Channel partnerships play a pivotal role in the success of many organizations. Whether working with or considering resellers, managed service providers (MSPs), referral partners, distributors, or other ecosystem collaborators, laying a solid foundation for your channel program is crucial. You can foster better partner engagement and drive mutual success by understanding partner revenue models and aligning their incentives and program benefits accordingly.
Let’s break this down by a few partnership types to understand different partner revenue models better and how we can shape incentives to meet them best where they are.
Resellers and margin
Resellers have long been a common type of channel partner. They purchase products or services from the vendor at a discounted price and resell them to end customers at a marked-up price, thus making a profit through the margin. For resellers, their primary focus revolves around generating sufficient margins to sustain their business operations.
Therefore, vendors must carefully consider pricing structures, volume discounts, and incentives that allow resellers to maximize their margins. Vendors can incentivize resellers and strengthen the partnership by offering attractive margins and additional perks such as marketing support or exclusive access to new products.
Understanding MSPs service models
MSP partners are not new to the channel but now play a more significant role in many partner programs. Of all the partner types in the Impartner PRM, the fastest-growing segment is the MSPs. Many VARs are adding managed services as margins decrease and added service revenues decline.
Unlike resellers, MSPs do not rely, at least solely on margin. MSPs offer ongoing services to clients, often providing a more significant bottom line than margin from reselling products.
Offering the same benefits to MSPs as resellers are unlikely to produce results. Additional margins, rebates, etc., are likely less appealing to an MSP since the margins are a small piece of their profit model.
What incentives might drive an MSP to engage more than points or rebates? Introduction to potential new customers, promoting them on your website as a valued partner, marketing resources to enable them to find new business?
How to incentivize referral partners
Referral partners can be vital in driving leads and potential customers your way. While they may not directly generate revenue from the sales, they rely on selling their services and offerings.
You may offer referral fees or commissions, but this is not a significant profit center to their business. I am not advocating eliminating these incentives, but if you want to see a dramatic increase in your referrals, offer valuable resources that drive referral partners' businesses. Can you provide them with content that makes them an industry expert and get them access to sales and marketing tools that they may not have had before?
Curious to learn more about growing your referral partner programs? Sign up for Impartner’s MasterClass on August 3!
Meeting ecosystem partner needs
In addition to resellers, MSPs, and referral partners, many partner programs involve various ecosystem partners such as technology integrators, developers, consultants, and more. These partners may have unique requirements that you need to address to ensure a successful collaboration.
Building value-based incentives and benefits
Building incentives and program benefits that partners genuinely value is essential to drive partner engagement. This can be achieved by carefully considering partner revenue models and aligning incentives accordingly. Understanding their business models and objectives is crucial in building effective relationships. Tailoring incentives, program benefits, and resources to meet their needs helps create a mutually beneficial partnership.
For example, providing training and certification programs for partners can enhance their expertise and boost their ability to generate revenue. Offering co-marketing opportunities, lead-sharing programs, or exclusive access to new features or products can also be compelling incentives.
To maximize the potential of your partnerships and drive business growth, you must prioritize partner-centric strategies that meet their needs. If you want to learn more about the power of building strong channel partnerships and understand partner revenue potential, contact me anytime. Together, we can navigate the complex landscape of partner revenue models and establish thriving collaborations that drive sustainable success.