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What Is Channel Management?

    

What_Is_Channel_ManagementThe poet John Donne famously wrote, “No man is an island.” Donne was talking about the human condition, but he could have been talking about sales and marketing. No organization can successfully deliver goods and services in isolation; every business requires strategic partners with whom it works as a team to close new sales and handle customer fulfillment. That’s why “the channel” was created and why effective channel management has to be a strategic aspect of any successful organization.

The Benefits of the B2B Channel

In business-to-business (B2B) sales, channel strategies have become commonplace as more organizations look to expand their reach. With channel partners, it’s possible to split the sales effort into different target markets and conduits, increasing sales volume and profits as a result.

Adding the right channel partners increases sales opportunities. Many companies maintain their own internal sales teams to support high-profile, enterprise customers, but they outsource sales for specific markets, such as SMB, or to reach customers in less-targeted markets. The advantage of hiring channel partners, of course, is that they don’t add to staffing overhead, which means lower training and support costs. Channel partners can also be deployed in strategic ways to represent new product lines, open new markets, or fulfill other functions while the internal sales team focuses on its core business.

According to CEB, and industry leader in providing best practice and talent management insights, 57 percent of a buying decision is made before the customer even calls a supplier. That means if you use smart marketing, you can influence the sale in advance with the help of channel partners.

Channel partners can include specialty partners, such as born-in-the-cloud partners (those partners whose business models are built around cloud-based delivery of computing resources and software), or traditional partners (on-premise hardware and software solutions). They also can include partners who include your company’s goods and services as part of an overall solution. Value-added resellers (VARs), as the name implies, add value to an existing product, which means they don’t just sell products; product sales are just part of a larger solution. For example, your VAR partner may specialize in providing enterprise services and sell your company’s servers, routers, or storage systems as part of their contract.

Aligning the Channel

A successful B2B channel management strategy requires careful planning as well as choosing the right partners. In addition to your own organization’s goals and objectives, you need to keep in mind your channel partners’ needs and concerns. How does your product fit into the solutions they already sell?

It’s also important to plan out how you and your channel partners align your marketing and sales strategies. For example:

  • Product alignment – This involves defining the market segments you need your partners to target. Product alignment requires developing a comprehensive distribution strategy and competitive analysis so you can show your channel partners how your products and services fit into their world and will increase their sales.

  • Sales alignment – Sales alignment requires collaboration between product marketing and channel marketing to identify which products and territories should be delegated to the channel, what products should be offered through channel partners, and how you can increase deal size. It also encompasses setting partner margins.

  • Marketing alignment – You need to build market awareness with your channel partners to drive demand. This means marketing to your partners as well as to your end customers. Be sure to provide the necessary information and sales and marketing tools to your partners to help them present your brand value to their prospects.

Remember, a successful channel management strategy is different from sales management. Sales management is focused on closing new deals and bringing in new customers, whereas channel management is about working with all the partners in the value chain to create a positive, end-to-end customer experience.

The right channel partners can make or break your business. When considering how to build your go-to-market program, seek out channel partners who understand your brand value and can operate as an extension of your operations, extending that positive customer experience.

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