozer said. Brands are misguided when they think that launching a channel partner program without a trusted, mutually beneficial relationship that will engage their partners. When partners believe or have experienced that the brand will go around them and sell direct, not provide promised resources or undermine them in some other way, they will not advocate the brand regardless of the program benefits.

Your programs don't make a bit of difference if the channel doesn't know about them. How are you communicating the offerings through the channel? Communicate pre-program, during the program, for each spurt, at program/spurt close, and through redemption. Stay in front of your partners to ensure they understand where, why and how they can earn.

Getting partners involved is where the manufacturer's own sales reps can shine, Wenthe explained. "Offer enrollment bonuses and other programs to encourage sales reps to understand the program offerings and benefits, and share them with channel partners. Develop clear, intuitive programs that are easy for the partner community to understand and use.

"The result of such programs should be the ability for the vendor or manufacturer to apply the right incentives to the right partners at the right times, and for partners to improve their own sales and profitability."