Top Down Vs. Bottom Up: Channel Building Strategies that Drive ROI

One of the biggest misconceptions we see companies make when they reach out to us to discuss building a channel program is the belief that all they need to do is sign with a Technology Solutions Distributor (TSD), and the leads will start flowing in. At the same time, a common mistake we see companies already in the channel make is focusing solely on a top-down strategy without implementing a bottom-up strategy.

A bottom-up strategy focuses on building relationships directly with Trusted Advisors first.? Instead of relying solely on TSD introductions from their employees and at their event, this approach empowers Trusted Advisors to choose the TSD that best fits their business model - or helps them discover a TSD that might not have considered.??

It’s undeniable: the conversion rates from TSD introductions to partners are significantly higher. Building strong relationships through these introductions leads to a higher conversion rate for partner relationships compared to cold calling potential Trusted Advisors. However, relying solely on introductions is not the only option when building a successful channel program. TCA's Channel Manager Advisory Council has created a list of tactical activities and lead sources with the highest to lowest conversion rates, which can be found in a previous blog post: Channel Manager Activities List .

By using the Channel 2.0 Methodology?, companies gain a reliable, repeatable approach to building successful channel programs. This isn’t just theory—it’s a proven system endorsed by many TSDs. When paired with the right CRM, it provides measurable ROI that empowers you to maximize your MDF and other investments.

In our Channel 2.0 Methodology?, we have outlined the steps of a successful channel program. These steps are Find, Connect, Discover, Present, and Engage. (A full description of the methodology can be found in our University) Finding activities, as mentioned in the blog post above, include direct to Trusted Advisor activities like cold calls, LinkedIn campaigns, and a few others. Pairing the methodology with a CRM configured to monitor the progression of Trusted Advisors through the onboarding process allows you to gather statistical feedback on the ROI of MDF and other expenses. ROI calculations based on events and activities enable us to strategically plan and allocate MDF, ensuring the best use of funds and helping us stand out in an increasingly crowded space.

Over the last 10 years, TSD vendor portfolios have grown tenfold, with expectations to double or triple in the coming years as new technologies enter the industry. Sandler currently has over 200 vendors, Avant has around 350, Telarus 450+, and AppDirect is approaching 800. Simple math shows that if a TSD field resource spends 15 minutes on calls with just one channel manager from each of 400 suppliers, they would be on the phone for 100 hours a month. Many suppliers have multiple channel managers per field resource! TSDs are maxed out on events, and we are seeing significant fallout from Trusted Advisors registering for events but not showing up, with increasing discussions around “event fatigue.”

We’re hearing it more and more—event fatigue is real. Trusted Advisors are overwhelmed by constant invites, leading to no-shows and wasted opportunities. The demand for TSD MDF programs is high, but the supply is relatively short and getting shorter. Basic economics tells us that when demand increases and supply decreases, prices rise—and we have seen this trend over the last several years, with TSDs indicating prices will increase by another 20-30% next year. With increasing demand for MDF and rising costs, the pressure doesn’t stop there. The talent market for experienced channel managers has also evolved rapidly, making it tougher to keep top performers.

The rising demand for channel resources has driven costs up, making it harder for companies to stay competitive without strategic planning. Eight years ago, channel managers started with a base salary of around $80K. Today, it’s common to see top performers earning a base of $120K to $150K, with total compensation packages reaching $200K to $250K. Combined with the rising costs of TSDs MDF programs, channel managers are facing higher quotas and shorter windows to achieve them, making it nearly impossible to succeed and leading to skyrocketing churn rates among channel managers.?

These rising costs—both in terms of MDF programs and channel resources—are forcing suppliers to rethink their channel strategies. Now, more than ever, suppliers are focused on getting a measurable ROI on their MDF investments and finding ways to maximize every dollar spent in an increasingly competitive space. The rising demand for channel resources has driven costs up, making it harder for companies to find that channel ROI without strategic planning.

It’s time for us to unite in the new and reimagined Channel 2.0. This new environment will help suppliers “move from HYPE to operational excellence. This means measuring, monitoring, and managing every partner interaction in a reliable, repeatable, and scalable way that CFOs and boards are willing to invest in because they feel they have a science behind partnering” (as Jay McBain mentioned in his recent podcast with Partnerships Unraveled).

If you’re ready to rethink your channel strategy and want to achieve real, measurable results, explore our Channel 2.0 Methodology? in-depth and help us unlock your channel’s full potential.