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Introduction to Channel Partner Relationships

The very basics of channel partner relationships

Relayware Partner Relationship Management

Introduction to Channel Partner Relationships

Posted on July 25, 2016

Our customers sell through channel partner relationships, which can be a complex way to go to market, but offers many benefits.

Hiring direct sales all over the world is very expensive. Working through intermediaries (channel partners / resellers) it’s much faster to scale. With a channel partner sales model, the reseller deals directly with the customer, and that customer’s relationship is often primarily with the reseller – not the manufacturer.

Not having a direct relationship with the end customer creates complexity, and furthermore, sometimes there are multiple layers between the manufacturer the end customer. For example, with physical products, such as hardware, many times the manufacturer sells to a distributor. That distributor sells to a reseller, and the reseller sells to the end customer. This would be considered a 2-tier reseller model. Software is typically only 1-tier – that is from the manufacturer to the reseller, and from the reseller to the end customer.

These layers necessitate more communication for a manufacturer to know how their product is ultimately being sold and used. This is why companies that want to expand rely on channel partners and as a result need partner relationship management software. They need a PRM solution that brings together all the data they have on their partners tied in with their CRM, ERP and marketing automation. PRM acts as the central system of record for the manufacturer.

There are many terms for these channel partners -- reseller channel, indirect channel, indirect partners. Also, a manufacturer may have alliance (also sometimes called “sell with partners”). These relationships work best when the sale is very complex. There will be a commercial relationship between the manufacturer and the alliance partner, and the manufacturer will have a direct relationship with the end customer as well. Another model is the OEM model, which is when a product is embedded into other products. For example, computers may have chips made from other companies, so the end product includes the chips, but the end customer is buying much more than just the chips.

There is so much to be said about channel partner relationships, and this introduction only skims the surface.

For more about managing channel relationships and PRM download our expansive eBook "The Ultimate Guide to Channel Management Strategy."