How to Build an Effective and Profitable Channel Sales Program
As channel vendors head into a new year, with optimism and a pristine outlook, it’s without question there are inescapable challenges which lie ahead. Uncertainty about the future is of top concern, as is monitoring [incentive] channel sales program performance and identifying areas where costs can be reduced.
The explosion of information and channel sales data has executives confounded and overwhelmed. The ease of communication and readiness of digital opinions can tarnish a [once good] reputation.
Market-trend inconsistency and failure to keep up with regulation and compliance standards risk more than just monetary discipline, but governing intervention.
Implementing channel sales programs that encourage partners to proactively sell your product while meeting the standards of their customers further deepens this intricate trade.
Despite the inevitable obstacles and growing complexities within the channel, a plethora of opportunity exists.
In order to capitalize on building an effective and profitable channel sales program, a balance of strategy and preparation must take place.
Establish Your Pricing
If one of your partners proactively sells your product, invests in marketing and provide technical support.
How do you justify their pricing versus a partner that simply takes orders?
What factors determine how you discount your pricing? Do you provide additional margin to partners that register opportunities before a specific end date? Do you reward a higher margin to distributors who sell to a specific end customer or market?
The parameters by which you design your channel sales programs and pricing is virtually endless. However, establishing guidelines without a clear direction is simply a waste of time and resources. Depending on what you want to achieve, prioritize your pricing based on how certain partners can get you there.
Define Your Territory
Although it may seem obvious, it’s not uncommon for vendors to blindly create sales channels without taking into consideration the [physical] areas which perform best.
Is there a certain amount of partners you wish to designate to a particular region either domestically or internationally? Should partners with different end-customers be segmented?
Effective channels stem from a specialized focus on what is specifically trying to be achieved. The better you understand the endgame, the more efficient you will be at getting there via the channel.
Integrate Product Exclusivity
Each channel partnership is unique, which means each channel partner’s end-customers are unique as well.
Implementing a one-size-fits-all approach to your channel sales programs might not be an effective strategy. Your programs may need to be tailored or personalized. Perhaps—if you’re selling in the intentional market—it may need to be localized within the context of the culture or demographic of the end-customer. Maybe you need to tweak the product’s functionality or aesthetic appeal. Whatever decision you decide to make, relate it back to how it can help partners become more effective.
Develop Strategic Incentives
How well you’re at implementing sales and marketing programs into your channel sales program will determine a large majority of your success.
Incentive programs need not only to be appealing and motivational but also easy to understand if they wish to participate.
Confusing and vague program guidelines are one of the biggest reasons why channel partners opt-out of programs. By creating a program with objective guidelines and feasibly attainable goals, more partners will be inclined to join.
While developing your channel sales program, think about:
- how your strengths will be able to help your partner’s weaknesses
- find ways to ‘sweeten the deal’ when designing programs
- Is your marketing department able to contribute to a joint marketing effort
- or, do you wish to simply allocate MDF (Market Development Funds)
- do you offer deal registration and reward partners that successfully close registered opportunities within a given timeframe?
- If so, how will you protect registered partners from channel conflict and/or your direct sales team?
Once a partnership has been established, and an order has been processed, which steps need to happen next?
Here’s a list of a few ideas you can use to support channel partners before, during and after orders have been processed:
- Designate an Account Partner Representative – You partners are going to have questions. Having an internal mediator that offers general and specific support to channel partner queries will dramatically improve their success, which inevitably helps you.
- Training – You and your internal team are experts, but your channel partners, on the other hand, might not be. By providing industry best practices, product manuals, industry updates, sales advice, on-premise training, recorded webinar, PDFs, etc., you revitalize their self-sufficiency, knowledge, and confidence to sell your product.
- Demos and Samples – Why do chefs continually taste their cooking? To make sure they can educate wait staff on how to describe and market the final product to guests. The channel works the same way: the more your partners can understand your product from a first-person perspective, the better they will be at selling it to consumers.
- Leads – When you notify a partner of a qualified lead, you not only garner their immediate interest and motivation, but also their trust and dependence on your business to make a profit.
- The more you give, the more you receive.