How to Drive Your Performance with Channel Partners

Summary

Synopsis:

The main challenges when selecting channel partners and assessing their quality
How to efficiently allocate budget and equip channel partners with resources
Best methods to engage and educate partners to maximize results

The channel space is an untapped market with the potential to deliver substantial ROI due to its resilience to macroeconomic uncertainty, currency volatility, supply chain unpredictability, and even IT industry pressure.

In fact, according to Canalys, the channel space saw full-year double digit growth and healthy profits in 2023, with this trend unlikely to change in 2024. The channel is outperforming the vendor community in both revenue and profit performance, with 72% of partners expecting revenue to increase in the coming year (according to the same study).

While channel marketing presents a significant opportunity, it remains largely underutilized, as many organizations struggle to navigate this space effectively.

Selecting the right partners and maximizing the effectiveness of channel marketing is particularly challenging due to the diversity of potential partners combined with the complexity of managing ecosystems and aligning them with business goals. As a result, many organizations are unable to capitalize fully on the benefits channel partnerships provide.

This article explores the three main difficulties of navigating channel marketing and presents strategies to address them.

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The top 3 challenges of partner marketing

The most common obstacles facing channel marketing include identifying the right partners, equipping and educating them to drive performance, and maintaining partner engagement.

Below is a breakdown of the challenges associated with channel marketing and how to overcome them.

Finding the right partners

Sourcing partners who are a good fit for the vendor is the foundation of channel marketing. However, organizations often struggle to identify partners who adequately align with their brand and drive performance. This is compounded by the complexity of navigating an expanding pool of potential partners and selecting those with the right capabilities, resources, and commitment to meet business objectives.

Challenges

The primary challenges when selecting channel partners include:

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Solutions

Follow these steps to adequately select channel partners:

Selection process: Defining your IPP (Ideal Partner Profile) will help you find channel partners and ensure that they fit your brand and requirements. To establish an effective selection process, evaluate:

Industry expertise: Identify the industries or sectors where your ideal channel partner operates and has experience.
Target market: Determine the customer segments or geographic regions your channel partner should have access to.
Values and culture: Assess whether their values and work culture align with yours, as this will impact your future partnership success.
Strengths and capabilities: Understand the specific skills, resources, and capabilities your ideal partner should possess to find those that complement yours.

Create a legal agreement: This should include the KPIs, as well as the goals and responsibilities of each partner. Defining specific and measurable goals is crucial for determining a partnership's success, as it provides a clear roadmap and enables tracking. Furthermore, it should also include official review cadences and assessments of the partnership.
Co-branding agreement: Work with your partners to share the use of your partners’ channels, platforms, and content to expand your reach and improve credibility. This allows both brands to reach and leverage each other's audience.
Evaluate and adapt: Maintain open communication with your partners, gather feedback, and adjust the strategy as needed. This process can inform the aforementioned evaluation process for partner performance as to ensure that they contribute to the set goals.
Prioritize quality and cohesion: A well-aligned channel ecosystem avoids friction and ensures that all partners contribute effectively. Each partner fulfills a unique purpose, such as demand generation, solution sales, or managed services, for example. Clearly defined roles minimize competition and ensure a unified client-centric experience. Finally, when establishing partnerships, you should prioritize quality over all else to contribute to better performance and ecosystem health.

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Equipping partners to drive performance

To enhance overall performance and drive optimal results, it is essential to provide partners with the necessary tools and guidance. These include training, support, often product certifications, access to sales and marketing assets, and measurable incentives.

Furthermore, partners should be provided with the necessary financial support through efficient marketing budget allocation. Properly managed MDF (Market Development Funds) can significantly enhance partners' marketing capabilities, leading to better results and a higher return on investment (ROI).

Challenges

The main challenges of equipping partners to drive performance include:

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Solutions

To efficiently allocate MDF budget, utilize:

Performance-based MDF allocation: To promote accountability, allocate Market Development Funds according to the performance of your channel partners. This enables you to direct resources toward partners who consistently achieve results and maximize their return on investment.

Performance-based MDF allocation requires continuous assessment of the performance of all your partners, which enables you to allocate funds efficiently based on KPIs and targets.

However, it is important to note that this approach is only possible when partners are receiving adequate support and are fully aligned on their performance goals.

Failure to account for this may create a vicious cycle where partners underperform and are unable to secure the MDF they need—resulting in a frustrating process that hinders the capabilities and partners and harms the health of partnerships. Should partners consistently deliver low performance, be sure to assess whether they are getting the resources they need and are being assigned goals in line with their capabilities.
Proposal-based MDF allocation: More frequently, companies now use a ‘proposal-based’ MDF allocation. Partners need to write business cases for funding, outlining their proposed marketing activities and the expected outcomes. This process allows you to evaluate the potential ROI of different proposals and allocate funds to those with the highest potential for success.

