Trade Relation

Channel Partners

Overview

An effective reseller program should help you and the dealer build the overall sales category while building sales.

Many organizations sell through some form of “channel partner,” such as a distributor, dealer, or independent sales or service agent. Some dealer or distribution organizations may use independent agents or representatives as well. For our purposes, we’ll refer to all such organizations collectively as “channel partners” or “resellers.”

The key to targeting channel partners and the people they employ is to remember: These people work for their own organizations or for an organization other than yours вЂ" they are not employees of your company. Further, they likely represent other companies with which your organization competes and which have their own marketing and management strategies to get them engaged and maximize their performance.

Bottom line: A channel partner and its people will generally be driven to do what is best first for their own organization, and not necessarily what your organization wants them to do.

What generally is most important to a channel partners is to make money, so incentive programs that target channel partners should help that company do so in a way that is convenient for the channel partner and which recognizes its desire to satisfy its own customers and bottom line.

Resellers are on the front lines of selling your company’s products and services, but they are doing so only to the degree that it is profitable or otherwise beneficial for them to do so. Therefore, the first steps in developing an incentive program targeting resellers involve:

• Identifying channel-wide trendsвЂ"what companies in your business do the best job engaging resellers, and what is it they are doing?

• Understanding individual partner requirementsвЂ"what’s in it for the reseller to sell your product or service or participate in your incentive program?

• Assessing the current level of partner commitment and loyalty to your brandвЂ"how does your product or service measure up with your resellers and why?

• Identifying specifically who within partner organizations can influence the sale of your product or service.

The ultimate rewards to the sponsors of a reseller incentive program can include increased sales, increased mindshare, and greater loyalty, based on the latest research on incentive practices by The Incentive Federation. This section of Incentivecentral.org provides the information and resources your organization needs in order to reap the rewards of a successful channel partner or reseller incentive program.

Facts and Figures

Some 49 percent of all companies surveyed in the 2005 Incentive Federation Survey of buying practices make use of dealer incentive programs. Increasing or maintaining sales, creating new markets, and gaining a larger share of market are common goals for reseller incentive programs.

Types of Resellers

Resellers come in many shapes and forms, and the nature of your business relationship with your resellers will say a lot about how to design your program. Resellers include:

• Distributors who take the billing for the products or services they sell to other companies and often warehouse it prior to sale or delivery.

• Dealers, who often buy from distributors or directly from manufacturers, and who sell products or services directly to consumers or businesses.

• Agents and independent representatives, who usually sell to distributors, dealers, or end users and who receive a commission from the companies they represent. In some industries, exclusive agents are the norm; in others, exclusivity is rare.

Resellers or channel partners can include value added resellers (VARs), sales agents, systems integrators, software partners, retail outlets, specialty stores, and manufacturer’s representatives.

Reseller incentive programs are offered by the sponsoring company as a motivational tool directed at increasing performance or behaviors that will be favorable to the sponsor. Obviously, the best outcomes result when the program is equally favorable to the reseller or channel partner.

Motivational Factors

Resellers have their own agendas. Your incentive program for the reseller’s sales people may be abundantly beneficial to your organization (and the reseller’s as well), but unless management within the reseller organization buys in to your mission, it likely won’t translate to success in the field.

Who’s the boss?

Keep this key factor in mind: The people employed by the reseller get their paychecks from the reseller. If management does not agree or embrace the belief that what you want his or her employees to do is in the best interests of the reseller organization at large, what you want done will not be reinforced by the reseller and your incentive program will likely fail, if it even gets off the ground. To succeed, your organization has to offer a triple-win scenario: the reseller principal or organization wins; the reseller salespeople or other sales influencers win, and you win.

Understand who influences the sale.

You might assume that the salespeople make most of the sales, when in fact, customer service or installers get heavily involved. You’ll want to make sure your program addresses everyone who can make or influence the sale. You might even discover an opportunity to engage installers, repair, or customer service people.

Achieving buy-in.

Getting buy-in from a reseller represents even a greater challenge than from an employee, because most resellers have choices. You’re asking an independent business entity to purchase something and then to sell it, or to sell your product or service to valued clients. The dealer principal and his/her salespeople have to believe they can move the product or service (at a profit) once it’s put on the shelves, in the lot, in the warehouse, or on the sell sheet, and that their clients generally will be satisfied. In the channel partner’s eyes, “partner” translates into expecting suppliers to deliver what’s promised. “Buy-in” occurs when reseller principals,