Once the groundwork is laid for your partner program, what’s the next step? Whether your program is taking off or you’re struggling to hit certain goals, evaluating the types of partners you’re working with is key to growing and scaling.
Taking a step back to evaluate gaps in your sales ecosystem can exponentially increase the results from your channel program, though. And this is where the value of adding new types of partners comes in.
A value-added reseller will help you attract new kinds of customers compared to an indirect reseller, for instance. A managed service provider will offer a more robust experience for your customers than a referral partner.
So, how do you figure out who else you need in your partnership community and how do you bring them into the fold? Here’s how to start adding different types of partners and the next steps as you scale.
What Are the Different Types of Channel Partners?
There are numerous possibilities of partner type combinations and nuances that can elevate your channel sales program. These are the five most common types of channel sales program partners.
Referral partners are third parties who promote your product or service directly to their own networks, tapping into the trust and credibility they’ve established with those relationships. This means the leads they send you tend to be highly qualified.
This type of partner typically receives a commission or fee for sales associated with their efforts.
Affiliate partnerships can fall under this category – if they’re posting a link to your product on social media, for example – but affiliates tend to be more hands-off.
A reseller partner sells your product or service to their customer base, helping you reach a much larger audience than you otherwise would have thanks to their connections. Unlike a referral partner that brings you leads, a reseller will typically be involved across all stages of the customer journey.
They usually make money from the profit margins, although they may receive a percentage commission of the sale.
Value-added reseller partnerships
Channel value-added resellers (VAR) partners are quickly becoming the most popular type for many businesses. Like a reseller, they extend your customer base by taking your product or service to new markets and adding a profit margin to it.
However, the difference is that they also provide additional value to the end-user which can be anything from services to customizations. This makes your product more competitive and tailored to that specific audience base. VAR partners are particularly helpful for increasing sales volume over a short period of time and getting products to market quickly.
Alliance partnerships are formed by organizations in a similar business – like software, cloud services or other tech – that integrate two products into a single solution for the customer; to learn more about this, specifically, read Channel Partner Integration Strategies.
It can require more investment upfront to create a joint venture with an alliance partnership but the payoff can be significant, both in terms of the product offered and any co-marketing opportunities.
Alliance partners often receive a percentage of the sales revenue. In an ideal alliance, both sides benefit equally from sharing access to customers. It doesn’t have to be a 50/50 revenue split though if one partner is benefiting more in other ways. Take it on a case-by-case basis.
Managed service provider partnerships
Managed service provider (MSP) partners deliver ongoing services, like IT infrastructure, to your customers after the sale. This can make your software more attractive to a consumer because it removes potential barriers to implementation and upkeep, improving the overall customer experience.
Partners like this can receive a percentage of the sale, but also benefit from the ongoing revenue generated from value-added services.
Choosing the Right Channel Partner Types
When figuring out which partner types to add to your channel sales program, the choices can seem overwhelming. With so many options for partners, how do you know which ones are the right fit for your program at this point in time?
If you are just starting out with a newly established partner program, you have both the advantage and the challenge of laying the groundwork. Before launching into half a dozen different categories of partners you’d like to work with, take stock of what you may already have running in the background.
Most partner programs have roots in informal partnerships, like organic referrals or resellers, long before an official structure is developed. So, consider who is already working with you and what has already proven successful when you start to solidify your ideal partner types.
Targeting sales gaps and goals
Once you’re at the stage of adding additional partners types, start by identifying gaps in your ecosystem that partners can fill as the first step. After all, your partners are an extension of your sales team and so tapping into the extra capabilities they bring to the table can be a huge source of support for your internal team.
Is your team struggling with the number of leads coming in and needing help with a more hands-on approach to sales? A highly-motivated reseller might be a good fit.
Do you need partners who can generate their own leads? Referral partners with an established customer base or value-added resellers, for instance, can be a life-saver.
Are you looking to improve the after-sales experience for your customers with ongoing services or support? Consider the benefits of managed service providers or alliances.
When you’ve established the baseline needs for your channel sales program and what gaps should first be filled, take a step back to focus on the more long-term business goals.
What are the ultimate results you are hoping to achieve with your channel sales program? Do you want to enrich your product with tech partners? Are you hoping to build up a pipeline of resellers?
There is no one-size-fits all solution for the best type of partners to include in any given channel sales program. And the best type for you will likely evolve over time as your program grows and your business goals shift.
That’s why it’s so important to set performance goals for your overall channel sales program and regularly review what’s working. Make sure that your expectations are clearly communicated to your partners, you’ve given them the material and support they need to successfully sell, and you’re measuring the results.
Recruit and Reward Each Partner Type Differently
Just like you’re looking for distinct benefits from these different channel partner types, each partner will be weighing the advantages of working with your organization, as well. And what motivates each partner type can vary greatly depending on where they’re coming from.
Thoughtful recruitment messaging and incentive packages tailored to the distinct goals of your individual partners can go a long way in building long-lasting relationships that are successful for both parties.
A partner who is referring a set number of new leads to your sales team each month, for instance, may simply be looking for a set commission on each successful sale. One who is helping you close the deal or is more actively involved in co-marketing efforts will likely be looking for a more competitive commission structure.
On the other end of the spectrum, a tightly-knit alliance that requires significant investment and effort from both of you upfront – often the case with technology or SaaS partnerships – would need a more comprehensive compensation plan that doesn’t just include monetary rewards.
That could include free certifications or training, the ability for their teams to use your technology solution at a reduced price or strategic visibility to build up credibility. The biggest benefit to a solution partner alliance is the opportunity to multiply revenue from the services offered over the long term. A $100K deal can lead to two or three times that in ongoing revenue from services provided.
Ultimately, the rewards you can reasonably offer are informed by and reflect the responsibilities, required effort and results for each partner type.
Go-To-Market Strategies For Different Partner Types
As you optimize your channel program to include new types of partners and expand your sales reach, your strategies will become more sophisticated, as well. The types of partner content you create, the way you onboard participants and how you go to market with them will evolve.
In our new channel partner go-to-market guide, we explore the best ways to increase revenue, expand reach and boost credibility with your channel sales partnerships for all partner types.