Leveraging this approach also encourages a higher level of accountability with partners, as this can also include partner proposals where they contribute a percentage of the MDF themselves. However, it is important to note that some partners might not have the marketing expertise to build a business case and marketing plan. Therefore it’s important to understand the support required for a particular partner.
‘Rising Star’ partners: In addition to rewarding the highest performing partners, it is important to drive growth from smaller partners. Through recognizing partners that show the greatest growth potential, and providing them with more support and resources could drive more revenue than an incremental increase from a large existing partner.
Incentivize: Offer incentives, such as bonuses, additional MDF, exclusive access to new products, or special recognition for top performers. These incentives not only motivate partners to achieve better results but also foster a competitive spirit within the partner network, driving overall performance.

Finally, unused MDF is one of the major pain points of channel marketing and is often due to a lack of resources or partner expertise. While vendors are justified in expecting ROI from MDF spending, it is often not realistic to expect partners to develop plans on their own to maximize these resources (unless they are well-versed in marketing and demand generation).

Instead of merely providing funds, you should aim to offer support to help partners execute campaigns that will achieve your expected goals.

To equip partners to drive performance, provide:

Resources: Develop and share flexible channel solutions with partners created according to their unique needs and requirements. This way, you can enable your partners by assisting them in the areas in which they lack expertise without the need to expand their teams.
Content: Provide the partners with content they can use for their marketing campaigns. Rather than adding a partner ‘logo’ consider supporting them by creating an optimized version of the content and supporting partners in creating their unique value proposition.
Dedicated support: Assign a manager to each partner to provide personalized guidance, planning assistance, and quick issue resolution through dedicated support channels, such as live communication platforms or email support.
Demand generation: Instead of simply prioritizing capturing TOFU leads, assist your partners in designing strategies for each stage of the buyer’s journey. By offering a full-funnel demand approach, you will increase lead quality, promote conversions, and increase client lifetime value (CLTV).

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Engaging and upskilling partners

As partner marketing has moved beyond exclusive partnerships toward an ecosystem approach, accessing assets has become increasingly complex, often requiring partners to manage multiple platforms.

The complexities of partner platforms and the often suboptimal user experience (UX) they provide result in poor adoption and engagement rates from partners. In addition, relying solely on platforms to supply partners with assets without personalization and open communication risks further reducing their engagement.

Challenges

The main challenges of engaging and upskilling partners include:

Solutions

To increase partner engagement:

Invest in UX: Enhancing the user experience is crucial for increasing partner engagement, as partners are more likely to utilize the available tools and resources. A seamless UX enables partners to easily access and use your assets in their campaigns, leading to better performance and higher partner satisfaction.
Maintain open communication: Consistent communication is the foundation of a successful partnership. It allows you to create assets according to partners’ requirements, thus strengthening relationships and improving performance. Furthermore, regular communication and reviews enable you to assess performance, address issues, share feedback, and refine your approach.
Incentivize based on contribution: In general, incentivization is a powerful strategy, however, acknowledging and rewarding top performers specifically based on their engagement is even more crucial in the channel space. However, when incentivizing, be mindful of smaller partners—instead of only rewarding the highest contribution, consider recognizing smaller partners who show improvement.
Gamify: Implement gamification elements within your partner program by rewarding the use of your resources. For example, you can reward partners who provide evidence of using your assets, such as copy and graphics. Establishing a rewards program can help motivate and evangelize partners.
Consider partner budget contribution: Encouraging partners to allocate their own budget can significantly enhance their engagement and dedication. Contributors are typically more receptive to implementing recommended strategies and responding to feedback, leading to improved outcomes and stronger partnerships.
Education: The final component of successful collaboration is education. To provide adequate education, you should assess each partner's strengths and weaknesses and tailor programs according to their knowledge and capabilities.

To improve the performance of your partnership strategies, it is essential to view them as an iterative process. Regularly reviewing and optimizing your approach will help you stay aligned with your partners' needs and the latest market developments.

Support these engagement strategies by setting up a feedback loop where partners can provide input on the usability of platforms, the effectiveness of communication, and the value of the resources provided. This feedback should be systematically analyzed to identify patterns and areas for improvement.

Finally, establish a cadence for reviewing performance metrics and engagement levels. Use these reviews to adjust your strategies, refine your support systems, and ensure the tools and resources remain relevant and easy to use.

Combining these strategies will help to boost your engagement and yield actionable feedback to continuously innovate and improve on your partnership initiatives.

Key takeaways

Here are the essential insights on how to drive your channel marketing performance:

Have a clear and defined IPP (Ideal Partner Profile) before looking to recruit new partners
Focus on a smaller number of specialized partners that share your target audience and marketing goals and ensure that your channel ecosystem is well-aligned to minimize friction
Clearly define objectives and KPIs and promote transparency and data sharing
Create a legal agreement outlining each partner's responsibilities to ensure accountability
Consider different tactics when distributing MDF. It is important to reward high performing partners while also supporting ‘Rising Star’ partners to drive growth
Continuously assess performance and allocate budget toward top-performing channels
Equip partners with all necessary collaterals but be bespoke and educate them to maximize campaign performance