How to get best out of your Channel Partner Management Program?

How to get best out of your Channel Partner Management Program?

Matt Goldman
How to get best out of your Channel Partner Management Program?

Although a company website is a great way to sell products, most companies rely on partners to drive sales to their site or store. A partner channel markets a product on behalf of a producer or manufacturer. Some examples include distributors, online vendors, and social media. These partners receive a small commission for selling the company’s product or get paid to refer a customer to the company website. With so many potential partners available to choose from, many companies have focused on developing a channel partner strategy.

Companies strategically select partners and often work hard to maintain good relationships with them. While the partnerships are mutually beneficial to both companies, a vendor or distributor may have multiple products to sell. The manufacturing company wants their product to be among the bestsellers. Three generic recommendations for maintaining a profitable partner channel are:

  • Be aware of the partner’s constraints.
  • Monitor the partner’s marketing metrics.
  • Analyze the impact of company changes on the partner.

These recommendations are applied to partnerships in different ways. The best way to work with a partner depends on who the partner is. Here, three common types of partner channels – distributors, online vendors and social media – are provided as examples of how to get the best out of partnering opportunities.

Social Media Channel Partner

Marketing to consumers via social media, like FaceBook and Twitter, is very common these days. Companies as small as one person or as large as a listed Fortune 500 can easily set up ads to be displayed to specific groups of users. These ads incorporate text and pictures and usually refer the customer back to an online vendor or the company website. Since social media partners generally do not sell the products themselves, they are usually called a ‘referring’ partner. Their purpose is to drive traffic to the company itself. While any publicity is good, there are ways that companies can improve these partnerships to get the best out of social media partners.

Be aware of the partner’s constraints

Social media partnerships are sometimes difficult because the social media entity often partners with multiple companies. Therefore, the social media company has to put standards in place. For example, Facebook does not allow text to occupy more than a certain percentage of an image. Facebook and Twitter also do not have the ability to sell products themselves. Therefore, the company often has to create an appropriate landing page for referred customers to see after clicking on the ad. Even other marketing strategies on social media, such as Facebook pages and Twitter accounts, have this limitation, which affects the overall marketing strategy.

Monitor the partner’s marketing metrics

A great benefit of a social media partner channel is the ability to easily monitor the effectiveness of the marketing. However, this ease also demonstrates that it’s the producing company’s job to monitor, not the social media entity’s. In short, Facebook will not notify a company if their ad is doing poorly. Entrepreneur recommends closely monitoring the sales, number of followers, engagement and sentiment metrics. These metrics help companies adjust marketing strategies like updating pages, boosting more effective ads with more money, and capitalizing on good Facebook posts. The channel partner strategy for social media has to include careful monitoring to be successful.

Analyze the impact of company changes on the partner

Social media partners are receptive to company changes as long as they fall within the constraints. For example, Twitter will not respond negatively if a company raises its prices by $2. Twitter’s profit margin does not depend on the price of a producer’s product.

However, other company changes can negatively affect the social media partner channel. For example, a text-based logo may make new ads difficult to get published on Facebook due to the text constraint. Additionally, FaceBook and Twitter have broad audiences. A pivot into a niche product may not be supported by the platform. For example, a company selling medical equipment to third world governments is not likely to use social media as a partner channel. A pivot to a government product may reduce the usefulness of social media within the company’s channel marketing system.

Online Vendor Partner Channel

Channel partners online include major marketplaces like Amazon, eBay, and Etsy. Unlike social media partners, these sites do more than simply refer customers to the company webpage. They all include the ability to charge customers for a product. Amazon can even fulfill the shipping for the producer, if requested. However, most manufacturers still have to ship the products. Like social media, these channel partners can display a product to a large and diverse audience. With the proper channel partner management, many companies thrive with these partnerships.

Be aware of the partner’s constraints

Like social media channel partners, most online marketplaces have standard profiles set up for producers. This limits how much information the producer can include in the product description. It can also impact how the producer takes payment. Cash is not usually an option for online marketplaces. The producer’s accounting system has to be able to interface with credit card charging services like PayPal or Stripe. To have a successful partnership, companies have to work these limitations into the marketing channel strategy.

Monitor the partner’s marketing metrics

Online vendors provide a great side-by-side comparison for customers, which means that producers need to evaluate competitors carefully. Is there a similar product that looks better or is selling at a lower price? Unfortunately, it can be harder for company’s products to stand out in an online marketplace. A product selling poorly may indicate it needs an image overhaul. Entrepreneur recommends unique and high-quality images, clear policies, and brand storytelling to stand out from the crowd. Keeping abreast of the sales in an online marketplace can alert companies to when changes need to be made.

Analyze the impact of company changes on the partner

Unlike referral partners, online vendors are included in the accounting process. Therefore, any price changes should take into account how the partners are affected. For example, many online vendors take a small commission that is a percentage of the price. When producers raise their prices, online vendors take the same percentage, but it will be a greater amount. If a company wants to increase profits by raising prices, they need to understand that the online vendor partner will take a piece of the profits too.

Distribution Partner Channels

Partner channels that distribute products can range from the mail carrier to a delivery man to a fleet of trucks. Distribution partners move the products from a central location to either storefronts or customers. Channel partner management and relationship maintenance can be more complex for distribution channels. There are fewer standards in place. Producers need to craft a good channel partner strategy to work well with the various types of distributors.

Be aware of the partner’s constraints

Distribution partner channels have limited resources to devote to a producer’s product. Unlike Internet-based profiles, a distribution partner will have to stock and fulfill products. There are limitations on warehouse space and the availability of trucks. Therefore, distributors often focus on products that can give them a large profit for a few sales or a smaller profit, but a large number of sales, according to Inc. Many producers provide incentives for distributors to focus the distributor on selling the producer’s product instead of other products. This may be an effective way to increase sales through the distribution channel.

Monitor the partner’s marketing metrics

Unlike the transparent world of internet marketing, physical distribution can be harder to monitor. Some distributors may take advantage of this inability to be completely monitored. For example, if the company offers a promotion where the supermarket gets a free case, the distributors may instead say its a free half of a case and sell the rest at a profit to themselves. The producer can’t see the difference. Distributors may also be negatively impacted. Broken products may be charged to the distributor even if the producer’s packaging is to blame. To develop a profitable channel, distributors and producers have to work together closely.

Analyze the impact of company changes on the partner

Raising prices or changing product packaging can have a huge impact on distributor partner channels. The channel partner strategy needs to take into account the distributor’s warehousing limits and more. A more fragile product can damage profits for both partners. A stronger one that takes up more space can suck up enough of distributor’s warehouse space, that the distributor may prefer to take on a different product. Even small changes can have a huge impact, so careful analysis is required before such changes.

Most companies need to take advantage of partner channels to sell products. However, making the most of these channels can be complex. Each partner channel has limitations. Good channel partner management takes these constraints into account to build a solid relationship. Producers also need to monitor partner’s sales to develop better marketing strategies. Finally, an effective marketing channel system analyzes the impact of company changes on the partner channels. Applying these strategies enables companies to sell products through partners much more effectively.

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Matt Goldman

Matt Goldman

Matt Goldman is a Content Marketer/Social Media Strategist for Tenfold. His writing has focused on social selling, marketing, as well as gamification.

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