7 Biggest Benefits of Starting a Channel Partner Program

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Making the decision to invest resources in starting a channel partner program can be daunting, sending even the most risk-averse entrepreneurs into a cold sweat. Companies across all industries, though, are finding the benefits of strategic partnerships far outweigh the cost.

“Partnering with a large organization can lend your company some much-needed credibility,” writes Tx Zhuo, Managing Partner at Karlin Ventures. “It can also expand your distribution channels, improve your industry knowledge, support your marketing efforts, and increase your lead generation.”

These benefits only come to those who choose their partners wisely and establish strong relationships and a culture of sharing with their partners. But for those who choose to start their own channel partner program, the benefits are, without doubt, worth the effort.

1. Accelerate Growth by Scaling Your Sales

One of the biggest challenges to growing your revenue? You only have so many salespeople. Even if you hire the most efficient reps, give them the best tools for boosting their efficiency, and relentlessly remove any distractions, they still have the same 24 hours in the day as the rest of us.

Sure, you can hire more reps, but it’s a solution that is difficult to scale efficiently and it cuts into your margins.

Instead of selling directly to the end customer, a channel partner program helps you scale your sales faster and more efficiently. One channel manager paired with multiple channel partners can bring in the same amount of revenue as five or six sales reps, at only a small fraction of the cost. Additionally, once you’ve set up your partner relationship management platform, bringing on new sales partners is typically easier than hiring and training a new salesperson.

For example, take a look at Hubspot’s channel program. Over the past few years, HubSpot has solidified their place as the industry standard tool for inbound marketing, mainly thanks to their successful channel partner program. In 2014, their partner program included more than 100 employees, who together generated nearly 42 percent of the company’s customer base and 33 percent of their revenue. Without a scalable program for partner success, this kind of growth would be nearly impossible.


2. Reach New Markets and Customer Segments

In addition to driving new growth by scaling your sales operations, partnering can help you quickly expand your business into new markets or customer segments that might be difficult or even impossible to reach on your own. This could include customer groups that are too expensive to reach through conventional marketing channels like paid advertising, moving into a new product or service vertical, or expanding into new geographical markets.

Strategic partnerships are crucial, especially when you’re looking to expand internationally. The majority of mid-size businesses simply don’t have the expertise or resources to go through it alone. Partnering with companies who already understand the lay of the land and have experience in the country you’re expanding into makes everything more efficient and cost-effective, from marketing and customer access to ensuring regulatory compliance.

“Every country has their own challenges, and every country has their own tax codes, and every product has their own tax codes within those countries,” says Christopher Veck, CIO at Miansai, a Miami-based jewelry company. “The most important piece of advice to people who have little or no business outside the U.S. would be…you need to find somebody to work with to help you get to those places.”


3. Elevate Your Offering to Better Solve Customer Problems

Creating a comprehensive package of products and services that meet the needs of their customers while also juggling cost and resource constraints is an ongoing problem for nearly every company. Partnerships can help improve the range of products and services both you and your partners can offer, better meeting the needs of your customers without the need for additional development cost or time investment.

Let’s say you’re looking to purchase a CRM solution for your company. You might have only considered purchasing this one tool on its own, but when your vendor presents complementary products like marketing automation or lead tracking tools, you’ll likely consider purchasing those products as well.

“You want to look at all the complementary goods that people are buying when they might be buying your product,” writes Alex Rampell, General Partner at Andreessen Horowitz, in the First Round Review. “That’s the best place to think about channel partners or prospective channel partners. The closer they are, the more complementary they are, the higher the chance they’ll be bi-directionally relevant.”


4. Leverage Additional Reach and Trust from Recognized Brands

One of the fastest ways to elevate your content and increase the reach of your marketing campaigns is to create strategic marketing partnerships with larger companies, a process known as co-marketing. By leveraging the relationships and reach of brands larger than your own, a well-managed partner program can help you work together to expose both your own and your partners’ brands to new audiences, driving additional awareness, leads, and revenue, with less work.

When deciding which partners might be best placed to help with co-marketing, there are a few things to keep in mind:

  • Make sure your audiences overlap. There’s no point in spending time and effort with partners whose audience might not be a good fit for your business.
  • Make sure you share a similar goal. If one partner is looking for new leads, but the other is hoping to sell more tickets to their latest conference, it will be difficult to satisfy both needs.
  • Make sure the brand has a good reputation. No need to bring down your own credibility by bringing on a bad partner.
  • Make sure the partnership benefits both sides. Try to partner with businesses who offer expertise that is something you cannot offer alone, but is of value to your own audience.

Partnering up with larger, well-recognized brands can help catapult your growth in ways that would be impossible on your own.


5. Reduce the Cost of Acquiring New Customers

Also known as CAC, customer acquisition cost is one of the key metrics measured by all sales teams. By managing the ratio of how much you spend to acquire that customer, and how much your customers spend on your product across their lifetime (LTV), business owners can get a quick check on how healthy their business is. It’s “Business 101”—keeping your CAC as low as possible in relation to your LTV can help ensure your business remains viable and competitive in the market.

Investing in a strong channel partner program is an easy way to reduce your CAC. Brad Coffey, Chief Strategy Officer at HubSpot, mentions in his SaaS Metrics 2.0 guide that HubSpot started seeing some of the biggest improvements to their marketing return when they compared their channel partner program to selling direct.

“When we started this analysis,” Brad writes, “we had twelve reps selling directly into the VSB market and four reps selling through Value Added Resellers (VARs). When we looked at the math, we realized we had an LTV to CAC ratio of 1.5 selling direct, and an LTV to CAC ratio of 5 selling through the channel. The solution was obvious. Twelve months later we had flipped our approach—keeping just two reps selling direct and 25 reps selling through the channel. This dramatically improved our overall economics in the segment and allowed us to continue growing.”

By measuring the return from their partner program sales, HubSpot was able to invest heavily in their partner program, not only ensuring the viability of their business but allowing them to rapidly improve their growth, without adding more sales staff.


6. Build a Sense of Community Around Your Company

One of the difficulties when working with a diverse range of sales partners is building a sense of community. Instead of just covering the basics, an engaging channel partner program can help build a sense of community around your brand and your product or service. A well-run partner program is an amazing resource for driving partner engagement, improving loyalty, and improving your revenue.

Each year, Shopify brings together partners and developers for Unite, a two-day conference specifically built to help their partners grow. In addition to platform news and updates, Shopify provides training, networking opportunities, and new content to help partners and developers grow their businesses alongside the Shopify platform. The conference helps partners build new working relationships, joint venture and co-marketing opportunities, and ideas for collaborations.

You don’t need to run a conference at the scale of Unite—even an online community can help build a sense of community among your channel partners. A thriving partner community cannot grow on its own, however. It needs to be fostered by you. Spend time engaging with your partners, and helping them engage with each other, and you’ll soon see the benefits.


7. Create Stronger Relationships with Customers and Partners

Traditionally, companies have looked at partnerships as tools for reducing costs and increasing returns. While these are admirable goals for any business, most partnerships put little consideration into the end customers and partners, in spite of the fact that those very people were the source of the returns they sought.

Today, the strongest partner programs put relationships first. Companies across many industries have realized that more value comes from strategic partnerships that establish a culture of sharing and community between partners. In fact, IBM found that highly collaborative partners see a 40 percent increase in revenues, versus the 12 percent average seen by less collaborative partners.

The hardest lesson most companies must learn is that strong relationships and partnerships are built through trust. By sharing openly and collaborating often, partnerships can help open up new opportunities to serve new customers, as well as better satisfying your existing customers.

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