What Can a Manufacturer Do to Prevent Channel Partnership Cancellation?
Many manufacturers spend a great deal of time and resources on establishing channel partnerships in order to expand their business, only to be let down by the results. For a manufacturer to maximize their chances of success, they need to understand the reasons why some of their channel partnerships fail. Preventing channel partnerships from failing is frequently considered to be the most challenging obstacle facing manufacturers. Therefore, instead of dealing with unsatisfactory business results, it’s best to be selective when it comes to establishing a new channel partnership. Dealing with unhappy channel partners may cause a manufacturer to neglect its better, top-performing partners. It pays to be selective in the channel.
In order for you to have a long-lasting and productive channel partnership, we have listed below the top 10 reasons partners cancel their channel partnership and what you can do to prevent these scenarios from rising.
1.) Goal Incompatibility
The ultimate goal of all members in a channel partnership is to make the end-user happy and at the same time create positive cash flow. Customer satisfaction, in turn, leads to profit maximization for all in a channel partnership. However, when there is no cohesive goal, reaching such an objective can cause confusion among channel partners and customers.
What you can do: Evolve and Coordinate goals with channel partners for the ultimate customer satisfaction. Early on in the partnership, all parties involved need to agree upon expectations that each party brings to the table. It is only when a goal for sales projections, measurable terms, and time frames are set that you and your channel partners can recognize whether you all have the same vision.
2.) Lack of Communication
Without adequate communication, channel partnerships are doomed. Therefore, an open line of communication is necessary for a manufacturer to relay information to their partners about new products, prices, and promotional strategies.
What you can do: Use every available tool in your arsenal for keeping an open line of communication with channel partners. An inclusive partner portal that acts as a hub for communication and information is beneficial for keeping sustainable channel partnerships.
3.) Difficult to Implement Programs
Creating a sales or marketing program that takes into consideration all channel partners seems impossible. However, a manufacturer’s sales and marketing programs that are comprehensive will most likely accommodate most channel partners.
What you can do: Make sure all your sales and marketing programs follow a logical pattern. Present your programs with documentation that explains and supports partners throughout the program. Being available to answer partners’ questions regarding these programs can also help partners to better resolve their questions.
4.) Lack of Effective Management
The lack of managerial involvement will place the channel partnership in jeopardy. Poorly managed channel partnerships are set up to fail.
What you can do: As you jointly start working toward achieving a mutually agreed-upon set of goals and objectives it is important to set frequent and recurring meetings with channel managers. Such regular status meetings will help answer the partner’s questions and concerns.
5.) Not Understanding the Manufacturer’s Product
There are situations where a manufacturer and its channel partners have a different vision for the product. These different understandings of a product not only confuses the buyers but can also damage the manufacturer’s reputation.
What you can do: Train and test partners on their knowledge of your products. Consider a partner portal that offers a learning management system (LMS). This method of collaborative learning helps partners improve and grow their knowledge of your organization and products.
6.) Not Realizing the Value Proposition
There are cases where there is a misalignment between the objectives of the partner and the objectives of the manufacturer. Such misalignments arise when partners and their manufacturers have a different goal and strategy.
What you can do: The key to avoiding such conflict is communication from the start of a partnership. As a manufacturer, you need to communicate your short and long term strategic plans to partners on a regular basis. When there is a clear line of communication you can retrieve all market feedbacks from partners and understand why partners have a different perspective on the product.
7.) Lack of Compatibility
Lack of operational and cultural compatibility are big contributors to channel partnership failure.
What you can do: During the partner profiling stage, it is crucial to investigate to find out the extent of alignment between the missions and values of your organization and those of the new partner. If there is no cultural or operational fit, major issues may arise later on in the channel partnership. Our advice is to consider these aspects of compatibility with your channel partnerships from the start.
8.) No Cohesive Plans for Future Growth
A channel partnership like any other partnership needs constant attention and ministration for future growth. A successful channel partnership needs more than the initial introduction and training.
What you can do: In order for a channel partnership to experience expansion and growth there have to be regular meetings where all involved revisit and revise their joint business plans. Also, channel partners that hold each other accountable are more likely to experience positive growth.
9.) Competition with Manufacturer’s Sales Team
Frustration and discouragement arise when your channel partner’s sales reps find themselves competing with your direct sales team for the share of the market.
What you can do: Channel partners are not your competitors. They are rather an entity that represents you and your product to the end-user. Therefore, partners deserve the same or even better attention, support, and training as your own sales team.
10.) No Training
When selling through the channel the direct control and relationship a manufacturer would have with end-user are severed. Therefore, it is important that you educate channel partners on your latest products, updates, and data available.
What you can do: Channel partners require even more training and nurturing than your in-house sales reps. When partners are educated on their manufacturer’s product, they can deliver the most accurate information as well as the best degree of support and services to the end-customer. To do so, partners’ sales teams need to receive up-to-date product training and supporting educational materials. It’s beneficial to have a partner portal that provides access to the latest product information and incentivizes partners’ sales teams for learning the most recent product instructions and data.