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As goods move from manufacturer to wholesaler to retailer to consumer, each party has its own interests. For the businesses in that chain, those interests are often centered on core company goals like increased sales or profitability. Channel partner managers seek to influence wholesalers and retailers to get more leads and sales.
Studies have revealed that alliances among businesses increased over the past decade, with partner distribution worth up to one-third of many companies’ revenue. Still, a channel program relationship has a remarkable failure rate—some estimates put it as high as 70 percent.
How to improve the management of these vital programs warrants a closer look.
What Is Channel Marketing?
Channel marketing builds partnerships with companies outside an organization to help increase the distribution and sales of a product or service. Each channel represents a link in the chain between the original manufacturer and the end consumer.
A common example is a supermarket that has aisles full of products it does not produce. While some may think of a cereal producer as the first link in the chain, the link extends further back to the farmers who grow the wheat or corn used to produce the cereal. That elongated chain reveals the potential scope of channel marketing efforts.
Channel programs developed over time because businesses face limitations in distributing a product or service from a single location. It’s not hard to imagine the potential increase in sales if a local health-food manufacturer were suddenly to feature on the homepage of Amazon.
Historically, the businesses with the resources to invest in channel marketing have been large organizations with sophisticated marketing departments. However, the growth of online shopping on sites like Amazon, eBay, or Etsy has provided single-person entities access to powerful channel partners with minimal maintenance of relationships within that channel.
Despite this expansion of the market, traditional channel program management remains key for many large organizations that depend on sales across a wide geographic area. Because channel marketing programs typically seek to influence other businesses between the manufacturer and consumer, the work often falls within the ambit of the business-to-business (B2B) marketing. Channel marketing may, of course, also advertise directly to consumers.
Types of Channel Marketing Programs
What does a B2B partner marketing program look like? The answer varies based on the business as well as short- and long-term marketing goals.
Typically, an organization hires a manager or team to identify new partners, negotiate channel marketing agreements, nurture relationships, and report on the value of channel partnerships. Due to the multi-tiered structure of a robust partner program, channel marketing tends to be resource intensive.
To minimize the burden of running a program, some businesses take advantage of Partner Relationship Management (PRM) software, which offers a similar set of benefits as Customer Relationship Management (CRM) software. Others outsource partner program management when in-house operations are not feasible.
Channel partner relationships operate in several ways. In each, the original producer usually shares a percentage of the revenue as compensation for a partner’s role in generating sales. Channel partners may also Go to the full article.
Source:: Business 2 Community