Building an indirect channel essentially requires the development of three basic frameworks:
- An ideal partner profile
- A channel partner agreement
- A channel partner program
Let’s talk about the channel partner program.
The terms and conditions associated with your channel partner relationships are collectively known as the channel partner program. The objective of the channel partner program is to make it attractive and easy to do business with you, enabling you to recruit and manage partners to cover the full potential of your product and achieve a leading market position.
The channel partner program shall support the three stages of your relationship with the channel partners:
Recruitment:
The channel partner program must motivate potential partners into talking to you and eventually signing up to include your product in their customer value proposition.
Ramp-up & Enablement:
It should motivate the channel partners to invest in the ramp-up phase, showing patience and persistence overcoming the learning curve and their initial lack of customer references.
Management & Growth:
The program should motivate the channel partners to keep growing their business providing you with increasing revenue, and thereby contribute to building a solid position vis-à-vis your competitors in the industry.
Supporting the value chain
Fundamentally the partner program must be designed to support precisely those activities that you ask your channel partners to assume responsibility for.
Figure 1: Examples of the steps and activities required to support a customer acquisition process that you may ask your independent channel partners to assume responsibility for.
I strongly recommend that you develop your own “best practice customer acquisition process” before you design your channel partner program as each element of the program should support a step in this process. Your channel partner program is the default path from getting started to achieving return on the investment with your value proposition and running a profitable business “thereafter.” It should be fair and balanced, requiring investments and focus from you and from your channel partners, otherwise it will not work.
Your channel partner program is not supposed to be a free lunch where the partners can serve themselves as they please without any financial implications. However you should always - and with current technology it is also feasible to - deliver as many of the services as possible in formats associated with the lowest marginal cost[1] possible. The fundamental principle is to deliver high value that the channel partners must pay to receive and then find ways to deliver this value as inexpensively as possible. Thus your channel partner program shouldn’t be a profit center, but it shouldn’t be a loss center either.
Hans Peter Bech is an Amazon bestselling author, keynote speaker, economist and advisor. He blogs on issues related to growing software driven companies to global market leadership and write books and whitepapers on business development in the software industry.
[1] An example is training, which is always a major element in a channel partner program, where you should invest in e-leaning formats, that may take some up-front investment on your behalf, but can be delivered to your channel partners at very little marginal cost.