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How to Build a Channel Partner Program

Written by Daniel Graff-Radford, CEO of Allbound, the partner preferred PRM (partner relationship management) company.

According to the World Trade Association, over 75% of the world’s goods and services are sold through indirect channels. So, how do you get the attention of these indirect sellers and marketers to drive demand to your offerings? 

This is a beginner’s guide to planning and building a new channel partner program. If you are running a program and want to accelerate what you are doing, please look at our content about scaling a channel

Step 1 – Identify Your Ideal Partner

The first question you should ask yourself is, “which audiences will want to work with me in a channel program?” An easy way to locate potential partners is to look at your competition’s channel. A good place to start is the partner page on their websites. Do they have companies that are reselling or referring them business? What types of companies are these, and what value are they receiving from the partnership? 

A second place to look at is companies that sell to your ideal customer profile (ICP). See if there is a vibrant ecosystem that want to integrate with your products, resell, or refer. Marketplaces, such as AWS, Shopify, HubSpot, etc., are another fantastic route to potential partners. They can be great places to list products and find services firms that may want to help connect you with buyers. For additional strategies, read Eight Tips to Find and Recruit Channel Partners.

Prioritize keywords by the metrics that matter

Step 2 – Determine the Preferred Channel Program Structure

Assuming you have tapped a vein (or ten) of places and companies to find potential partners, your next step is to determine what type of partner program is right for your business. Here are some industry terms for the typical type of programs you can start with:

Referral / AffiliateThis company has excellent relationships with your potential clients and refers them to you. Typically, companies will pay referral fees either one time or for some recurring period of time, like renewals. Look at what others are doing in your space for guidance. 

PRO TIP: A higher pay rate does not necessarily mean higher referral rates in most cases. The speed and transparency of payment and proof of how well you treat their relationships will be far more important. 

This partner type can be a massive part of your revenue if the referral partners need your product in order to do their jobs. An example would be a web hosting company getting referrals from web marketing agencies that need hosting for the sites they are building and consulting.

Reseller / Distributor This partner sells your products, many times with other goods and services. Sometimes they use their brand on your product (if you let them), and this is known as “White Label.” At times, these distributors have sub-distributors, also known as sub-agents, and in these instances, the lead distributor is sometimes called a Master Agent. 

These types of partners will usually need:

  • Training on how to sell your products
  • Regular interaction on what is developing with your company
  • Updates on current offerings

These partners may have tiers based on the performance of selling your products. Those tiers can be bronze, silver, gold, or any other stratification and naming.

AllianceSometimes, companies will work together with joint marketing agreements or joint offerings that suit both parties. An example would be a credit reporting agency having an offering with banks that offer loans. Both need the other and do separate work but can work together. Other alliances work with joint selling of opportunities that can be won together.

Ecosystem / MarketplacesThis is a great and changing place for channel partners. There are amazing marketplaces run by the likes of AWS, HubSpot, Shopify, and many others. You can see that many companies work to enhance the customer experience for other products or in collaboration with each other. 

Tech Integrated PartnershipsMany types of products can be embedded into other products to create a great result for customers. For instance, a business intelligence (BI) tool may help show data to customers with their own data, or that BI tool can be embedded into another product to show the data of that product and be sold together.  

Step 3 – Define & Build Your Partner Journey

Now that you have picked one or more partner types that you want to recruit for your program, you will want to figure out the partner journey. Defining the partner journey is the first step in engaging your partners and building your channel program. Here is how we see the whole lifecycle of working with partners:

Partner Engagement Cycle

Partner Journey Exploration is where you define what it will be like for partners to engage with your company. You will want to draft some ideas on how you plan to meet partners, engage with them, conduct training, and help them market/sell. Once you have the beginnings of a plan, you should meet a few potential partners and share your thoughts. The goal should be to see whether your plan aligns with their objectives so you can adjust before onboarding partners.

If you can meet 3-5 solid partners who want to work with you, you may want to offer favorable terms to them for helping you build out your partner program. Sometimes just being first is advantageous enough. 

Once you have a partner or two that is helping you bring in business, you are ready to plan for scale. It is time to revisit your original plan and adjust it based on how much interaction each partner will need at each point of their journey. This will help you plan for revenue and cost of the program. 

Example build-out plan:

List your facts (sample from real example):

If there are 30,000 agencies that fit your profile for referral business and at least a third of them match your example programs. If it takes 5-9 interactions of 60 minutes to meet them, onboard and train, and help them market and sell. If you hire a team of 2 and can take on 10-20 partners per month with that team and each partner brings in an average of 6 deals per year at a value of $12,000/year that stays for an average of 4 years, this would be an example model for a reseller partner:

Internal team of 2 X 15 partners per month = 30 partners / month

30 partners bringing in 0.5 deals per month (6/year) = 15 deals per month

At $1,000 Monthly Contract Value ($12k Annual) = $15,000 / month

At month 2 you would have that $15k plus the next and so on

You can take your team and tool costs and gross margin (minus revenue share) to figure out your payback period. This should provide you with a good understanding of your potential growth.

If you want to learn more about building or scaling a channel partner program, please reach out to us at www.allbound.com.

Daniel Graff-Radford