What is a channel partner?
In the world of indirect sales, a channel partner is a company that partners with a vendor to market and sell their products, services, or technologies. While it’s a straightforward concept, it can look many ways in practice as the world of business partnerships is constantly evolving. However, the end goal is often the same: partners allow you to reach larger or new market segments to increase your sales without the need to handle sales or support internally.
Here’s some examples of how channel partners might work with vendors:
- A B2B SaaS company partners with various value-added resellers (VARs) and consultants to reach more customers and provide continued support to their customers
- A telecom company partners with local retailers to sell their service packages
- A cybersecurity company forms a technology partnership with a data analytics company to rapidly expand their offerings to customers
- A healthcare app builds a network of trusted medical thought leaders who refer their followers to the app with a unique referral link, so they earn a commission on each purchase
- A marketing startup releases co-branded reports about paid marketing trends with consultants in different industries
- A manufacturing company works with resellers and distributors to get their products to market
Again, a channel partner will look vastly different depending on your industry and customer needs. Most partners will also play more than one role in your channel partner ecosystem. In fact, a Microsoft study of their partner ecosystem found that only 20% of their partners engaged in a single business model.
Typically, your channel partners may perform one or more of the following tasks:
- Resell your products or services
- Offer ongoing support services for your product
- Handle complex implementation projects
- Develop IP to release alongside your product
- Refer new customers to you in exchange for a commission or other benefit
- Run co-branding or co-marketing initiatives with your company
A HubSpot report found that, of its respondents, 50% attributed 26% or more of their revenue directly to partners. This supports the claim in a McKinsey article that forecasted: “By 2030, ecosystems will play a major role in almost every aspect of global economy, driving around $80 trillion in annual revenue—a third of total global revenue.”
The power of channel partnerships is here to stay. Cultivating a network of reliable, high-performing channel partners is how you can rapidly accelerate your growth in years to come.