Manufacturers utilize partners to identify new customers, service existing ones and fulfill all kinds of product, service and solution requests. This approach is also called indirect sales. In order to achieve successful indirect sales, a sound channel management strategy is key.
This article provides an overview of traditional Partner Led – a specific model within the channel management strategy – and its essence, its value, as well as challenges. In the second and final edition – which forms part of an exclusive publication – SELLBYTEL’s alternative hybrid approach to Partner Led is introduced, and ultimately suggestions are made for a valid future strategy.
If manufacturers want to conduct channel management successfully, they have to recruit, onboard and develop competent channel partners.
While products, services and solutions are developed and produced by manufacturers, the actual sales process can be divided: to facilitate the sale between manufacturers and end users, wholesalers / distributors frequently take care of availability, logistics and credit risks. Wholesalers / distributors mainly sell to channel partners that cover a specific industry, a given territory or customer segment. Whereas channel partners either source their products directly from the manufacturers (1-tier) or through wholesalers / distributors (2-tier). It should be noted here that in this article we refer to capital goods, i.e. IT/High-Tech industries, rather than services.
Now if the channel partners define the contact strategy with the end customer, i.e. they are given full responsibility and control by the manufacturer rather than just a fulfillment role, then we speak of a so-called Partner Led model within the channel management strategy.
With markets becoming faster and increasingly saturated, products getting even more exchangeable, competition rising and price pressure augmenting, businesses find it more and more challenging to grow further and differentiate themselves from the competition. Successful businesses primarily aim at one thing: achieving greater market share.
Growth, however, is often only possible if you manage to outperform your competition. This means selling more successfully than competing businesses and thus winning new customer segments. The goal: be better and faster than the actual market and thereby gain valuable market share.
Channel management is all about winning the right partners, transferring your vast know-how (so they really know your products and end customers’ needs), and covering the right region with the most suitable one. The set-up of a support organization covering all processes involved is further crucial to optimally support the partner. The core, however, is to make business relationships as easy and fun as possible. Only then will you be able to achieve sustainable success. The latter will be discussed in more detail later on.
In the pure Partner Led version, the partners have full responsibility for selling the manufacturers’ products and identifying all of their business. A clear advantage is the partners’ close proximity to the market, their already established trustful relationships with important decision-makers and thus their broad sales networks.
However, a common pitfall of this type of channel management is that the partners frequently lack knowledge of the clients’ products and insight into customers’ needs. Plus, you give all of the responsibility to the partners and thereby lose control over your sales process. Therefore, SELLBYTEL in particular has been applying a more transparent and efficient hybrid partner model in recent years.
To find out how the SELLBYTEL Group approaches this concept in practice, please access our detailed management paper.
Text: Anna-Luisa Wiefel