Who are your channel partners? How do they influence the purchasing decisions of end-users? Why do they recommend some brands and not others? Which channel partners have the biggest impact on your potential sales growth?
These are important questions to ask yourself when planning your channel marketing strategy. Our latest e-book, Incentive Program Secrets for Manufacturers, discusses the role of channel partners in influencing the purchasing decisions of end-users (and how incentives influence their recommendations). However, this is a topic we wanted to expand upon.
Channel partners profoundly impact sales for manufacturers, distributors, and wholesalers. To put things into perspective. Forrester Research’s Jay McBain shared the following stat at our annual summit: 75% of all world trade (or $80 trillion) occurs through a channel. In other words, 75% of all world trade is enacted or influenced by channel partners.
Channel Partner Definition
What is a channel partner? Webopedia.com defines a channel partner as “a company that partners with a manufacturers or producer to market and sell the manufacturer’s products, services, or technologies.” This partnership can be co-branded, or not. These channel partners can be transactional, i.e. they buy and sell your product. Or, especially today, these channel partners might be non-transactional influencers who affect the purchasing decisions of end-users in other ways.
Identifying Your Channel Partners
When planning your channel marketing strategy, it’s important to analyze the buyer’s journey to identify the various members of your distribution channel who influence end-users. These can be traditional partners (transactional) or non-traditional (non-transactional).
Types of Traditional Channel Partners
Traditional channel partners are directly involved in transactions with end-users. At the point of sale, it’s up to them whether or not the end-user purchases your product or the other guys’.
Examples of traditional channel partners include:
- Distributor Sales Reps (DSR).
- Value-Added Resellers (VAR).
- Showroom Sales Reps.
How Traditional Channel Partners Influence End-Users
Below is an example of a conversation that might occur between a traditional channel partner and an end-user, as well as a quote from our new e-book:
The counterman may be recommending Ol’ Reliable Brand because he genuinely thinks it’s the best option for the end-user. Then again, he may be recommending it out of habit, or because he earns points from Ol’ Reliable’s channel partner program when he sells their evaporator coils. In this instance, the discretionary sales effort is with your counterman and he should be part of your incentive program’s target audience.
Incentives for Traditional Channel Partners
You’ll notice in the excerpt above that there are three factors that are driving the channel partner’s recommendation:
If you look at the first two factors, those can be partly attributed to brand awareness and education. The third can be attributed to motivation. A channel incentive program can be incorporated into your channel marketing strategy to increase brand awareness, educate channel partners, and give them a reason to sell your product over the competitions’.
Whether you use a SPIFF, rebate, or points-based program, it’s important to offer incentive rewards that scale to a wide range of performance – to incentivize growth with your part-time partners, boost revenue from your middling majority, and to drive loyalty with your top-performers.
How Non-Traditional Partners Influence End Users
Non-traditional partners are a little more complex. If they are non-transactional, how do they impact sales? The answer is: influence. Industry thought leaders, publications, and consultants may not ever buy or sell your products, but their opinions and preferences can have massive sway over end-users and other more traditional partners.
Non-traditional channel partners can include:
- Media Companies.
- Marketing Agencies.
- Thought Leaders.
- HR Brokers.
- Certified Public Accountants (CPAs).
The importance of non-traditional channel partnerships has expanded greatly in recent years. With the internet and social media, their ability to share information and spread brand awareness – positive or negative – has grown exponentially. You cannot afford to neglect these partners in your channel marketing strategy.
While you still can incentivize individual players in your channel, now you also have to incentivize entire ecosystems of influencers.
Applying Incentives to Non-Traditional Partners
Obviously, you have to alter how you structure incentives for non-transacting channel partners. They play a very different role in your channel. Executive Vice President Jim Costello said it well in his last blog post:
You can’t really offer a thought leader SPIFFs or rebates or invite them to enroll in a points program. They are typically non-transacting and don’t exist in the framework of a traditional channel partnership. However, you can invite a select group of industry influencers to an exclusive forum at an incentive travel destination. Group incentive travel creates opportunities for you to educate influencers on your brand and start building meaningful relationships that could pay dividends down the road. This small, targeted investment could have a major impact on your visibility and credibility in the channel.
Identifying Where Incentives Will Make the Biggest Impact
While it would be nice to be able to incentivize every member of your channel, doing so wouldn’t be time or cost effective (not to mention it’d be impossible). Instead, you have to segment your channel and determine which segment has the most impact on your overall revenue. Incentive Program Secrets for Manufacturers provides insight and advice for conducting research to inform your channel marketing strategy that will get you pointed in the right direction.
But today’s distribution channel is complex. I strongly advise enlisting the help of a channel incentive company to help analyze your channel, identify which partners will make the biggest impact, and configure technology platforms to drive your channel marketing strategy.