Companies that work with channel partners grow much faster than those that rely on paid ads. An average business generates 18% of revenue through paid advertising, whereas companies that lean on high-maturity partnership programs can generate revenue up to 28%.
If you are already using partnership marketing, then that’s great. If not, this article will help you explore your options, helping you choose the partnerships that will scale your business.
Software-as-a-Service (SaaS) businesses and other companies wanting to grow steadily can benefit significantly from channel partner programs.
What is channel partnership?
Channel partners are companies or individuals that act as a middleman, connecting your company to the right target audiences. They provide support with tasks such as sales, installation or implementation, customer support services, and more.
Through such associations, companies and channel marketing partners can enjoy mutual benefits. For instance, partners can generate income by distributing a company’s products or services.
Moreover, channel sales partners can also enhance their rewards by selling or distributing ancillary products or services.
Advantages and disadvantages of working with channel partners
Working with channel partnership programs can have its advantages and disadvantages. These include:
Benefits:
- You don’t have to hire or train more employees to help scale up your business
- There is no need to obtain new office space, furniture, and equipment
- Customer acquisition costs are cheaper
- You will be able to enter new markets and/or sales regions without investing in infrastructure
- When you work with popular and well-reputed partners, you will strengthen your brand image and credibility
- Partnerships can help you concentrate on other core elements of your business
Drawbacks:
- Forecasting revenue is not going to be easy, as you will have very little control over the sales process
- Getting feedback from your customers will be harder
- Your company’s brand reputation might encounter high-risk exposure
- Giving support to your partners can be a time-consuming task, as it requires proper planning and consistent effort in training, communication, and onboarding
It’s not, however, all bad news. Just look at the companies that are currently benefiting from working with channel partners today:
- Microsoft earns 95% of its revenue through its partners
- Zoom’s business in Japan grew approximately by 40% because of partnering with regional channel partners
- TrialPay used channel partners to acquire around 10,000 customers, starting with literally zero customers
Types of channel partners
Channel partnerships come in different shapes and sizes, and the myriad options on offer to companies starting out on this path can be confusing. To help you make a decision, here are some of the popular partnerships you can choose from in the industry:
1. Indirect sales
When you (the vendor) sell the product to your customer directly, it is called direct sales. Indirect sales are sales a third-party or affiliate partner helps you get by brokering in for you.
Kevin Cohn, Chief Customer Officer of Brightflag, calls indirect sales “the holy grail of SaaS.” That’s because, in indirect sales, your channel partner will spend money from their pocket for your customer acquisition, which means you do not have to spend a single penny. Now, this is what selling while sleeping is all about.
Companies benefit significantly through indirect sales because they do not have to hire any sales personnel. There are different indirect sales strategies that you can adopt to scale your business.
2. Resellers
Reseller partners make modifications and customizations before selling a vendor’s products in the market. The relationship between affiliates, referral partners, and their customers ends once the customer makes a sale or a purchase from the vendor.
Nevertheless, reseller partners take charge of the entire customer relationship. It is one of the main reasons why they need increased vendor support. They also need access to partner enablement resources to help them provide better customer service.
3. Channel value added resellers (VARs)
Channel VARs are also known as ‘solution providers.’ These channel resellers add a margin on your product before selling it to customers. Most importantly, they will add value to the product in diverse ways.
Partnering with channel VARs is beneficial because they will first sell your product to their existing customer base. Since these companies put in the effort to explore and embrace new technologies, small companies have a great advantage. Their products can reach the right target audience quickly and with little to no effort.
Channel VARs might be right for you if you…:
- Are launching new and innovative technology to the market
- Desire to get your product or software into a broader market
- Do not have sufficient resources or capacity to scale your marketing efforts
4. Agency partners
Agency partners are good because they can refer leads to you and are able to close deals on your behalf. Sometimes, agencies also have products that they sell alongside yours.
Agency partnerships can increase your market reach and assist you in earning additional referral revenue. Some of them might also collect payments from customers on your behalf while maintaining relationships with your consumers. Agency partners work with companies in the same industry with similar goals and values.
5. Affiliate marketing programs
Affiliates are individuals or companies that sell your product on their website, social media platform, or other platforms online for a commission.
Companies pay affiliates in one of the three payment methods:
Affiliates earn revenue depending on their website visitors’ actions on their affiliate websites or social media platforms. Affiliates are usually content creators that use content to grab potential customers’ attention and employ affiliate links to send them to the vendor’s website. The commission they receive depends entirely on the pre-agreed terms and conditions they sign-up for before they begin promoting your products.
6. Service delivery partners
Service delivery partners are not resellers but partners who add value to the products or software you create. Its focus and goal are to provide the company’s clients with the best customer service.
They offer a wide range of services, including presales consulting and product or software installation. These companies take care of installation projects, correct reliability issues, and provide excellent service to customers using professionals.
7. Technology alliance partners
These partners increase your product’s value by adding another product. In this type of partnership, you will offer your clients an integrated solution by combining two different products that harmoniously achieve the same goal.
If both partner companies are trusted and well-reputed, they have the potential to enter new market segments as well as appeal to each other’s existing customers.
8. Cloud service providers
Cloud service providers are not resellers. They offer elements of cloud computing, such as SaaS, Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). When you host your solution on the cloud, you can significantly enhance your product in various ways, such as by improving its security, speed, and flexibility.
Google Cloud Services (GCS), Amazon Web Services (AWS), and Microsoft Azure are some of the most notable examples of cloud service providers. As such, by partnering with one, you will be able to offer your clients the most powerful and reliable solutions available. Besides generating brand visibility and recognition, you will get the market share of the cloud providers too.
9. Managed service providers
These companies remotely assist your customers with their end-user systems and IT infrastructures. Their rates are usually very affordable. Using various tools, techniques, and processes, these companies are proactive in their approach and do not wait for problems to arise before offering a solution.
One of their strengths is that, after installing a product or software, they help businesses provide their customers with consistent care and support.
10. Embedded partners
Embedded partners are also known as ‘white-label partners.’ These companies are happy to embed your product into theirs and sell them as their product. It is one of the quickest ways to accelerate sales.
While this partnership may not help you with brand visibility and recognition, companies that want to scale up their sales quickly can benefit from this association.
In conclusion
Associating with channel partners is essential for businesses that want to succeed in the market and improve their sales processes. The above is a list of the most popular channel partner programs that most companies are part of and how you can benefit when you partner with one. Think about the pros and cons before making a decision, and ensure your partnerships align with your marketing strategy and goals.
