5 'Ps' - How To Build A Successful Channel Program

Breaking into new markets, expanding your outreach, building your brand awareness, faster time-to-market, lower customer acquisition cost (CAC), delivering localized services to customers etc... These are a few out of the many benefits of going to market via channel partners. According to Forrester, indirect sales comprise of 75% of the world's commerce. An example - Freshworks - a cloud-based customer engagement software company valued at US$3.5B. Deals were closed 50% faster than the average opportunity-to-close timeline because of channel partners. Freshworks's partner program consists of resellers, system integrators and MSPs. This allowed them to tap into the partners' installed base which generated more than 120 qualified leads in 2020.

While there are numerous benefits to going to market via channel partners, it can be detrimental to a business if not done rightly. In any sales channel relationship, we need to first sell the product before the partner does. How & why would a partner be able to sell our product(s) if we ourselves have not developed our Product Market Fit (PMF). If we have a hard time selling our own product, what more our partners. But yet, vendors expect partners to break into new markets, grow new verticals when there isn't proven success. We often forget that channel partners are running their own businesses and they have bills to pay - their human resources, office rental, electricity bills etc. Obviously, they will channel their resources where they can experience success.

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So how do we build a mutually beneficial channel program aka win-win partnership? Below are the 5 Ps:

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1.???? Proposition

Value Proposition... a commonly and overly used term. Essence? What is the need of the end customer? What is the business impact without your solution (or if nothing is done)? What is the motivation of your channel partner? What is the Total Addressable Market (TAM)? What are their goals? In short - what is in it for them.

It starts with the end-customer. As we have briefly mentioned earlier, channel partners need to first see 'What' you are selling, 'Why' are you selling, 'Who' are you selling to & 'How' you are selling (aka your go-to-market GTM strategy). This answers the initial proposition - the end customer. Then, we have to repeat the same exercise, now for the channel partner. We need to understand their profile, business nature, core offerings & capabilities and how our solution aligns. Whilst there are different types of partners (we will list some of them in #2), most partners are driven by services. Tie back to your channel strategy and why you are going to market with channel partners. These professional services include implementation, support, training and retainers (for agencies), known as value added services (VAS). Ensure that there is an enablement program that certify partners that could also be used for partner marketing.

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2.???? Partner Program

Speaking of program, once we have defined our proposition, next is to construct the partner program. There are typically 2 facades – horizontal and vertical

Horizontal – aligned with the vendor’s objectives with metrics including net new revenue target, customer renewals, case studies, certification completions etc.

Vertical – partner benefits including tiering, MDFs, dedication partner manager, exclusivity to events & trainings etc.

These metrics can vary depending on your ideal partner profile. Partner types include VARs, Affiliates, SIs, GSIs, consultancies, agencies, ISVs. Again, it falls back to the proposition for each partner and what is in it for them that will outline the framework of the partner program.

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3.???? Process

A common pitfall with a lack of priority. Poor processes can/will cause friction in your program and can/will result in partner attrition. With the scale of technology innovation & hunt for new partners amongst vendors today, the need to stay on top of mind with partners is pivotal to sustainable growth. After all, with all the investment made into partner recruitment, the last thing that could happen is for partners to turn somewhere else, worst case, your competitors.

Some processes to be defined very clearly are the rules of engagement (RoE), partner deal registration, lead ownership, commission payments, tiering structure etc. Ideal to have these processes stipulated in your partnership agreement so both parties are clear on the processes. Leave no room for ambiguity and always be 100% transparent with partners.

4.???? Profit

Business 101 – partners must make money. If they can’t and don’t, then they shouldn’t be in our program. While this is fundamental, I am aware of vendors that take a one-sided approach with the core focus of ‘how do I get the most of the partners’. This completely obliterates the essence of partnerships and it is almost sure guarantee that the partnership will fail. It is give-get, not get-give. It starts with giving, the value you can offer partners before earning the right to ask the partners for something in return. Partnership is long-term. If the business is looking for short-term growth, be sure to note that partnerships is not the right strategy.

Some recommendations to build a more partner-centric approach are to segment partner-only markets so there is no direct competition (as the last thing partners want is to compete directly with the principal), routing leads to partners to help them experience success so they are willing to invest more (back to give-get), enabling partners to drive services/support. Aside from services and depending on the partner type as listed in #2, other areas of profitability that be derived from license sales, joint GTM campaigns (usually for VARs to bundle other products & services that completes the solution for the end customer) and marketplaces.

5.???? People (aka Partner Team)

Common saying – people buy into you before they buy into your product. A vendor can have the most attractive proposition, program, processes and profit margins, but the entire experience can be tarnished if the partner manage cannot connect with the partner. It’s back to basics – it is about relationships, and relationships are built on trust. And trust takes time to develop. Unlike the 4 points, this is an art rather than science. It has to be caught, not taught. I have seen new partner managers that take on a ‘higher than thou’ attitude with a stance of ‘I am in the principal, you are the partner’. However, omitting the fact that partner has deep experience being in the field with relevant insights to glean from. This is one of the best ways to break the relationships.

Some key characteristics in effective partner managers from my experience are – always be humble. Learn, learn and never stop learning. There is a saying ‘once you are ripe, you start to rot’. Humility is a natural force of attraction that draws people. A way to express this is to be curious and ask questions (smart ones). Be genuinely interested in the partner and their business. Always be humble. Next – always have a giving mindset. It is first about what you bring to the table. It is a reminder to myself that I bring something every time I meet a partner, whether it is a gift, a sharing session or market insights. I had a partner in Vietnam that hired a new salesperson and I bought a sales book in my next visit to the partner. It is not just about connecting on a business level, but a personal level with the executive and your stakeholders (partner sales & marketing team). After all, they want to work for/with people they like right? Always have a giving mindset. All in all simply put – be human. We all have our frailties and it takes courage to be vulnerable. Vulnerability is a key ingredient to building a relationship as vulnerability begets vulnerability. It is a partnership after all, we go into the battlefield together, celebrate wins and progress from losses TOGETHER.

Recap of the 5 Ps – Proposition, Program, Process, Profit, People.

I end off with one of my favorite quote from a prolific sales & leadership author, Zig Ziglar:

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