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How to Scale Business through Channel Partnerships
In the last few years since the onset of the Covid-19 pandemic and during its aftermath, there have been considerable challenges for businesses in terms of scale, reach and growth. Organizations have no option but to re-evaluate their existing go-to-market strategies and consider leveraging more indirect strategies such as channel partnerships, to scale and accelerate growth. The reason being that channel partnerships can significantly reduce administrative, financial and regulatory burdens and can penetrate the markets beyond in house sales teams that focus on linear scaling models. This can be immensely helpful, especially for smaller businesses which is to say that channel partnerships present great value not only for billion-dollar businesses, but also for smaller ones.
A channel partnership can be a cost-effective way for a company to expand its reach and increase revenue. By partnering with other companies, a business can leverage their existing resources and expertise to reach new markets and customers, without having to invest in additional employees and infrastructure. Most successful technology companies have used channel partnerships as a key part of their growth strategy. 95% of Microsoft’s commercial revenue flows in through its partner ecosystem. Cisco, a leading brand that has a robust sales force also leverages a strong channel model which accounts for 85% of its total revenue.
How to successfully establish and leverage channel partnerships depends on how well an organization evaluates their potential and identifies the benefits and pitfalls that come with them. It should be noted that establishing such a relationship requires a win-win strategy for both parties. A channel partner must see the value in your business offerings across products and services and their capacity to deliver value to the end-user.
There are many advantages to considering a channel partner approach. Let’s look at some of these:
Channel partnerships help businesses achieve competitive advantage by helping them penetrate new markets both globally and locally which might otherwise be difficult due to reasons such as lack of manpower and market capturing capabilities.
Businesses can leverage their partner community to provide credit and financial services to end customers. This eases the burden of financial risk and improves cash flow.
Businesses also have a wide range of routes to market to help them make the right choice in determining the most viable way to scale and grow. Some of these include:
Value Added Resellers
Value-added resellers (VARs) are channel partners who resell products while adding their own value, such as customization, installation, and support services. They may also bundle the product with other products or services to create a solution for the end-user. VARs can be regional or national in scope, and their primary goal is to provide added value to the end-user while also increasing their own revenue through the sale of the manufacturer’s product. They can significantly increase a sales volume by leveraging their existing customer base and relationships to sell the manufacturer’s products or services. VARs often have established sales and marketing channels, as well as a trained sales force that can help to increase product visibility and market penetration be it specific regional or vertical market. Additionally, VARs are often more willing to embrace new technologies and can help smaller companies to get their products and services to market faster by providing valuable market insights and feedback.
Service Delivery Partners
Service delivery partners typically do not resell a product or software. Instead, they enhance its value to the end user by providing a range of services such as pre-sales consulting, installation, configuration, and ongoing support and management. They often work closely with the end-user to understand their specific needs and tailor the solution to meet those needs. They help increase relevance value of the brand withing the market to increase absorption, sales and customer satisfaction
Fulfilment Partners helps companies increase sales and reduce administrative costs by handling order fulfilment for high volume of transactions.
Managed Service Providers
Managed Service Providers provide additional services such as monitoring, troubleshooting, and maintenance, typically under a flexible subscription model, to ensure that the solution is always running at optimal performance. This approach to service delivery helps to ensure that the end-user is getting the most value out of the product or software.
Cloud Service Providers
Cloud Service Providers such as Amazon Web Services, Microsoft Azure and Google Cloud Services enable speed, flexibility and security by shifting entire IT infrastructures to the cloud or by offering some component of computing.
Businesses can also leverage influencer marketing, affiliate schemes, and partner programs. Many leading organizations in the technology sector have integrated partner programs in their strategies. Brands like Redington offer many platforms and programs namely FORUM, FORUM+, TURF, TURF + and LEAP for partner expansion, demand generation, scaling and business growth. These programs have helped Redington and its partner ecosystem by increasing partner engagement, creating network opportunities and organizing thought leadership activities. Redington also creates sales incentives through its Premier Partner Program (PPP), Elite Partner Program (EPP) and Drivers of Change (DOC) initiative.
To summarize, building a channel partner network can be a very effective strategy for B2B companies looking to expand their presence in local and global markets and accelerate their international sales. However, it is important to conduct a thorough analysis of the market and the company’s goals in order to determine the best approach for building and managing a partner network.