We are quickly approaching the end of the year, and 2020 has been nothing short of a doozy. But one thing that remains the same is the fact that B2B partner programs still make the world go round. With ease, if done right. Selling products through third-party partners extends your products to every corner of the Earth imaginable. But you already know this and your B2B partner programs are already well underway. However, there are more than a few factors to consider when building partner programs, depending on which channels you use to distribute your products and/or services.
Partners come in all shapes and forms, and you’ve already decided where you want to go, now you need to determine how you will get there. This is where your channel partners become front and center. So which channel partners do you need to get your products through your pipeline to your customer?
As we’ve stated in previous posts, all partners aren’t created equal. It’s up to you to decide where their partnership fits best with your business. Some channel partners have the edge up on attracting new customers, while other partners perform in the end stages of the sales funnel. Some partners will manage your technology, and some will act as liaisons between channels. It’s your job to create a comprehensive strategy that takes all these moving parts into account.
You’re winning if you put together the right ecosystem of channel partners. And different channels require different tactics. Let’s closely examine each partner type as well as challenges in managing these partners.
Original Equipment Manufacturer
Also known as OEMs, these partners do exactly what their name says it does – they manufacture original equipment. These manufactured parts are then built into products and marketed and sold under a specific brand. Sorry to burst your bubble, but Dell computers are not made in a Dell factory with Dell parts. The computer parts are made by a third-party OEM in partnership with Dell. Also, OEMs work hand-in-hand with value-added resellers.
Challenges: Inventory management has traditionally been a big headache for OEMs. Monitoring inventory in a supply chain can be tough when OEM channels don’t have direct access to real-time inventory. Manual processes only increase poor performance. Implementing inventory management software will streamline processes and bring efficiency to the supply chain.
It’s all in the name, as these partners “add value” to your existing products or services. Also known as VARs, value-added resellers are the king of the bundles. They take your product, bundle it with another product or service, and voila, customers take notice. With IT, this can take the form of hardware being bundled with software or professional service. A computer retailer such as Best Buy is an example of a VAR. Best Buy brings a ton of added value to customers that are not produced by the manufacturer, including extended warranties and service contracts.
Challenges: VARs are the oldest type of channel out there and has been in rotation since the ‘70s (hello, that was almost a half-century ago). VARs have hit some snags over the years as the business world has evolved with a more technologically savvy customer. As a result, VARs have had to adapt to still bring the “value add” that goes beyond software installation. Another drawback: low margins – there’s not a lot of wiggle room in pricing structures with VARs.
These partners buy up a whole lot of parts – both hardware and software – from different sources and put them together to make an amazing solution-oriented product. There are many facets to these channel partners. Ultimately, they are the problem-solvers of the group and they build and integrate computing solutions for clients. They also handle data security, monitoring, and performance management.
Challenges: System integration in itself can be a pain, especially if you’re dealing with incompatible systems. Monolith systems add an additional layer of frustration. You can start by replacing your older systems with newer technology that more readily supports integration. There are various tools on the market to streamline the integration process, but the key is to choose the right one to boost your efficiency and manage all your moving parts.
Managed Service Providers
Also known as MSPs, these partners deliver ongoing services related to your IT infrastructure. These are your IT people because you don’t want or need an in-house IT department. Or because you want your in-house IT team specifically focused on larger initiatives instead of performing day-to-day tasks.
Challenges: Technology is a gift and a curse to MSP partners. MSPs need to stay flexible to keep up with the constant changes and improvements to digital systems to be able to consistently meet customers’ evolving needs. As a result, vendors need to provide the most up-to-date, state-of-the-art software for MSPs to excel at what they do. Antiquated software systems will have your MSPs running for the hills for a more tech-savvy partner.
This is your supply chain middleman. Distributor partners act as a liaison between manufacturers and retailers. The benefit to distributor channel partners is they already have established networks for resale.
Challenges: Product failure can be a big drawback to distributors because they are in the middle of a vendor’s failed product and a disgruntled customer. And oftentimes, distributors don’t have the product knowledge or education to resolve these issues and your customer doesn’t have the time, patience, or energy for your distributors to send issues back up the chain and wait for a resolution. You can resolve this by requiring distributors to be thoroughly educated on your products, services, and solutions.
Last but not least, we have your retailers. Retailers include both brick-and-mortar stores and e-commerce.
Challenges: Retailers are a dime a dozen, so retail partners need to be innovative and efficient to stand out from the crowd. Multiple retail channels are better than one if your intent is to build revenue and grow your customer base. But with multiple channels comes a greater level of strategy and planning. You can streamline this by implementing automated systems to manage the various sales channels.
A few additional strategies…
Understand that there are varying tiers within each partner type listed above, and some of the partners even overlap, so the options are endless. Here are some strategies to manage your varying B2B channel partner programs:
Keep your partners motivated. A little motivation goes a long way to decrease channel partner turnover and increase production.
Incentive programs are a must. Rewards programs with attainable incentives keep partners engaged and high performing. Incentives are the fuel to their outstanding performance and success. If you provide fumes, that is what you will get in return. Capisce? Ok, let’s move on.
Communicate clear and measurable goals. Whatever you want to achieve, you better believe there is a channel partner to take you there. So, it makes no sense to get into a relationship with a partner whose goals don’t align with yours.
Be transparent with your partners. No one likes secrets. Be open and honest with your partners to establish trust and partner loyalty.
Make sure the partnership is mutually beneficial. Partnerships skewed to one side are not the fruitful types of partnerships you should be seeking. You risk losing partners if they don’t reap benefits of the partnership.
Look to the successful partners in your chain for more potential partnerships. Looking for new partners? The answer lies in your high-performing channel partners. If they’re high-performing and they have all their ducks in a row, they probably have a network of high-performing potential partnerships at their fingertips.
Do your research. When setting up a new B2B channel partner program, you need to do your due diligence in research upfront. There are many factors to consider when building a machine with overlapping parts, and your channel partner program needs the same consideration. The more planning you do upfront will lessen hiccups in your system.