Three Critical Areas of Alignment for Vendors and Their Channel Partners

Channel partners come in various flavors, sizes and motivations:

  • Value Added Reseller (VAR) – Resell a product under its manufacturer’s brand or as a white-labeled solution potentially as part of a broader solution.
  • Value Added Distributor (VAD)-  Entity that stores and distributes hardware and/or software on behalf of vendors. They may provide a marketplace and offer services like credit lines to resellers.
  • Independent software vendor (ISV) –  Organizations specializing in making and selling software for niche or vertical markets. 
  • System Integrator (SI) –  Entity that specializes in bringing together component subsystems (including software/hardware) into a functioning complete solution for end-users.
  • Service Provider (SP)– In the most generic sense, a service provider (SP) provides organizations with consulting, communications, storage, processing, legal, real estate, education and other types of services. It may also refer to a third party or outsourced suppliers, including telecommunications service providers (TSPs), application service providers (ASPs) and Internet service providers (ISPs).
  • Strategic Alliance – A strategic alliance is an agreement between two or more parties to pursue a set of agreed-upon objectives needed while remaining independent organizations.
  • Referral Partner – Refer your product to other customers for a fee.
  • OEM Partner – Leverages a portion of the vendor’s product or in its entirety integrated with their solution or bundled with the partner’s solution.

Before a vendor builds a partnership and brings them into ecosystem, there are 3  key areas of alignment they should consider:

Business Alignment:

Go-To-Market Strategy: The Channel Partner is strategically aligned with Vendor in their Go-To-Market strategy.

Financial Stability: A business with a stellar credit rating and verifiable references.

Target market: Partner has access and knowledge of to Vendor’s target market.

Complementary Product Line: Partner sells a product that complements the Vendor product line.

Familiarity with offer type: The Channel Partner is familiar with the economics and positioning of the offer type – for example, when dealing with a SaaS offering, Channel partner understands the economics around SaaS and is setup to sustain their business with a recurring revenue model (vs. the traditional upfront Capex model).

Sales and Marketing Alignment:

  • Sales Coverage: Channel Partner has adequate coverage in terms of sales and sales engineering staff for the territory they intend to cover for Vendor.
  • Sales Experience: Partner has been in business for a period of at least 3-5 years in the specific vertical with double-digit sales and margin growth achieved over the period.
  • Culture: Vendor and Partner should share similar cultures of collaboration, coordination and inclusion.
  • Marketing Support: Channel Partner has marketing staff to support sales activity across customers.

Technical and Operations Alignment:

Technical Know-how: Partner has adequate knowledge of Vendor’s industry and understands how to position the Vendor’s offer in the market vs. the competition.

Provisioning Support:  Partner has the ability to provide provisioning support when onboarding customers in conjunction with the Vendor.

Day 2 Support: Partner has support desk with robust set of trained resources to provide the required coverage across customer base (24×7 or 8×5 coverage based on contractual commitment.

Billing Support: Partner has a billing system that either currently supports or can be extended to support billing for the type of product they offer from Vendor (for example, e-Commerce).

Language Support: Adequate language support for target markets the partner intends to cover.

With full alignment across these three critical areas and a commitment for joint success, vendors and partners will be able to reap the full benefits of their partnership bringing top-line and bottom-line growth and delighting their customers.

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