What is a Channel Strategy?
A channel strategy is a must-have in the B2B world. Think of a channel as a chain, with the vendor or manufacturer on top, followed by “links” that represent the various partner companies needed to get products or services in front of customers. These links, or channels, work in concert to market your business, sell your products, and build your customer base. Now you probably want to know why you need to develop a channel strategy…
Why You Need a Channel Strategy
Managing multiple partners with differing processes, channel structures can be complex. In addition, you may have multiple paths to get your product/service from the top of the “chain” to the consumer at the bottom. This is where your channel strategy comes in. You’ll need a plan to manage these different facets to achieve a common goal: to market and sell your products to as many customers with as much efficiency as possible. Also, having a clearly communicated channel strategy in place will alleviate any possible conflict among your channel partners. A poorly communicated strategy will cause kinks in your chain and discord with your partners.
Types of Business Model
The type of business you have, as well as the type of products/services you offer, will determine the type of channels you’ll need. There is a variety of methods for vendors to distribute products, but there are two most commonly used in channel structures:
- Direct sales (B2C). Vendors sell directly to customers. This is considered the simplest approach.
- Indirect sales (B2B). Vendors sell through third-party. This includes wholesalers, distributors, resellers, dealers, etc.
Before you begin creating your strategy, you need to employ a Partner Relationship Management (PRM) tool, or partner portal, to keep your channel partners connected and streamline operations. Do your research on the various tools in the market to avoid the common pitfalls of implementing a PRM.
Once you’ve decided on the appropriate PRM tool, it’s time to start crafting your channel structure and strategy.
Design the Structure
Channel structures vary based on your organization and the types of products or services you offer. Larger businesses with multiple products and/or services require more partners than a smaller company with fewer products and customers. Also, the more support you need to get your products in front of customers, the more channel partners you’ll need to make it happen.
Determine Your Partners
And choose wisely. Your business is going to operate on the shoulders of your partners. You want to choose partners that bring value to your channel structure. And while you’re looking for the perfect partner for your enterprise, know that they are looking for you, too. And, would you want to have a partnership with someone whose house is not in order? It’s common knowledge that channel partners seek out vendors that know their stuff and prepare for the unexpected. And simplified processes will definitely be appealing to prospective partners.
Prepare to Onboard
Education is a crucial element in developing an efficient channel. Share your training materials and any other documentation that pinpoint what you do and how you do it. This is also the best time to teach your partners the nuances and functionality of your partner portal since it will be the heart and soul of your channel structure. In this step, you can also provide tactics and tools to motivate channel members.
Your partners need to be able to easily access your sales and marketing material. At all times. This is another reason why PRMs are necessary with a channel structure. A portal allows 24/7 access to all necessary documentation and provides an open forum for partners to communicate with one another. For your channels partners to achieve success, you have to set them up for success. Go an extra step and organize the collateral so your partners can easily access it on the fly.
Implement Your Process
Now it’s time to put your channel strategy to work. You have a lot of moving parts and you need to coordinate these various parts with the appropriate channel partners.
Analyze and Report
All partners aren’t created equal. And because nonperforming partners can be a drag to your bottom line, you need to stay on top of all the action by pulling analytics. You have to take the lead in evaluating member performance. It’s essential to work in a process to analyze your progress and report out your findings to your channel partners.